The Finance Minister, Tun Daim Zainuddin had admitted on Tuesday that KWAP acquired the lion’s share of 48 per cent of Time dotCom’s IPO issue of 571.7 million shares or 63.9% of the unsubscribed IPO portion of 428.83 million shares, ploughing some six per cent of its total funds by taking up 273.86 million shares of the unsubscribed portion of the Time dotCom IPO at the cost of M903.74 million.
Daim said KWAP subscribed for Time dotCom’s shares as a sub-underwriter during the company’s IPO because it was a sub-underwriter of the company’s IPO as it had expected the shares to be oversubscribed.
The Pensions Trust Fund Act 1991 (Act 454) under which KWAP was established does not empower the KWAP to use its funds to go into the business of underwriter or sub-underwriter for IPOs of shares of companies.
Section 10(1) of the Act sets out the investments which the Fund is
permitted to do:
“10. (1) The Investment Panel may invest money standing to the credit of the Fund -(a) on deposit in any bank, in or outside Malaysia, in any currency including the ringgit;
(b) in money market instruments, including treasury bills, bankers’ acceptances and certificates of deposit in any currency including the ringgit;
(c) in loans, on terms remunerative to the Fund, to the Federal Government or to the Government of any State in Malaysia;
(d) in loans, on terms remunerative to the Fund, to any public authority or corporation in which the Federal Government has an interest;
(e) in precious metals including gold, silver, platinum and palladium; and
(f) in any other manner authorised by the Minister.”
During the meeting between a DAP delegation and the EPF Chairman,
Tan Sri Abdul Halim Ali and top EPF officials on Wednesday, I had asked
whether EPF funds had ever been used to underwrite or sub-underwrite IPOs
of companies and the EPF Deputy Chief Executive Officer Mohd. Zabidi Dasuki
categorically replied in the negative, as he said that it would be unlawful
under the EPF to use EPF funds for such a business.
I have referred to the EPF Act 1991, which amended and re-enacted the EPF Act 1951 and was passed by Parliament in February 1991 in the same meeting which passed the Pensions Trust Fund Act 1991. It is clear that Section 10(1) of the Pensions Trust Fund on “Investment of the moneys of the Fund” is very akin to Section 26 of the EPF Act 1991 on “Investment of the Fund”.
Although Section 10(1)(f) of the Pensions Trust Fund empowers the KWAP funds to be invested “in any other manner authorised by the Minister”, it would be most shocking if the Finance Minister had directed the KWAP to illegally use funds to sub-underwrite the Time dotCom’s IPO.
It would be a scandal of the first magnitude if the KWAP had illegally
misused its funds to sub-underwrite Time dotCom’s IPO, for at least four
reasons:
Deputy Finance Minister, Datuk Shafie Mohd told Nanyang Siang Pao
in Parliament yesterday that the Finance Ministry has asked KWAP to present
a report on the colossal losses it has suffered as sub-underwriter for
the Time dotCom IPO.
It is most shocking that it has taken the Finance Ministry more than a week since the KWAP-Time dotCom IPO scandal had exploded publicly to ask for a report from KWAP. The top echelons of Finance Ministry seem to be infected by a lethargy and malaise which cannot public confidence that the finances of the country are in the best of hands.
The Finance Minister, Tun Daim Zainuddin, should present a White Paper in Parliament when it resumes next Tuesday on KWAP’s scandalous sub-underwriting 48% of the RM1.88 billion Time dotCom’s IPO issue and declare whether the opinion of the Attorney-General had been sought on the legality of the KWAP getting involved in the sub-underwriting business and suffering some RM300 million losses jeopardising the pensions and gratuities of 850,000 civil servants in the country.
The White Paper should also account for the involvement of the Employees Provident Fund and other government-linked funds and agencies in the RM1.88 billion Time dotCom IPO bailout scandal.
(23/3/2001)