Call on Mahathir to inform Parliament of the outcome of my police CBT  report in March last year on the KWAP for taking up 273.86 million of the unsubscribed Time dotCom IPO shares for RM903.74 million

Media Conference Statement
- launching the “No to 911, No to 929, Yes to 1957” People’s Awareness Campaign in Ipoh
by Lim Kit Siang

(Pasir  Pinji,  Wednesday)After the Cabinet meeting last Wednesday, the Prime Minister, Datuk Seri Dr. Mahathir agreed that there was some truth to the statement by the Minister in the Prime Minister’s Department, Datuk Dr. Rais Yatim that government enforcement agencies had sat on high-profile cases involving criminal breach of trust and other financial improprieties and he promised to “look into them”. 

Mahathir should present a White Paper in Parliament on June 17 listing  and explaining the status report of police investigations into such outstanding “high profile” cases which seemed to have gone nowhere -  whether Rais’ list of  21 outstanding high-profile cases or better still, a full list of the outcome of all reports which had been lodged against Cabinet Ministers and Deputy Ministers in the past decade.  

The White Paper on “Outstanding High-Profile Police Reports and Investigations” should also explain what has happened to my police report in March last year on the Pension Trust Fund (KWAP) taking up 273.86 million of the unsubscribed Time dotCom IPO shares for RM903.74 million as to whether there had been criminal breach of trust or misappropriation of public funds to protect the interests of public funds as well as the pensions and gratuity interests of 850,000 public servants.

Although more than a year has passed, the government has not given a satisfactory accounting as to why the KWAP,  the second largest  provident and pension fund  in the country after the Employees Provident Fund (EPF),  became a “Bail-out Fund” in March last year by  acquiring  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.

The Time dotCom IPO was an utter flop, with applications for only 142.86 million shares, or 25% of the total 571.7 million shares made available for public subscription. Excluding shares that were privately placed or subject of restricted offer for sale, individual investors applied for  only 29.738 million shares  or a mere pittance of 5.2% of the total number of  shares offered in the IPO. 

This leaves  the IPO with 428.83 million unsubscribed shares, for which KWAP took 63.9 per cent at the IPO price of RM3.30 per share - which works out to the lion’s share of 48 per cent of the entire Time domCom’s IPO of 571.7 million shares.

The use of public funds to bail out the Time dotCom 75% IPO shortfall paying the IPO price of RM3.30 when the market had been quite unanimous in expecting a sharp plunge of its price on its public listing tantamounts to criminal negligence, criminal breach of trust and criminal misapplication of public funds.

From the very first day of its public debut in the stock market on March 12, 2001, Time dotCom had been on a daily plunge, closing on the first day  at RM2.43, the second day at RM2.28, the third day at  RM2.27, the fourth day at RM2.17  and the fifth day at RM2.12.

As a result, KWAP had lost hundreds of millions of ringgit in the disastrous decision to  enable Renong and in particular Tan Sri Halim Saad  to laugh all the way to the bank cash-rich by RM900 million at the end of the Time dotCom IPO exercise.

Since its listing, Time dotCom never came near its IPO price of RM3.30. This year, for instance, the Kuala Lumpur stock exchange experienced a rebound, the highest price chalked up by this counter is RM2.67 as against the lowest price of RM2.20.  The closing price of Time dotCom on Monday was RM2.37, which works out to a loss of over RM250 million in the KWAP investment.

In acting as a “bailor-of-the-last-resort” for  the Time dotCom IPO, by acquiring 63.9% of the unsubscribed IPO portion of 273.86 million Time dotCom shares for
RM904 million on March 1, 2001, and incurring hundreds of millions of ringgit of  losses, KWAP had acted most imprudently and recklessly in disregard of its statutory charter to finance payments of pensions and gratuities for the 850,000 civil servants.

Under the Pension Trust Fund Act, the Fund is administered by trustees known as  the Pensions Trust Fund Council comprising as chairman the Secretary-General of the Ministry of Finance and nine other members including an officer each from the Treasury, Bank Negara, Attorney-General’s Chambers, Accountant-General’s Department, Public Services Department, the Employees Provident Fund and three other members with business or financial experience.

The Accountant-General is responsible for the day-to-day administration and management of the affairs of the Fund.

Article 16 of the Act stipulates that the Fund’s annual audited account and annual report shall be laid before Parliament, which KWAP had never complied.

This is a very serious “high profile” case In view of the highest-level representation of the trustees, with  the Secretary-General of the Finance Ministry and the Accountant-General both directly responsible for the management and investment decisions of the KWAP.

Rais Yatim said on Sunday that that information on the “hot cases” of criminal breach of trust would be made known to the public soon.

He should clarify whether my police report on the KWAP losing a quarter of a billion ringgit in recklessly investing in  Time dotCom is one of them.  


*Lim Kit Siang - DAP National Chairman