Tuesday 19 January 2010

Misplaced sympathy for loan-shark borrowers?

It is easy enough to jump on the bandwagon and call for heavier penalties against loan sharks. No one wants to be on the side of the Ah Longs and their paint-splashing, fire-starting scare tactics.

2 comments:

Guanyu said...

Misplaced sympathy for loan-shark borrowers?

Attach a social stigma to borrowing from loan sharks

By Selina Lum
18 January 2010

It is easy enough to jump on the bandwagon and call for heavier penalties against loan sharks. No one wants to be on the side of the Ah Longs and their paint-splashing, fire-starting scare tactics.

So go ahead, fine ‘em, jail ‘em and cane ‘em.

But while there is no sympathy for these blood-suckers, there appears to be plenty for the people who give the

loan sharks their business - borrowers. Is this sympathy misplaced?

The Moneylenders Act has been amended three times - in 2005, 2008 and last week. Each time, the cordon gets wider, ringing in kingpins, middlemen and runners, people who sell loan sharks SIM cards and those who ferry runners around to carry out the dirty work.

Where the borrowers are concerned, however, the steps have been milder, limited to whether they assist loan sharks in their operations.

So a debtor coerced into using his telephone line, selling his SIM card or letting his bank account be used to transfer funds will be liable to the same harsh penalties as the loan sharks and their helpers. But as for being a borrower himself, that appears to be okay.

Some steps have been taken to punish borrowers, especially if their actions jeopardise the innocent. For example, if the home of an innocent person is vandalised because his address had been given to the loan shark in an effort by the defaulting debtor to save his own skin, that debtor will be penalised.

The holes, however, have still not been plugged. What about debtors who move out of their homes but continue to use their old addresses, leaving the new occupiers at the mercy of loan sharks?

The solution: Those who update their home addresses in their identity cards will have to prove that they actually live there.

What about those who rent rooms, then up and go, leaving the unwitting landlord to face the loan shark?

The solution: Those who have tenants in their flats will have to register their tenant’s particulars with the Housing Board, or face a $3,000 fine.

The upshot seems to be that the innocent have to go the extra mile to protect themselves from the illegal moneylending business, even as their money, in the form of service and conservancy charges to town councils, are diverted towards repairing the damage the runners inflict. Put in this light, it seems clear that the problem should be tackled at the source - by criminalising illegal borrowing.

In fact, this mantra is repeated every time Parliament debates loan-sharking. On Tuesday, MP Christopher de Souza cited as examples, the Misuse of Drugs Act, which penalises both drug user and seller, and the Prevention of Corruption Act, which throws the book at both bribe-giver and bribe-taker.

Another MP, Mr Sin Boon Ann, noted that if borrowing was criminalised, the Attorney-General’s Chambers could always exercise its discretion on whether to prosecute offenders or not.

But other MPs weighed in, citing the desperation of borrowers who cannot go to legitimate lenders because they have no income or collateral to put up. There is also the oft-heard argument that some people might be too ashamed to turn to family or friends for a loan.

These are arguments repeated time and again, even as the loan-shark problem gets bigger and bigger, with 18,645 cases last year. For now, the Government has decided that it is not time to take the bold step of making illegal borrowing a crime.

One concern is that criminalising borrowing may drive the loan-shark problem deeper underground, deterring borrowers from reporting instances of harassment. This is a little odd given that the loan sharks do not seem too shy about advertising their presence in permanent marker.

Guanyu said...

Another is the old chestnut about those who borrow from loan sharks because of a genuine financial need. Anecdotal evidence, however, suggests that such people are in the minority. The loan sharks’ market comprises mainly chronic gamblers hoping to recoup their losses or land the big one.

If it is a question of saving face in legitimate cases of need, there are channels already in place, such as the Community Development Councils and family service centres, which would surely guarantee the financially stricken some level of privacy.

Perhaps, it is more of a stigma against accepting handouts. Then MPs’ suggestions of micro-loan schemes should be looked into. But sadly, the credit cooperatives and clan associations appear cool to the idea. Let us hope they will be moved to change their minds.

For the thrift and loan societies, some attempt could be made to widen their membership net. As for clan associations, especially those with deep pockets, they could think about lending money instead of doling it out.

Will the recent changes make it more difficult for loan sharks to operate? It seems they are always a step ahead of the law, using technology and devising ingenious ways to elude apprehension.

There is now the added lure of big bucks, with the impending opening of the two integrated casino-resorts. A $100 entrance fee is unlikely to deter a chronic gambler.

Picture Ah Long rubbing his hands in glee. Not pretty.

Here’s a suggestion: The fight has to be taken to the grassroots where the loan sharks operate.

Spend some money blanketing coffee shops with information about the penalties for loan-sharking. Put up photographs of runners and middlemen. Make them re-paint walls in the communities they terrorised.

As for borrowers, deride and shame those who borrow from loan sharks. Portray them as weak and without a care for their family and neighbours. If borrowing cannot be criminalised, it should at least be stigmatised.

After, say, a year or so of such concerted community effort, it would be time to re-visit the issue. By then, the impact of casinos on loan-sharking activities could be factored in.

If the problem still persists, let’s bite the bullet and go after debtors. After all, this old adage remains good advice: Neither a borrower nor a lender be.