Five proposals to Halim Ali  for the restoration of public confidence in EPF

Media  Statement
by Lim Kit Siang

(Petaling Jaya, Thursday): Yesterday, a  DAP delegation comprising  Secretary-General Kerk Kim Hock (MP for Kota Melaka), DAP National Vice Chairman Dr. Tan Seng Giaw (Kepong)  and DAP National Organising Secretary Tan Kok Wai (MP for Cheras) and myself met the Employees Provident Fund (EPF) Chairman, Tan Sri Abdul Halim Ali, Deputy Chief Executive Officer Mohd. Zabidi Dasuki and head of investment department, Hasni Harun for an hour to discuss the  concerns of the 9.7 million EPF contributors  about (i) the lowest dividend in 25 years when EPF declared 6% as dividend for last year; (ii) need for greater accountability and transparency by EPF; (iii) a mechanism for the 9.7 million EPF members to interact with the EPF Board and Management on their concerns and views on EPF investments and policies; and (iv) EPF’s participation in the RM1.88 billion Time dotCom initial public offering (IPO) fiasco.

The meeting, which was held in a  very cordial and frank atmosphere, gave  both parties the opportunity to understand each other’s views although we agreed to disagree on  a number of  issues we discussed.

Basically, we made five proposals to Halim Ali for the restoration of public confidence in the EPF, namely:

Halim undertook to raise at the EPF Board the question of a new EPF policy on accountability and transparency.

The EPF Board should give top priority to the task of restoring confidence of the 9.7 million EPF contributors.

Even Utusan Malaysia has today carried an editorial entitled “Kembalikan Keyakinan Pencarum KWSP” opening with the statement:

“Isu Kumpulan Wang Simpanan Pekerja (KWSP) telah menjadi sasaran kritikan pelbagai pihak terutama para pencarumnya bukanlah sesuatu yang baru.  Tetapi kritikan itu menjadi lebih hebat sejak kebelakangan ini apabila timbul dakwaan bahawa agensi dana persaraan itu menjadi penyelemat kepada beberapa syarikat awam yantg bermasalah.

“Semua golongan pekerja dan kakitangan awam tiba-tiba menjadi lebih prihatin kepada KWSP akhir-akhir ini apabila ia mengumumkan dividend 6.8 peratus iaitu yang paling rendah sejak 25 tahun lalu.”

Apart from the carelessness of the  Utusan Malaysia editorial writer in referring to  6.8% dividend when it should be 6% dividend, the editorial’s concern about the need for greater EPF transparency so as not to raise doubts about the actions of the EPF management should be given special consideration by the EPF Board at its next meeting, apart from the views of the DAP delegation on the same subject  yesterday.

I am glad that the Utusan Malaysia editorial has come around to support the proposal, which I made in Parliament in April 1998, that the EPF should make public the list of its share dealings in the stock exchange to enhance EPF accountability and transparency.

Last year, EPF invested RM39.46 billion in equity, and in the past five years, EPF had been one of the “movers and shakers” of the stock market.   EPF contributors are entitled to know the  full list of the shares which the EPF Investment Panel had bought with their EPF monies so that they could give their inputs about these equity investments.

At the meeting with Halim, we communicated our concerns that workers’ representatives are not represented on the EPF Investment Panel and the six trade union representatives on the EPF Board have not been regularly  briefed about the share dealings of the EPF Investment Panel.

Last year, EPF invested RM37.63 billion in loans and bonds.   These are astronomical sums and the list of the beneficiaries of huge  EPF loans should be made public in keeping with the highest standards of good corporate governance.

At the meeting, we called for a mechanism whereby the 9.7 million EPF contributors or their representatives could convey their concerns and interact with the EPF Board and Management, as the EPF Board structure formulated five decades ago could not adequately cope with the demands of accountability, transparency and good corporate governance in the 21 century.

We suggested that an EPF Contributors’ Association should be set up to protect the rights and interests of the 9.7 million EPF contributors and that the EPF Board should be prepared to give it official recognition and support its operations.

Moves are now afoot to establish the EPF Contributors Association to help the EPF Board to be more accountable and transparent.

At the meeting yesterday, we asked Halim to consider ways to rescind EPF’s participation in the RM1.88 billion Time dotCom IPO fiasco.

EPF  has 81.6 million Time dotCom shares or 3.22% in the company because of (I) conversion of half of RM500 million loan to 78.7 million Time dotCom shares in the IPO at RM3.30 per share, representing  3.11% of the total shareholdings of the company and (ii) a further 2.85 million shares from a restricted offer for sale of shares.

The EPF must give a satisfactory explanation as to why it was necessary for EPF to convert half the loan to equity in the Time dotCom IPO when the entire IPO issue was fully underwritten, and why the EPF decided to take up the restricted offer of an additional 2.85 million shares at RM3.30, incurring an instant loss of over RM90 million.


*Lim Kit Siang - DAP National Chairman