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Former Malaysian goldsmith S. Shanmuga lost his house, two cars and went into debt to stave off the threats of illegal money lenders. But he is one of the lucky ones.

'I borrowed M$30,000 [HK$65,414] from the Ah Long [illegal money lender] to set up a small  jewellery outlet, but the business went bust and with exorbitant interest the loan ballooned to M$260,000 within a year,' said Mr Shanmuga, who now works as a salesman for a goldsmith.

'I could not pay and I begged the Ah Long for mercy but they showed none. One day they sprayed red paint on the front door of the shop and the house. That's when I knew it is either pay up or die.'

The story is all too familiar in Malaysia, where there is a national outcry over the  problem after three children died last week in a botched murder-suicide of a desperate debtor.

Police said Seah Wong Chong, 42, and his wife Kau Mei Lin, 38, fed rat poison to their sons, aged eight, 10 and 12, on Friday. The couple then tried to commit suicide by turning on the gas stove. But a neighbour called the police who rescued the parents.

The  boys died, but  the parents survived. The couple had to bury the boys on Monday and now face murder charges.

They  were reportedly driven to desperation after failing to settle a M$3,000 loan that had shot up to M$150,000 in two years.

Mr Shanmuga finally confessed to his wife, sold his two cars and  house, and borrowed from an uncle to settle the loan.

'He is one of the lucky ones,' said Michael Chong, a veteran politician who runs a help centre for people in trouble with Ah Longs.

'Ah Longs have even asked wives and daughters of borrowers to prostitute themselves to repay the money.  Sometimes borrowers simply commit suicide to escape the constant harassment.'

Interest rates of  legal microlenders vary from 24 per cent to 36 per cent,  depending on the amount borrowed.

But in the illegal sector compound interest rates surge with added penalties for late payments, and can end up being 150 per cent a year. Bank rates usually average 6 to 8 per cent.

It is easy to  find an Ah Long - their 'in-your-face' advertisements are everywhere, even direct to mobile phones.

A typical message reads: 'Want M$10,000? 24 hours approval. No guarantor needed. Call X.'

'Don't make that telephone call,' said Mr Chong who handles around 500 cases a year. 'It will only bring misery and even death.'

Mr Chong, who helps debtors by negotiating with Ah Longs or providing legal services, said the biggest borrowers were usually habitual gamblers who often run up huge debts.

Others are mostly hawkers, factory workers, government servants and odd-job workers.

'If they can't pay, the Ah Longs go after their parents,'  Federation of Malaysian Consumer Associations president N. Marimuthu said.

Parents often publicly disowned their children just to escape the harassment by the Ah Longs. 'Children are always targeted,' he said.

Despite the horror stories, increasing numbers of Malaysians, desperate for quick cash - to start a business, to marry or to bury a loved one - have no one but the Ah Longs to turn to.

The Ah Longs were really the frontline soldiers of well-organised money laundering  syndicates, said opposition politician Lim Guan Eng.

'The syndicates are well connected politically and are in cahoots with police. That's why very few people are charged with illegal money lending despite the horror stories,' Mr Lim said.

Illegal money lending is punishable with up to five years in prison and a M$200,000 fine, but few cases - only about 50 this year according to officials - are investigated. Culprits  were seldom charged because of a lack of evidence, they said.

'This activity is illegal ... they [Ah Longs] cannot exploit borrowers. It is against the law and our morals,'  Deputy Prime Minister Najib Razak  said.

But police said borrowers feared the Ah Longs and often suffered in silence.



Frantic debtors driven to suicide by tactics of illegal money lenders