Press Conference Statement by Parliamentary Opposition Leader, DAP Secretary-General, MP for Tanjung, Lim Kit Siang, in DAP PJ Hqrs on Wednesday, April 1, 1987 at 3p.m.
DAP to hold a public protest meeting of EPF contribution on May Day to demand that – Government stop using the $24 billion EPF funds for shares speculation and for greater accountability over EPF funds.
In the past several years, the country has been inundated with one financial scandal after another, and not a single one has as yet been satisfactorily explained to the people.
One of these scandals is the way the workers’ monies in the EPF had been managed. The EPF, in the past few years, had forgotten its responsibility as the custodian of the social security needs of the nation’s work force, and had even got itself involved in operations in the stock exchange and shares speculation which are inimical to the interest of the five million EPF contributors.
What is even more reprehensible is that the EPF board and officials had forgotten that they are trustees of the Malaysian work-force in refusing to give the public and the workers a strict accounting of how they had managed the $24 billion funds of the five million EPF contributors.
The following are some of the improper, irregular or even illegal conduct of the EPF board, EPF investment Panel or the Government in the management of the EPF funds:
1. EPF Makuwasa scandal:
Between June 1984 and March 1985, EPF Investment Panel invested $12.8 million in 13 share counters, after which the EPF sold to 70 percent of it to a $2 company, Makuwasa Securities Sdn. Bhd., for going profits of $10 million which rightfully belonged to the 5 million EPF contributors;
2. Non-trustee stock investments:
As pointed out by the Auditor-General in the 1985 EPF Annual Report, the EPF infringed Section 4(2) (b) of the 1951 EPF Act by investing $50.79 million in non-trustee stocks – $18.86 million in 1985 alone.
The Deputy Chairman of the EPF Investment Panel is none other than the Attorney-General, Tan Sri Abu Talib. As I asked in Parliament last month, is Tan Sri Abu Talib the Attorney-General going to take legal action against Tan Sri Abu Talib the Deputy Chairman of the EPF Investment Panel for violation of the 1951 EPF Act?
I had asked in Parliament for a full list of these non-trustee stocks to be made available to the 5 million EPF contributors, but the EPF and Government have refused to do so up to now. The Malaysian work force must ask the EPF and the Government what have they to hide if they are so frightened to make public the full list of non-trustee stocks illegally invested by the EPF Investment Panel?
3. Concentration of EPF shares investments in eight companies
According to the 1985 EPF Report, EPF’s $517.52 million investment in equity holdings
Was concentrated in eight out of 86 companies, especially Cycle & Carriage with $81.76 million in 1985, which sustained ‘paper loss’ of $23.6 million. What is the criteria for the EPF concentrating its equity investments in these eight companies, especially Cycle & Carriage, and what is the full list of investments in all the 86 companies?
4. Mysterious $30 million EPF contribution to a Treasury Fund to jack up to share prices
EPF contributed $30 million to a special Treasury Fund to jack up share prices, which is clearly against the spirit and letter of the EPF Act as well as its purpose as the custodian of social security of the Malaysian workforce. When did the EPF become the custodian of the Malaysian shares market?
Whe 1951 EPF Act does not give any powers for the EPF to make any such contribution for such an operation to jack up share prices.
What has happened to this $30 million EPF contribution to this special Treasury fund to jack up shares prices; which also received contribution from other bodies like Socso, Sports Toto, Bank Simpanan Nasional. I understand that this special Treasury fund, operated by an Investment Co-ordinating Committee (ICC) had bought over 3.5 billion shares in Raleigh at about $4 per share (as compared to $1.87 per share yesterday) and over a quarter million shares of Grand United at about $2 per share (which is now worthless as it had been one of the counters suspended from the stock market after the Pan El crisis).
The Investment Co-ordinating Committee had used EPF monies to also invest in non-trustee stocks. Why is the EPF and the Minister of Finance, Daim Zainuddin, whose Ministry operated the Investment Co-ordinating Committee, not prepared to give a full accounting of the $30 million EPF contribution to the operation in 1985 to jack up shares prices, and the net result of such an operation to the five million EPF contributors?
5. Illegal placement of EPF funds
The 1985 EPF Report disclosed that EPF received from “Interest from Funds held by bankers and brokers” the sum of $576.279. Section 4 of the 1951 EPF Act provides that EPF monies shall be deposited in Bank Negara or in a bank licensed under Banking Act 1973 or any other financial institution duly licensed and approved by the Finance Minister. There is no legal provision for the EPF monies to deposit its funds with brokers and to receiver interest!
6. Workers shut out from effective decision-making over EPF monies
The $24 billion EPF funds belong to the 5 million EPF contributors, yet they are shut out from all effective and important decision-making over EPF monies.
Although workers’ representatives sit on the EPF Board, they are excluded from the powerful EPF Investment Panel which had shown that it could operate without reference to the EPF Board, and in many ways, more important and powerful than the EPF Board.
The time has come for the Malaysian work force to regain meaningful control over the future of their EPF funds, and to make it clear to the Government that it should stop using the $24 billion EPF funds for shares speculation, and to demand for greater accountability
over EPF funds.
The DAP’s EPF Contributors’ Protest Meeting on May Day would serve as a focal point for workers to demand that the EPF Board and EPF Investment Panel act as custodian of workers’ social security interest, rather than as custodian of share prices in the stock market.
The DAP will propose the formation of a EPF Contributors’ Action Committee at the May Day EPF Contributors’ Protest Meeting to demand that the EPF Board and the EPF Investment Panel should fully account to the contributors for their decisions and actions.
The DAP will send out invitations to all trade unions to send representatives to the 1987
May Day EPF Contributors’ Protest Meeting.
3. Call on Bank Negara to make a clear statement whether it had revised KOSATU’s net asset value from 30 cents to 10 cents and that the worst co-ops like KOSATU, SAKAAP, FORTISS would not be making out any second repayment at all
Last Thursday, in a wide-ranging press conference on the occasion of the public release of Bank Negara’s annual report for 1986, Bank Negara Governor Datuk Jaffar Hussein, was also asked questions about the $1.5 billion co-operative finance scandal.
He had however no good news for the depositors with the 13 deposit-taking co-operatives (DTCs) which had yet to finalise arrangements with the financial institutions appointed to look into the take-over of their assets and liabilities.
What is the most disturbing is that reports quoting Bank Negara Sources after last Thursday’s press conference by the Bank Negara Governor said:
1. That while the Government White Paper had estimated that even the weakest of the DTCs had a net asset backing of 30 cents per dollar of deposit in August last year, Bank Negara has revised this figure downwards and the net asset backing of some cases has gone as low as 10 cents;
2. That although all the DTCs depositors had received initial payments of at least 10 per cent around the Chinese New Year period, there may be no second payment for depositors with some DTCs.
I call on Bank Negara Governor, Datuk Jaffar Hussein, to make a clear statement whether Bank Negara had revised KOSATU’s net asset value from 30 cents to 10 cents, and to list all co-operatives whose net-asset value had been revised downwards as compared to the White Paper estimate. Bank Negara Governor should also clarify whether depositors of the worst co-operatives like the 52,566 depositors in KOSATU, 23,119 depositors of SAKAAP, the 18,400 depositors of FORTISS, 23,593 depositors of GUNONG EMAS, among others, would not be getting any second repayment at all?
In reply to my parliamentary question last month, Finance Minister, Daim Zainuddin, said the second payment for co-operative depositors is expected in January next year. It is significant he did not say that all depositors will get a second repayment, or what is the quantum of the repayment – whether it would be the same as January 1987, or very much less.
The 588,000 co-operative depositors, in particular coming from KOSATU, FORTISS, SAKAAP AND GUNONG EMAS, must demand clear-out statement from Bank Negara, the receivers and the Government, and unite to press the important demand in the Gopeng Declaration of Co-operative Depositors that “there should be a minimum of six-monthly pay-outs for at least 10 per cent each to the 588,000 co-operative depositors, the second payment to be made by June this year.”
The Business Time report of 30th Match 1987 that receivers appointed to the co-operatives regard their duty as merely to liquidate the co-operatives is most disturbing. One receiver was quoted as saying: “We are not appointed to manage the DTCs. We are in the business of receiving on the one hand and giving out on the other, which effectively involves liquidating the assets. We are not entrepreneurs or managers.”
This is why the 588,000 depositors, if they are to get just and fair solution, must not leave the matter entirely in the hands of the receivers or even Bank Negara, but must demand that the Government and Cabinet bear full responsibility and not wash its hands of its responsibilities to the depositors.