(Petaling Jaya, Monday): The Employees Provident Fund should explain whether it had lost RM4 billion in the Kuala Lumpur Stock Exchange last year. It should make public a full list with details of the shares it had bought last year and its profit-and-loss position as at the end of the year.
Business Times today reported that the EPF, whose investible funds have reached RM130 billion, "may have incurred a loss from investments in shares for the first time last year".
It reported that as at last November, "the EPF is said to have incurred net paper losses of RM4 billion".
Business Times reported that the remaining 80 per cent of EPF inverstments - in Malaysian Government Securities (MGS), loans, money markets and property - "still earned satisfactory returns".
If the EPF had invested 20 per cent of its funds in shares, this would mean a figure of some RM26 billion.
EPF should be an example of accountability, transparency and integrity by giving the nine million contributors all available information about its investment decisions, particularly its investments of shares in the stock market.
Last Thursday, I had sought a meeting with the EPF Chairman, Tan Sri Sallehuddin Mohamed in connection with increasing concerns from the nine million EPF contributors about EPF investment decisions in the financial crisis and to seek an assurance that the best interest of the nine million EPF contributors would not be compromised to bail out any troubled stocks or companies.
I cannot understand why it is taking the EPF Chairman so long to decide whether he is going to meet DAP MPs or not, and I hope Tan Sri Sallehuddin would remember that he is still a public servant in his capacity as EPF chief executive.
EPF had been very active, buying shares in about 20 companies, following the announcement by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad in early April of a RM60 billion rescue fund to prop up the share prices by making use of the EPF, Khazanah Nasional Bhd, Pension Funds and Permodalan Nasional Bhd.
Although adverse public market reactions prevented the full deployment of the RM60 billion rescue fund, it is no secret that some billions of ringgit had been committed for this purpose, and the nine million EPF contributors are legitimately concerned as to the extent of drawdown of funds from the EPF for this purpose.
This is particularly so as when Mahathir announced the RM60 billion rescue fund, the KLSE Composite Index was in the 820 point region. Today's kLSE CI closed trading this morning at 586.72 , a loss of some 30 per cent.
Between Sept.30 and Oct. 31 last year, EPF bought 65.91 million shares in UEM. UEM traded between RM11.50 and RM7.90 during the month of October. It has been calculated that EPF would have forked out a total of RM645.53 million for these UEM shares and could have lost some RM500 million as a result of the plunge of the UEM share price after its proposed acquisition of 32.6 per cent stake of Renong.
In October, EPF also bought 5.91 million shares in financial group AMMB Holdings Bhd. During this time, AMMB's highest close was RM8.50 and its lowest, RM5.45. Today AMMB has dropped to RM2.70 at the end of this morning’s trading , or about 50 per cent off its average closing price in October - involving another multi-million losses for the EPF provident fund.
The EPF contributors are entitled to know the extent of deployment of EPF funds as part of the government’s RM60 billion rescue fund to prop up share prices, why the EPF Investment Panel had agreed to be part of this RM60 billion rescue fund, and whether the rescue fund operation has finally been abandoned.
There are many other EPF investment decisions which calls for accountability and transparency.
One such important decision is with regard to EPF's investments in the UEM.
EPF should explain whether its purchase of the 65.91 million UEM shares was part of the strategy for UEM to bail out and prop up Renong - with disastrous results for the Kuala Lumpur stockmarket.
What is the position of EPF at the UEM Extraordinary General Meeting on 14th February 1998 to approve or reject the acquisition of 32.6 per cent stake of Renong, and in particular:
(a) whether EPF agrees or objects to the participation of Renong, which owns 37.1 per cent equity in UEM, to vote on the question on whether to approve or reject the UEM acquisition of 32.6 per cent stake in Renong;
(b) whether EPF is satisfied that Tan Sri Halim Saad, the chief executive of Renong, has given adequate financial guarantee for his "put option", i.e. the option to UEM to dispose of its Renong (i.e. 722.9 million) shares to him at UEM's acquisition cost (ie. RM3.24 per share, or total about RM2,342 million) plus UEM's holding cost in two years.
The position of EPF at the UEM EGM on Feb. 14 must be one which has the support of the nine million EPF contributors. Before EPF takes a position at the UEM EGM on Feb. 14, it should consult with the EPF contributors, as the EPF investment managers are acting on behalf of the nine million contributors and have a duty to act in their best interest and should not allow extraneous considerations to intrude into their decision-making process.
Furthermore, EPF should clarify whether it is now considering buying over 20 per cent stake in PLUS for RM1.5 billion, to help UEM finance its RM2.34 billion equity purchase of 32.6 per cent stake in Renong Bhd.