Ten Questions about RM2.34 billion UEM-Renong deal, and if government cannot give satisfactory answers, DAP demands for full public inquiry to ascertain whether there had been violation of Banking and Financial Institutions Act, Companies Act and Securities Industry Act as well as other malpractices

---

Speech
- Labuan Offshore Securities Industry Bill
by Lim Kit Siang

---

(Dewan Rakyat, Thursday): The Prime Minister, Datuk Seri Dr. Mahathir Mohamad had been in the international forefront condemning "rogue speculators" and manipulators who have through their "immoral" actions destroyed the currencies and economies of developing and small natiions.

However, there seems to be very little government action or concern over the years against unscrupulous corporate figures who, either through inside information or connections with the powers-that-be, manipulated the Kuala Lumpur stock market to profiteer at the expense of the small investors.

There should not be any double standards where we rail against "manipulators" in the currency market while closing our eyes to the "manipulators" in the stock market.

This is why I am very disappointed that the Deputy Finance Minister, Datuk Dr. Affifudin Othman had not replied to my queries about the RM2.34 billion UEM-Renong deal, which had been the single biggest corporate catastrophe in recent times, precipitating the biggest crash in the Kuala Lumpur stock market in the five-month economic crisis, causing the KLSE Composite Index to fall by 19.58 per cent, from 667.29 to 536.62 points in three days, wiping out RM70 billion of the investors' funds in the stock exchange.

Yesterday, I had specifically raised five questions:

whether it is true that the RM2.34 billion UEM-Renong deal is actually a bail-out for Tan Sri Halim Saad in his US$800 million purchase of Philippines' National Steel Corporation (NSC) from Wing Tiek Holdings Bhd, through his proxy, Abdul Rashid Manaf, through the shell company Hong Kong-based Hottick Investment Ltd as well as take over the liabilities.

• whether it is true that four banks, namely Maybank, Rashid Hussein Bank, Bank Bumiputra and Bank of Commerce shared equally in the syndicated US$800 million loan, given to Abdul Rashid Manaf in December last year, guaranted by Halim with Renong shares;
• whether the four banks had breached the rule on single customer limit which, I understand is RM450 million for Maybank, RM250 million for Bank Bumiputra and Rashid Hussain Bank and RM150 million for Bank of Commerce - all exceeded by the four banks when they each give Abdul Rashid Manaf a loan of US$200 million (or RM500 million at the time).
• Whether it is true that the UEM-Renong deal was necessitated by the drastic fall in the price of Renong shares which were used as collateral for the personal guarantee by Halim Saad for the US$800 million loan, as in January, the price per share of Renong was RM4.58, but it fell to RM2.90 per share on 17th November, the date of the announcement of the UEM-Renong deal, which is a fall of 36.68 per cent. If the entire collateral is in Renong shares, it would mean a top up of 37 per cent of US$800 million, which comes to about US$300 million, and at current exchange rate, this would work out to over RM1 billion.
• whether these four banks were also the banks which have given UEM the RM2.34 bill loan for the acquisition of 723 million Renong shares.

Today, I want to pose five further questions:

• Whether it is true that Abdul Rashid Manaf, who is a lawyer practising in Kuala Lumpur, to whom the US$800 million loan was given, did not have the creditworthiness for such a colossal loan.
• Whether Halim Saad was the beneficial owner of the 32.6 per cent stake in Renong which was bought by UEM from eight nominees. According to Form29A dated Nov. 26 to Renong, a copy of which was furnished to KLSE and which was reported in the Sun of November 29, 1997, UEM said it bought eight tranches of Renong shares registered under various holders totalling 722.883 million shares on Nov. 17. The first tranche, for 340.2 million shares, was registered under BOC Nominees (Tempatan) Sdn. Bhd., the second for 285.715 million shares was registered under HLB Nominees (Tempatan) Sdn. Bhd while the third under Rashid & Lee Nominees (Tempatan) Sdn. Bhd. was for 67.407 million shares. Other blocks were 18.06 million shares (Lintasan Savana Sdn. Bhd), 9 million shares (RHB Nominees), 1.5 million shares (Multi-Purpose Bank Nominees), 1 million shares (BHLB Nominees) and 5 million shares registered under Pengkalan Nominees (Tempatan) Sdn. Bhd.
• Furthermore, if Halim Saad was the beneficial owner of the eight tranches of Renong shares totalling 722.883 shares, whether he had committed offences under the Companies Act for not filing a declaration as well as under the Code on Take-Over and Merger in failing to make a mandatory general offer to minority shareholders, as together with 23.3% personal stake in Renong (which he admitted in a press conference on November 19), he would have owned 55.9 per cent of Renong shares - well beyond the 33% trigger point.
• The government has been calling on banks to be prudent to tide over the banking crisis by giving priority in allocating credit to borrowers engaged in productive activities in high-technology, foreign exchange earnings industries such as tourism and export-oriented sectors of the economy. How can US$800 million loan to acquire a foreign firm or RM2.4 billion to enable UEM to acquire 32.6 per cent stake in Renong from the eight nominees come under such a category of prudential loans?
• If the four banks could breach the single customer limit by giving mega-loans which violate the government's guidelines on bank loans, what is the magnitude of the such unproductive mega-loans in the banking and financial sector in the country.

Parliament and the country are entitled to full answers to these ten questions about the UEM-Renong deal, and unless the government could be forthcoming with satisfactory answers, there should be a full public inquiry into the UEM-Renong deal, as well as to ascertain whether there had been violation of Banking and Financial Institutions Act, Companies Act and Securities Industry Act as well as other malpractices.

The UEM-Renong deal is a test case as to whether the government has the will to clean up malpractices in the corporate sector, including the banking and financial sector, or whether transparency and accountability would remain to be a major problem in the corporate and banking sector.

A United States-based risk consultancy has just come out with a report which is unfavourable to Malaysia. The Business Risk Service (Beri), which ranks profit opportunities for 50 major countries for next year and the next five years, has issued a report which tracked developments from July to mid-November to come up with its "profit opportunity" recommendations.

According to the November report of Beri, Singapore retained its position as the world�s second most profitable place to invest in for the next one to five years, despite the currency turmoil that has hit the region.

Beri gave Malaysia a score of 57, down from 59 in its previous report in July. The rating slipped one notch to 19th.

In its analysis of Malaysia, Beri noted that the Malaysian government had been slow to react to the crisis and that the Prime Minister, Datuk Seri Dr. Mahthir Mohamad�s "intemperate remarks" attacking foreign currency speculators and the "ill-judged measures to strengthen the collapsing stock market also undermined confidence abroad".

I know Barisan Nasional MPs hate to hear these reports, which is further evidence that the "denial syndrome" still dominates the thinking of Barisan Nasional leaders. It is such "denial syndrome" which would be the biggest obstacle to the success of any national economic recovery programme to ride out the current economic crisis.

(11/12/97)