Speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, in the Dewan Rakyat on the Ministry of Finance during the debate of the committee stage of the second set of 1993 supplementary estimates on Thursday, 29th July 1993
Has the Securities Commission the power to take action against prominent UMNO personalities who are involved in corporate fraud in the securities market?
Since March 1 this year, the Securities Commission, with overall responsibility for the securities and futures industry, including supervision of exchanges, clearing houses and central depositories, had been fully operational.
On June 22, 1993, when declaring open three events – the Malaysian Capital Growth Opportunities Exposition, the Fifth Annual PACAP Finance Conference and the Seminar Pelaburan Saham – the Finance Minister, Datuk Seri Anwar Ibrahim said that the Securities Commission is a “very clear signal that we are committed to the development and growth of the capital market, efficiency and innovation, about an orderly, fair and transparent, marketplace.”
However, the Securities Commission has not been able to establish public confidence by proving that it is serious about ensuring that, the Kuala Lumpur Stock Market is not a casino used by politically well-connected corporate predators could fleece ordinary investors with impunity, especially in the Union Paper Holdings Bhd. Shares scandal.
The Deputy Finance Minister, Datuk Ghani Othman, has failed to give a satisfactory reply to my criticisms of the actions taken by the Kuala Lumpur Stock Exchange and the Securities Commission in the Union Paper shares scam, where the regulatory agencies had not only ‘bolted the stable doors when the horses have fled’, but intervened in such a fashion as to do injustice to the small investors while benefitting the corporate crooks, like the short-sellers.
Examples are the announcement that Union Paper shares had been ‘cornered’ and suspending its trading on June 29, when it. was the big ‘short-sellers’ who had been cornered – as proved by the widespread nation-wide complaints on July 9 when large numbers of small investors that they could not sell into the ‘buying-in’ market on July 9; the fixing of the buying-in price at RM15.20 and the manner the ‘buying-in’ was conducted on July 9; the attitude of the KLSE Chairman, Nik Din Nik Mohamad who seems to be more concerned in defending the ‘short-sellers’ than the ordinary investors.
Up to now, the KLSE and the Securities Commission have failed to reveal the names of the 12 ‘short-sellers’, nor has any action been taken against these “short-sellers’ and the manipulators of the Union Paper shares scandal.
Nobody is convinced that the Securities Commission has the power to take action against prominent UMNO personalities who are involved in corporate fraud in the securities market, as in the Union Paper shares scam.
This is why I had called for a public inquiry into the KLSE and the Securities Commission as to whether they are protecting the interests of the small investors or certain UMNO interests involved in the Union Paper shares scandal.
I hope the Deputy Finance Minister will be able to give a more satisfactory reply on the Union Paper shares scandal.
What steps have the Securities Commission taken to ensure that scandals like Pan Electric scandal, missing scrip scandal,, Pahang Con and Federal Cable fake shares scandal do not recur
In this connection, the investing public are entitled to know what steps the Securities Commission have taken to ensure that, scandals the Pan Electric scandal, missing scrips scandal, the Pahang Consolidated and Federal Cable fake shares scandal, and most recently, the Union Paper scandal would not recur.
DAP MPs, for instance, had repeatedly asked in, the last Parliament what actions were being taken by the regulatory authorities in connection with the Federal Cable fake shares scandal. In the last meeting of the last Parliament, Xv>€> were informed that, the Police had completed investigations into the Federal Cable fake shares scandal and that the matter had been referred to the Attorney-General for action.
Nothing has been heard of the police investigations into the Federal Cable fake shares scandal. What has happened? Has the whole matter been hushed up? Is this the example that would guide the investigations of the Securities Commission? I hope the Deputy Finance Minister can also give a definitive answer on what the authorities have done on the Federal Cable fake shares scandal.
What is the Securities Commission’s stand on the series of complex corporate moves involving MRCB
As the highest regulatory authority in the securities market, what is the Securities Commission’s stand on the series of complex corporate moves involving:
(i) the RM800 million Management Buy-Out {MBO of New Straits Times and TV3 by four journalists aligned to the Finance Minister, Datuk Seri Anwar Ibrahim, involving Realmild (M) Sdn.Bhd. and the Malaysian Resources Corp. Bhd. (MRCB).;
(ii)
(iii) Whether it is true that Hong Leong group or more specifically, Hong Leong Credit, funded this RMS00 million MBO, would eventually in exchange get the big fish – the MUI Bank;
(iv)
(iii) To resolve its massive debt problem, MRCB announced another complex corporate deal to acquire Sikap Power Sdn. Bhd. and Malakoff Bhd; and Malakoff, in turn, buying Sikap Power’s 75 per cent interest in Sikap Energy Ventures (OEV) – violating Sections 67 and 132G of the Companies Act.
It is clear that to help the cashflow problems arising from having to service its massive loans, several projects involve little capital outlay but with quick returns in new growth areas such as power, telecommunications, engineering and gas, have to be pumped into MRCB to generate the much-needed cash flow for it to finance the MBO.
This is why MRCB had been allowed to take part in two Independent Power Producer projects – acquiring 80 per cent, stake in Sikap power which is licensed to build the RM3.5 billion 1,300-megawatt power plant in Lumut, Perak as well as taking a 30 per cent stake in a consortium led by Sime Darby to build a 450-megawatt Port Dickson power plant.
Another relevant, question is how one company could be allowed to be involved in two IPP operations.
Finally, I wish to refer to the introduction of scripless trading, which involves at present some 10 companies. Although the authorities have announced that scripless trading would be fully introduced in two year’s time, it is likely to take longer – probably years,
The most important question however is what steps the Securities Commission has taken to prevent the hijacking of shares from the Central Depository System as white collar crimes can easily take place. Under the scripless system, every shareholder has a secret code number and those who have access to this information could easily key-in and transact transfers.
Has the Securities Commission set up a task force to take preventive measures against such a new white collar crime in Malaysia?