shocking announcement of a 5% dividend declared by the Employees Provident Fund (EPF) for last year, the lowest
for 34 years since 1967, has again highlighted the need for a new EPF policy of
accountability, transparency and good corporate governance to the 10.07
million EPF contributors on its RM186.95 billion investment decisions.
the years, the EPF Board had ignored DAP calls that the EPF should adopt the
best practices of good corporate governance especially in terms of
accountability and transparency, and it is most regrettable and deplorable that
after half a century, the EPF is not prepared to establish a
mechanism whereby the EPF Board could be accountable to the over 10
million EPF members with regard to its investment policy and decisions
and to allay the concerns of EPF
contributors about the safety, liquidity and yield of EPF funds.
year, EPF invested RM39.77 billion or 21.28% its total investments of RM186.95
billion in loans and bonds, RM42.58 billion or 22.78% in equities and RM34.97
billion or 18.70% in money market instruments.
These are astronomical sums and the list of the beneficiaries of huge
EPF loans, the full details of the stocks and shares and money market
instruments bought with EPF monies should be
made available to the public
in keeping with the highest standards of good corporate governance and the
principles of accountability and transparency.
involvement in the RM1.88 billion Time dotCom IPO fiasco last year is the latest
example as to why the investment decisions of the EPF Investment Panel, which at
present operates without any supervision even from the EPF Board, must be
subject to periodic scrutiny and review by a mechanism directly representing the
interests of the 10 million EPF members to ensure that no investments, whether
in stocks or loans, are made imprudently or as a result of improper influence.
the past, EPF had given dubious and
questionable loan facilities running into billions of ringgit to various
mega-projects and companies, like the billion
ringgit loans to Perwaja Trengganu Sdn. Bhd. and
the RM500 million loan in 1996 to
Time Telecommunications Holdings Bhd (renamed
Time dotCom). What lessons
have the EPF Board and Investment Panel drawn from these dubious
and questionable mega-loans?
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.
reply that I 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 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 was finally answerable to the EPF
has proved to be an empty assurance. The EPF contributors have all these years
been kept in the dark about the
EPF shares dealings, which came to RM42.58
billion last year. In fact, even the EPF Board members, in particular the
workers’ representatives, do not
know what are the counters which had been bought or sold by the Investment
should amend the EPF Act to require
the EPF Board to comply with a new
policy of accountability, transparency and
good corporate governance for its RM186.95 billion investment decisions
by periodically publishing a detailed report of its investments, whether in
loans and bonds, stocks and shares or money market instruments so that they
could be subject to public scrutiny.