PETALING JAYA: Barely two weeks after Ishak Yaacob, 56, filed a police report against a local bank for allegedly selling his non-performing loan (NPL) to a debt collection agency, his property is expected to come under the hammer soon.
In a last-ditch attempt to save his property, his lawyer says there will be a hearing soon on his application for an interim injunction to stay the auction pending an appeal.
The lawyer, who asked to remain anonymous, told The Malay Mail they were applying for a stay because "there are major breaches of the National Land Code (NLC) and the Banking and Financial Institutions Act (BAFIA) 1989 pertaining to the registration of the property".
He said they believed debt collection agencies did not have the locus standi to auction properties even if they were provided with vesting orders (VOs) by the court.
The lawyer said the document of titles did not indicate that these agencies had any benefi cial or legal interest as they had not registered their interest on the title.
The Malay Mail reported on June 22 that Ishak had lodged a police report against a bank suspected of selling his NPL.
In his report, he said he and his wife took a loan from a local bank and used one of her properties as collateral.
When they defaulted on their payments, the bank proceeded to initiate legal action and put up a public auction of the property.
During the auction, Ishak alleged the bank proceeded to sell the couple's NPL to debt collection agency Mystique Bay Sdn Bhd, via a sale and purchase agreement, dated Oct 5, 2007.
On Oct 12, that year, he alleged Mystique Bay and the local bank procured a VO in favour of the agency, and corresponding sales and transfer on Nov 20, 2007.
Ishak claimed the bank and Mystique Bay misrepresented to the court that they had complied with the relevant provisions of the BAFIA.
He alleged that Mystique Bay had issued a letter to the local bank instructing that all monies relating to the NPL must be paid in US dollars to CVI Global Value Fund Luxembourg Master Sarl, via its beneficiary bank, JP Morgan Chase Bank, in New York.
"Mystique Bay is currently trying to auction off my wife's property and we are adamantly defending the matter as I believe there is evidence of collusion between the bank, Mystique Bay and government authorities, whereby funds are being repatriated out of the country illegally," Ishak had said in his police report.
He lodged the report hot on the heels of The Malay Mail's front-page expose on June 21, headlined RM60b illegal outflow, which reported that local banks were found to breach the Bafia since 2005 by selling NPLs to foreign controlled debt collection agencies.
Many conditions to meet before sale can take place
AUCTIONING properties under the category of non-performing loans (NPL) seems to fall under two different laws -- the National Land Code (NLC) and the Banking and Financial Institutions Act (BAFIA) 1989.
Debt-collection agencies -- non-financial institutions which cannot be regulated by Bank Negara Malaysia -- are having a breeze doing so after purchasing NPLs from local banks with a Vesting Order.
Retired Perak deputy registrar of properties Razman Yahya told The Malay Mail the following under the NLC must be adhered to before auctions could take place:
-- Section 253: The chargee must be a financial institution defined by BAFIA 1989
-- Section 414: The transferee (collection agency) means one in whose favour a statutory vesting is effected
-- Section 415 (1): The transferee must apply to the Registrar to register interest by submitting form 30A or 30B
-- Section 415 (2): The Registrar shall proceed to endorse a memorial on the title to the effect that the registered interest has been vested in the transferee (the agency)
-- Section 415 (3): The Registrar then shall register the said registrable interest in the land in the name of the transferee
-- Section 415 (4): The transferee's (agency's) interest in the land can only take effect upon such registration
-- Section 420 (2): The Court shall cause a copy of any such order to be served on the Registrar and upon receiving such a copy shall give effect to the order, by making a memorial of the vesting on the title in which the order relates
-- Section 420 (3): The Registrar shall sign and seal every memorial
-- Section 50 (6) BAFIA: The VO, upon being procured, must be immediately lodged with the Registrar of titles pursuant to Section 420(2) (3) and (4) NLC