Bankruptcy or prison: PSD scholars who break bonds without paying risk court action

KUALA LUMPUR: Scholarship recipients who owe the Public Service Department (PSD) more than RM30,000 as principal sum payable for breaching their contracts will be issued bankruptcy notices. The notice can also be issued to the defaulter’s guarantors, which in cases like these were usually the student’s parents or relatives.

For those who owe less than RM30,000, a judgment debtor summons will be issued.

These defaulters will have to pay the amount either in lump sums or instalments, depending on the court’s order If the defaulter fails to obey the court order, the person may be sent to prison.

Attorney-General’s Chambers civil division, execution and enforcement unit head Mohammad Al-Saifi Hashim said they were currently processing 195 such cases.

He said scholarship holders were contractually bonded with the PSD to perform certain duties, such as serving in a certain institution upon completing their sponsored studies.

“When we receive a case from the PSD where a student has breached the contract, we will bring the defaulter and or their guarantors to court to obtain a judgment.” Al-Saifi said from there, those owing more than RM30,000 would be issued bankruptcy notices. “Once the defaulter is declared bankrupt, the case will be forwarded to the Insolvency Department,” he told the New Straits Times yesterday.

Al-Saifi said a person who has been declared bankrupt would have many restrictions imposed on him. “For example, a bankrupt person cannot take further loans or go overseas without the permission of the depar tment’s director-general or the court.

“The director-general also has the power to sell off a bankrupt person’s property in order to settle their debts. ” Al-Saifi said those who failed to service their judgment debtor summons would be brought to a committal proceeding.

He said a committal proceeding might result in the defaulter being sent to prison.

Al-Saifi said so far no one had been sent to jail for breaching scholarship contracts or for defaulting on study loans.

He said, however, that the laws were already in place and enforcement would be exercised if the need arose.

Around 500 scholars had not fulfilled their contract with PSD since 2000 until last year.

PSD issued 4,000 scholarships this year, including 1,500 for overseas degree programmes.

Itwas reported earlier that most of those who were reluctant to return to uphold their end of the contract had studied in universities in Europe and the United States.

The scholarships for students studying there ranged from RM400,000 to RM1.2 million each.

The government over the past several years had allocated about RM1.2 billion for 1,500 overseas scholarships.