Time to establish EPF Watchdog Panel and EPF Contributors Association to  protect the rights and interests of the ten  million EPF contributors and to demand EPF accountability and transparency

Media Conference Statement
- after meeting the EPF Chairman, Tan Sri Halim Ali at EPF Hqrs
by Lim Kit Siang

(Kuala Lumpur, Wednesday): The  time has come for the establishment of an EPF Watchdog Panel and an EPF Contributors’ Association should be formed to protect the rights and interests of the 9.7 million EPF contributors whose total funds are in the region of  RM181 billion.

The EPF Watchdog Panel, which should be represented from a wide cross-section of society and should have a lawyer, an accountant, an economist, representatives from trade unions, consumers, women, academia, pensioners, etc.  would have at least six broad terms of reference.

Firstly, to review the whole concept and structure  of the EPF which has outgrown from its modest beginnings in 1951 to provide some retirement security to workers earning low wages to be  one of the world’s largest provident funds with  RM181 billion funds - as to whether there is a need to restructure the whole EPF in view of the gargantuan funds as its command.

The EPF had given the lowest dividend in 25 years when it gave a 6 per cent dividend for last year - when the GDP growth was expected to be a robust 8.5  per cent. An overall review of the concept and structure of EPF is even more urgent in view of the very difficult times that will be faced by the EPF in the coming years with the economic slow-down.

Secondly, to study and review the laws applicable to the EPF to make them more attuned to the needs and aspirations of the times as well as the interests of the EPF contributors, as making the EPF more responsible, accountable and transparent.

Thirdly, examine and review the investment policy and decisions with regard to the EPF’s  stock market operations. In 2000,  EPF invested close to RM40  billion   in the shares market. The EPF contributors have a right to know why the EPF Investment Panel took certain decisions, whether purchase or sale of shares, as for instance its involvement in the  RM1.88 billion Time dotCom IPO fiasco.

Fourthly, scrutinise and review the EPF investment policy and decisions with regard to loans, which amounted to RM37.63  billion last year  to ensure that there are no loans given to cronies or as a result of imprudent judgements or  improper influence.

In the 1998   UMNO General Assembly, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad released lists of beneficiaries of privatisation contracts, shares and licences, which should be a normal course of public disclosure by the
government  as part of good governance rather than as an act in an intra-party feud in UMNO.

With this precedent, EPF should make public the  full list of the beneficiaries of its loans in the past five years, giving the names, amounts and the terms of the loans in accordance with the principles of accountability and transparency.

EPF had given loan facilities running into billions of ringgit to various mega-projects and companies, like the RM1.5 billion to the new Kuala Lumpur International Airport Bhd. (KLIAB) at 8 per cent interest per annum, the billion ringgit loans to Perwaja Trengganu Sdn. Bhd. and even to Khazanah National Bhd., and the recently-disclosed RM500 million loan in 1996  to Time  Telecommunications Holdings Bhd (renamed  Time dotCom) at nine per cent interest and the recently-revived  Bakun hydroelectric dam project.

Fifthly, to monitor and review the EPF’s billion-ringgit involvement in housing development in the building of low and medium cost houses and computer-ownership loan schemes. This is to ensure that EPF’s  involvement  in housing in the form of provision of financing facilities for housing project joint-ventures as well as acquisition of land to be developed by a third party, i.e. MBSB or a joint venture-company is not at the expense and interests of the ten  million EPF contributors. This also applies to the EPF computer ownership loan schemes.

Sixthly, to monitor and review the administration and operation of the EPF to ensure that members’ interests are safeguarded and that the workers’ rights and interests are furthered as intended by the EPF Act 1991.

In Parliament in April, 1998 I had proposed that  the EPF  periodically issue public reports of its sales and purchase of shares in the stock market, giving a list of the shares concerned.

The reply that I first received was  that EPF did not give details of its purchase or sale of shares so as to avoid influencing the stock market as EPF investments were  very substantial, but I had pointed out that nobody was asking for immediate report of proposed individual shares dealings, but periodic reports in keeping with the principles of accountability and transparency, and which would not influence the stock market at all.

The Finance Minister at the time   had promised to look into the possibility of directing the EPF Board to make periodic reports to the nine million EPF contributors on its shares dealings.

During the debate on the EPF Act 1991, DAP Members of Parliament had demanded that there should be  worker representatives on the seven-man Investment Panel, but the then Deputy Finance Minister, Datuk Ghani Othman assured Parliament that the workers’ interests would be protected as the Investment Panel is finally answerable to the EPF Board.

The 9.7 muillion  EPF contributors however have all these years been  kept in the dark about the shares dealings, which came to RM39.46 bil last year.

Even the EPF Board members do not know what are the counters which had been bought or sold by the Investment Panel.


*Lim Kit Siang - DAP National Chairman