September Parliament should adopt a motion to reject the EPF 2002 Annual Report to demand dialogue and not monologue and greater EPF accountability, transparency and good corporate governance
by Lim Kit Siang
(Petaling Jaya, Saturday): In the Employees Provident Fund’s first “Statement on Corporate Governance” in its 2002 Annual Report, it said:
Parliament, when it reconvenes in September should discharge its responsibility to protect the best interests of the 10.3 million EPF contributors by adopting a motion to . reject the EPF 2002 Annual Report to demand greater accountability, transparency and good corporate governance and to register the desire of the 10.3 million EPF contributors for a dialogue and not monologue on the EPF’s stewardship of their RM200 billion EPF funds.
There are many reasons to justify an unprecedented Parliamentary motion to reject the 2002 EPF Annual Report.
Parliament and the nation are firstly entitled to a satisfactory explanation for the most improper, irregular, and “fishy” circumstances in the recent tabling of the EPF 2002 Annual Report in both Houses of Parliament.
Although the Dewan Rakyat Order Paper on June 25, 2003 listed the EPF 2002 Annual Report as one of the “statute papers” presented on that day, Members of Parliament never received copies of the report either on that day or the next day, the last day of the June meeting of Dewan Rakyat. They only got it by Pos Laju some two weeks later!
The failure to physically table the EPF 2002 Annual Report in the Dewan Rakyat on June 25, 2003 could not be the result of an oversight, or the report would have been distributed to MPs on the last day of the Dewan Rakyat meeting on June 26.
That there was something very strange, unusual and even “fishy” about the so-called “tabling” of the EPF 2002 Report in Parliament was reinforced by the failure to table it on the first day of the meeting of the Dewan Negara which met after the Dewan Rakyat, from July 1 to 8, 2003. It was tabled in the Dewan Negara only on the last sitting on July 8.
One gets the impression that the whole object of the “fishy” circumstances in the tabling of the EPF 2002 Annual Report in both Houses Parliament was to avoid parliamentary and media attention, accountability and debate while complying with the requirement of having it tabled in Parliament.
But the strongest reason for a parliamentary rejection of the EPF 2002 Annual Report is its failure to give full, proper and acceptable explanations for EPF declaring the lowest dividend in 40 years at 4.25 per cent for last year.
As stated by the EPF Chairman Tan Sri Abdul Halim bin Ali in the Annual Report, in terms of asset size, the EPF ranks 28th in the world and 7th in Asia. Compared to the biggest pension fund in the world, the Californian Public Employees Pension Fund (Calpers) which has USD143.9 billion worth of assets, the EPF has USD54.5 billion which is one-third the size of Calpers.
Instead of claiming that “The success of accumulating such a huge fund is indeed an achievement”, Halim should have explained why EPF is not prepared to comply with the most basic principles of good governance as making public the full list of equities for whose “paper losses” EPF had to make provision for RM2.14 billion last year, without which the EPF could have declared a 5.43 per cent dividend for last year.
In the five years from 1998 to 2002, EPF declared an astronomical total provision of over RM5 billion, which could have been used to declare higher dividends for the EPF every year for the past five years. The provisions for “paper losses” for equities, which became “real losses” for the EPF contributors in the past five years were:
1998 - RM 453
Just like its full-page EPF advertorial in all the language print media on Monday, the EPF claim in its 2002 Annual Report that it has “always maintained a high level of transparency” could not withstand public scrutiny as it had refused to answer a whole array of queries, such as the following:
It is clear that the EPF 2002 Annual Report made an attempt to respond to the last two points, which I had raised at the DAP forum on “Lowest Dividend in 40 years – what is the future of EPF” in Kuala Lumpur on 28th April 2002 to which the EPF Chairman was invited but which he declined to participate.
The EPF Chief Executive Officer, Datuk Azlan Zainol adverted to both these points in his “Review of Operation” in the EPF 2002 Annual Report.
Firstly, he claimed that the cost rationalistion of the operations of the EPF last year had resulted in cost savings of RM20 million – i.e. RM330 million or 3.11 per cent of the income compared to RM350 million or 3.63 per cent of the previous year.
This is not a satisfactory explanation to my original query as to why the annual operating costs of EPF shot up 80 per cent from RM194 million in 1998 to RM350 million in 2001, when the EPF dividend had plunged by over 26 per cent from 6.8 per cent to 5 per cent for this period, as illustrated by the following data:
Year Dividend Rate Operating Expenditure
6.70 194.8 million
On improved EPF quality of service, I had at the April 28 forum drawn attention to the 2001 EPF Report promise to EPF contributors that they would be able to check their account balance online from the EPF website latest by the end of last year, which had not been fulfilled.
This promise was repeated by Azlan in the 2002 Annual Report who said that the interactive EPF website for EPF members to check their account balance, current contributions paid by their employers, withdrawal application status, etc. would be launched by the middle of 2003 – which is another deadline missed!
MPs, regardless of political party, should unite to reject the EPF 2002 Annual Report in September Parliament to send a clear and unmistakable message that the 10.3 million EPF contributors want a dialogue and not a monologue and greater EPF accountability, transparency and good governance.
* Lim Kit Siang, DAP National Chairman