When the Singapore police nailed four suspected members of a loan-sharking syndicate on July 21, they seized the usual paraphernalia: cellphones and prepaid SIM cards as well as time-honored tools of intimidation, including paint to be splashed on the doors of bad debtors and super-glue to lock them inside their apartments.
The government has blamed this crime wave on the deteriorating economic climate. GDP fell 9.5 percent in the first quarter of 2009 and 3.5 percent in the second. The tough times for the loan sharks’s prey, the police say, are exacerbated by the fact that many of the younger debtors end up joining the syndicates as runners when they can’t afford to repay their loans.
The terms are steep, normally a usurious 40 percent to 50 percent per month if the luckless borrowers can meet the agreed payments. They are the lucky ones. Defaulters are met by a demand that the borrower pay the full amount as a penalty charge. The annual rate can thus easily top 1,000 percent.
While loan sharks — or Ah Longs as they are known — have long been a ubiquitous presence on Singapore’s sprawling public housing estates, this gang is one of a growing number taking bully-boy tactics to the next level.
Police said one of the members had been sending bullets to borrowers in an attempt to scare them into paying up. The syndicate, which police said was responsible for more than 600 harassment cases, was said to have also been terrorizing the wider community by starting fires outside the apartments of bad debtors.
Cynthia Phua, an MP from the ruling People’s Action Party, said the level of harassment in her constituency in eastern Singapore had surged.
“It is also more violent,” she said. “We are seeing things we did not see before, like petrol bombs and innocent neighbors being harassed.”
In a city-state that proudly boasts one of the lowest crime rates in Asia, such violence was once rare. But, worryingly for the government and the vast majority of the population who live in the public housing estates, it is becoming increasingly widespread as the economic crisis forces more people to turn to loan sharks.
Although overall crime fell slightly in the first half of the year, the number of reported cases of loan sharking and harassment more than doubled to 9,395, according to the Singapore Police Force. The number of people arrested for such offenses doubled to 417, with a sharp rise in the number of young people getting involved in loan shark gangs. One in five of those arrested for loan sharking and intimidation was aged 19 or under, compared with just one in 10 in the first half of last year.
While Singapore’s loan sharks rarely resort to the sort of extreme tactics practiced by their counterparts in Macau and Hong Kong — kidnapping and sometimes murder, or pouring gasoline under the door of someone in arrears and lighting it — they are well-versed in the language of intimidation and fear. The Singapore Ah Longs spray graffiti on the walls of common areas identifying bad debtors, threaten their family members and vandalize their cars and apartments. Although they target the debtors and their families, they spread fear throughout the community, not least because the junior loan shark runners often go after the wrong people.
Earlier this year, Home Minister Wong Kan Seng said he was considering making it a criminal offense to borrow from unlicensed money lenders. However, social workers and organizations that help victims of loan shark harassment are largely opposed to this approach, insisting that it would criminalize the desperate and the needy, who only borrow from Ah Longs because they have no other sources of credit, and drive the problem further underground.
“Most of the people who turn to loan sharks are from low-income families and they usually borrow small amounts,” often as little as 200 Singapore dollars ($138), says Ravi Philemon, a voluntary social worker and the executive director of a charity for the mentally disabled. “You shouldn’t criminalize people who have no choice but to turn to the loan sharks to buy food and clothes for their families.”
Philemon argues that if the law were passed it would prevent victims of loan shark harassment from going to the police for fear that they themselves would be arrested.
Philemon believes that the root cause of the problem is a lack of sources of unsecured credit for less well-off Singaporeans. He cites the case of one family that wanted to set up a food stall and had no other alternative than to borrow from a loan shark. W hen their business faced cash-flow problems, they defaulted on their repayments and the amount they owed spiraled from 20,000 Singapore dollars to 90,000 dollars. They were eventually forced to sell their flat earlier this year and now live in a tent in a park.
“We need to make loans available to lower-income families and if the banks won’t lend at the moment then the government should,” he argues.