Speech (Part 2) by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, at the DAP leadership conference held at Wentworth Kuala Lumpur Hotel, Kuala Lumpur on Sunday, July 18, 1993 at 10 a.m.
DAP to move a motion of urgent definite public importance in Parliament tomorrow to demand Royal Commission of Inquiry into the Union Paper Holdings Bhd. Scandal
I will move a motion of urgent definite public importance in Parliament when it meets tomorrow to demand a Royal Commission of Inquiry into the Union Paper Holdings Bhd. scandal which proved that the Kuala Lumpur Stock Exchange is still a casino and not an orderly, fair and transparent stock market.
On 22nd June 1993, when simultaneously declaring open three functions, the Malaysian Capital Growth Opportunities Exposition, the Fifth Annual Pacific Basin Capital Markets (PACAP) Finance Conference and Share Investment, Seminar, the Finance Minister, Dat.uk Seri Anwar Ibrahim said that the establishment of the Securities Commission is “a very clear signal” that the Government is committed to the development of an “orderly, fair and transparent” marketplace in the stock exchange.
He also spoke of the need to “force upon listed companies…the discipline of listing and responsibility to public shareholders”. He stressed that “Most of all, the system must not place the public, investor at a disadvantage”.
In less than a week of this speech, which was to send the clear message for a disciplined and. fair capital market, the Union Paper scandal and the ensuing chaos in the stock market proved that all the fine sentiments expressed by the Finance Minister were just meaningless words.
I am seeking an adjournment, of the Dewan Rakyat tomorrow to discuss the Union Paper shares scandal on a motion of urgent, definite public importance because public confidence in the Kuala Lumpur stock exchange as an orderly, fair and transparent marketplace had been gravely shaken with the Union Paper Holdings Sdn.Bhd. scandal, where a loss paper, toilet paper and wrapping paper processing outfit, skyrocketted from a low of RM1.73 early this year to RM23 on June 14, and then crashed down to RM4.72 on 25th June 1993;
The wild gyrations in the share prices of Union Paper Holdings Bhd. in three weeks until its suspension by the Kuala Lumpur Stock Exchange has reinforced national and international image that the KLSE is just a casino where well-connected predators are seen as being able to fleece ordinary investors with impunity;
Parliament should also immediately debate the handling of the Union Paper Holdings Sdn. Bhd. scam by the Kuala Lumpur Stock Exchange, which is a scandal by itself.
It could not be denied that the net effect of the KLSE’s dubious handling of the Union Paper shares scandal, as in arbitrarily declaring that UPHB had been ‘cornered’ and suspending trading in the share, and instituting a buying-in at RM15.20, the chief beneficiaries are the ‘short-sellers’ who are left off cheaply while the small investors are made to bear the brunt, of the losses.
Impossible that KLSE Chairman not familiar with the chief ‘default-seller’ who is a very prominent ‘Tan Sri’
Parliament should also censure the astonishing and self-contradictory two-hour press conference by the KLSE Executive Chairman, Nik Mohamad Din Nik Yusuff last Tuesday where he refused to acknowledge that, massive illegal short-selling had been the cause of the Union Paper shares scandal.
What is worse, he became an apologist for the “12 shortists” who did not deliver 3.32 million Union Paper shares by trying to find loop-holes in the Securities Industry Act which made short-selling an offence, and refused to divulge the identities of these 12 ‘default sellers’.
He even claimed that he was not familiar with the 12’default sellers’ when the chief defaulter, who sold more than a million shares, is a very prominent “Tan Sri’ whom it is impossible that the KLSE Chairman did not know.
It is clear from the Union Paper shares scandal that the regulators, namely the KLSE, the Securities Commission, the Registrar of Companies and the Finance Ministry have failed to develop the KLSE in an orderly, fair and transparent, manner.
Parliament has a duty to take steps to restore public confidence in the KLSE both nationally and internationally as in establishing a Royal Commission of Inquiry to investigate into all the causes of the Union Paper shares scandal, the inadequacies of the Securities Industry Act as well as the regulatory agencies.
Furthermore, critical to restoring public confidence in the KLSE is that the short-sellers linked to the Union Paper scandal must be brought to justice, regardless of their political connections, as short-selling is illegal under the law.
The names of the 12 ‘defaulting sellers’ must also be made public as they caused the suspension of Union Paper which precipitated a collapse of the stock market, causing untold losses and hardships to the small investors’.