by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Sunday, March 25, 1990:
50,398 KSM-Multi-Purpose Holdings Bhd. Investment Fund unitholders may lose as much as $150 million under the present MCA-approved formula
Yesterday, the MCA Headquarters issued a statement on behalf of the Pulau Ketam headman, Cheah Swee Kim, who purportedly spoke on behalf of about 200 KSM-Multi-Purpose Holdings Bhd. Investment Fund unitholders (KSM-MPHBIF), warning Lim Guan Eng and me that we have to bear all the consequences for any losses suffered by the unitholders for our ‘interference’ in the KSM-MPHBIF issue.
This is exactly the line which MCA leaders had been talking in their statements and comments to our queries about the MCA-approved formula for resolving the KSM-MPHBIF issue. They could not answer the queries that we have raised, but could only issue threats!
I do not know whether the statement issued by the MCA Headquarters on behalf of about 200 KSM-MPHBIF unitholders bear the signatures of all the 200-odd unitholders, and whether Cheah Swee Kim really had the authority to speak on behalf of the 200-odd unitholders in Pulau Ketam.
I also do not know whether the 200-odd Pulau Ketam unitholders understand the issue I am raising about the MCA-approved formula for the KSM-MPHBIF, although it is clear that Pulau Ketam headman Cheah Swee Kim does not understand at all.
MCA leaders trying to distort and confuse the KSM-MPHBIF issue
From the statements that have been made by MCA leaders, right from MCA President, Catuk Dr.Ling Liong Sik, downwards to Pulau Ketam headman Cheah Swee Kim yesterday, there is a deliberate attempt to confuse and distort the KSM-MPHBIF issue, and even to want to pin the blame for the collapse of KSM on the DAP!
I will like to explain this clearly through the following question-and-answer format:
1. Q: Is the DAP responsible for the collapse and receivership of the KSM? If not who is responsible?
A:The DAP never had any connection with the KSM, whether in its policy, management or administration. If anyone is to be held responsible for the gross mismanagement of KSM funds leading to the suffering and financial hardships and losses of the 250,000 KSM co-operative members and 166,000 depositors, it is finally the MCA national leadership as the KSM is a MCA project.
DAP does not oppose the share-for-share exchange of MPHB shares for Investment Units
2. Q:Is the DAP opposed to the scheme announced by the KSM receivers and approved by the MCA national leadership for the share-for-share exchange whereby one (1) ordinary share of MPHB would be exchange for every one Investment Unit.
A:No. in fact, this would have been done long ago, as the KSM-MPHBIF was conceived right from the beginning as a one-counter unit trust where each unit is equal to one share in MPHB.
3. Q:Why then are you and Lim Guan Eng raising queries and objections to the MCA leadership-approved formula for KSM-MPHBIF?
A: this is because under the MCA leadership-approved formula for KSM-MPHBIF, the 50,398 unitholders can lose as much as %150 million.
We are not apposed to the exchange of MPHB shares for KSM-MPHBIF units. Our difference with the MCA national leadership is what happens after the exchange.
Under the MCA leadership-approved formula, after the exchange of MPHB shares for the Investment Fund units, the 147.98 million MPHB shares (representing 19.7 per cent stake in MPHB) would be distributed to the 50,398 unitholders, who can decide whether to keep the shares or sell them on the open market.
If the 147.98 million MPHB shares are dumped on the market, it will depress the price of MPHB shares. At present, the price of MPHB is $1.48 a share. If the 147.98 million MPHB shares are dumped on a stock market which is on a downward cycle, it may drop to $1 a share or lower.
On the other hand, if the 19.7 per cent stake of 147.98 million MPHB shares are sold in one block, it could fetch a premium price. Kamunting paid $2.05 a share for MPHB when it outbid Hume for KSM’s 28.9 per cent controlling stake in MPHB 10 months ago. Ii had asked MCA President, Datuk Dr.Ling Liong Sik, to answer whether three locally-incorporated public-listed companies have shown interests to acquire the whole block of 19.7 per cent stake of MPHB shares at around $2 a share.
The difference between the 50,398 unitholders individually selling MPHB shares at a rock-bottom stock exchange at say $1 per share and selling the 147.98 million MPHB shares in one block at the premium price of $2 per share is the hefty loss of $150 million.
Is the fair and just that the 50,398 unitholders, whho had loyally invested in the Investment Fund for 10 years, to have to bear a loss of as high as $150 million under the formula approved by the MC National leadership?
I believe the majority of the 50,398 unitholders are ordinary and hard-working people in the small towns and new villages, particularly in Johore and Pahang, who have never entered the Stock Exchange and have not even seen a share certificate. They would have to depend on other people to advise them what to do with their MPHB shares distributed to them, and from past experience, they are likely to be cheated once more in the process.
DAP wants the unitholders to get the best possible deal and not to leave them without a single cent.
4. Q:Can your objections destroy the formula announced by the Receivers resulting in the 50,398 unitholders not getting a single cent?
A:No, for we are not objecting to a court order to exchange the MPHB shares for the Investment Fund units. What we want is to protect the best interests of the 50,398 unitholders so that after the share-for-share exchange, the unitholders get the best price for their investment.
The unitholders shouls not be denied the opportunity of selling their MPHB shares at the premium price of $2 a share through its sale as a block, instead of bearing a loss of $150 million if the price plummet to $1 per share when they retail them individually.
DAP wants the unitholders to get the best possible deal and not to leave them without a single cent!
5. Q:Why can’t you wait until the Receivers have got the Court Order to exchange the MPHB shares for the units before making your objections?
A:It will be too late. Under the present application made by the Receivers and approved by the MCA national leadership, when the Court grants the Order, the Receivers would be required by law to distribute the 147.98 million MPHB shares to the 50,398 unitholders for them to keep or sell on their own. The Receivers would have no legal power to sell the 147.98 million MPHB shares in one block to fetch a premium price. Furthermore, I have reliable information that very powerful forces both inside and outside the MCA are opposed to the sale of the 19.7 per cent stake of the MPHB shares in one block to fetch a premium price. These people do not place the interests of the unitholders above everything else.
Proposal to have a dialogue with the 200-odd unitholders from Pulau Ketam at MCA Headquarters on Tuesday at 3 p.m.
I am prepared to meet and have a dialogue with the 200-odd unitholders from Pulau Ketam about our stand on the KSM-MPHBIF, which is in the best interests of the unitholders.
As the MCA Headquarters is clearly acting on their behalf, I would suggest that the MCA Headquarters should arrange a dialogue for me to meet these 200 unitholders from Pulau Ketam. As I am going to the MCA Headquarters on Tuesday at 2 p.m. to discuss the Investment Fund with the MCA President, I would suggest that the MCA Headquarters arrange for a dialogue for me to meet the 200 unitholders from Pulau Ketam at the MCA Headquarters at 3 p.m. the same day.