1. Part Payment
The Hendra affair did not disrupt my good relations with Norbert and Freddie. And strangely enough, the tension between them eased. In a sense, the affair brought them together.
Hendra remained a thorn in the Bank’s side. On quite a few occasions, as I passed by the building housing the Bank, I saw Hendra proceeding happily on to Collyer Quay. I had no doubt that, on each occasion, he had managed either to extend or to replenish his overdraft.
Bang Bang Hendra greeted me warmly whenever our paths crossed. On two occasions he invited me to have lunch with him, assuring me that he had just discovered a restaurant with “suitable dishes”. I reciprocated. In due course, we became acquainted with one another. As was to be expected, informality replaced the cold business protocol.
Bang Bang manifested an interest in my obsession with eighteenth-century porcelain. I, in turn, was impressed by his activities as a breeder of exotic fish. When he discussed his hobby, he shed his image of a questionable business entrepreneur and talked about his subject with a fervour verging on devotion. It was difficult to associate this aficionado with the financial charlatan who used disappearing ink in his contractual transactions.
Soon it became clear to me that he wished to shed that unsavoury image. One morning he came over to my office and asked me to help him in his latest dealings with the Bank. His overdraft stood at that time at S$180,000. He wanted the Bank to accept payment of part of the amount in full settlement. Effectively, he was asking the Bank to waive part of his indebtedness.
“But how can I help you in this matter? As you know, I am one of their legal advisers. I can’t take a position that conflicts with their interests.”
“Oh, I know this, Peter. But you see, Norbert is prepared to settle. His main fear is that Freddie will make a fuss.”
“But surely, Bang Bang, this matter is up to the Head of the Bad Loans Department. It has nothing to do with compliance.”
“Norbert and I know this. But Freddie was involved in some … earlier dealings. Norbert wants to forestall any further unpleasantness.”
“So how do I fit into it?”
“Norbert says you are Freddie’s good friend. He thinks that a gentle word from you might do the trick.”
“I think, Bang Bang, that the best way is to have a frank word with Freddie. I suggest you call on him in person. But you know, Freddie will ask why they should accept part payment.”
Hendra was aware of the need to show cause. To explain his position, he produced a memorandum prepared by his accountant. It showed that, over the years, Hendra had paid a great deal of money by way of penalty interest and bank charges. He would have been better off if a rate of 8.5 per cent had been charged on his median debit balance over the period.
“But surely penalties and charges are not part of a bank’s profit?” I averred.
“Not in theory. But all in all, the total amount is paid out of my own pocket and is received by the Bank! What I am saying, Peter, may be wrong in theory. But commercially it’s sound. After all, I am poorer by the total sum paid by me for obtaining banking facilities and their extensions.”
“You may find it difficult to convince Freddie. But, Bang Bang, I take your point.”
To my relief Freddie, too, was impressed by the figures. They demonstrated that if the Bank accepted payment of some S$90,000 in full settlement, it would end up with a small profit. True, it would have been accrued through the imposition of penalty interest and charges. All in all, though, the Bank would not have lost money.