Parliament next month should refer Daim to the Committee of Privileges to inquire whether he had deliberately misled MPs when answering questions about the RM1.79 billion government buyback bail-out of Tajudin Ramli’s MAS stake

(Penang,  Thursday):  The Malaysian Airlines System (MAS) police report on January 9 and the police investigations into alleged million-ringgit  management irregularities at  the MAS  cargo division during   the tenure of  former MAS executive chairman and key shareholder Tan Sri Tajudin Ramli is  a most welcome  departure from the invariable past practice of government and  corporate cover-ups, especially  in government-owned or controlled companies, making Malaysia notorious as a country teeming with “heinous crimes without criminals” - starting with the infamous Bumiputra Malaysia Finance (BMF) scandal in the eighties. 

It has been reported that the alleged management irregularities centred on business arrangements between MAS and a Germany-based cargo handler controlled by Tajudin Ramli and focussed on contracts between MAS and ACL Advanced Cargo Logistic GmbH, a 60%-owned unit of Naluri Bhd., a listed Malaysian company in which Tajudin is the largest shareholder.  ACL operates a cargo facility in Hahn, Germany, that MAS in 1999 contracted to use as its global cargo hub.  

The management irregularities being investigated by the police can only be  the tip of an  iceberg as MAS has chalked up colossal debts of RM9.2 billion and accumulated losses of R2.5 billion, requiring repeated billion-ringgit bailouts at the public taxpayers’ expense - and the Malaysian public are entitled to demand a  full accountability as to how the national airline could end up as such a sick company, a national embarrassment and a burden on public coffers.  

It was reported that the management irregularities in the cargo division  were discovered in   an audit ordered by the government after taking control of MAS early last year  following  the scandalous RM1.79 billion buyback  bailout of Tajudin’s 29.09 per cent stake at RM8 a share when the market price was only RM3.68.

This raises the question as to why an audit was not conducted before the government’s  buyback  bailout of Tajudin’s MAS stake - which would have a very important bearing on the proper price of the government buyout. 

On March 21 last year,  the then Finance Minister, Tun Daim Zainuddin, gave a long and most unsatisfactory reply in Parliament during question time to justify the buy-back bailout of  Tajudin’s MAS stake which took place under his watch, but he  failed to address or  answer the  two most important questions, viz:

• Why no independent professional valuation was ever done when the government agreed to  pay Tajudin’s Naluri Bhd for the MAS stake at RM8  per share representing  a premium of  RM4.32 or 117 per cent over the closing market price at RM3.68 per share when the deal  was signed on 20th December 2000; and 
• Why rules for the bail-out of companies established by the National Economic Action Council  in the “National Economic Recovery Plan” was violated and  Tajudin was not only spared from having to “take his appropriate hair-cuts” but was given a bonanza at taxpayers’ expense to reward for his mismanagement of MAS by  being given  117% premium for the  MAS shares over the  market price, transforming it into a personal rescue for Tajudin instead of a public rescue for MAS.  

The  current police investigations into management irregularities in MASkargo Sdn. Bhd. have again brought to the fore  the  questions concerning  prudence, propriety, responsibility,  integrity, accountability and transparency of the decision to use RM1.79 billion public funds for the buy-back bailout of Tajudin’s MAS stake.  

Last month, the government announced a RM6.1 billion MAS restructuring exercise involving assets sale to enable the national carrier to retire some of its debts and provide RM820 million as working capital, which is just a creative way for a second round of government bailout for the national airline.

This was because the RM6.1 billion MAS restructuring exercise - which  involved the two key elements of   RM3.9 billion for the sale and leaseback of eight aircrafts and the disposal of properties worth RM2.2 billion - hinged on the government using public funds to take over the national airline’s debts and financing risks by  buying over the MAS aircrafts and properties. 

Had the government envisaged  when it decided on the first  RM1.79 billion bailout of MAS by relieving Tajudin of his MAS stake at more than double the market price, that to make MAS viable, the government would have to embark on a second round of bailout to the tune of RM6.1 billion to relieve MAS of its assets to enable it to fast-track recovery back to profitability?

When Parliament reconvenes next month, it should demand full accountability and transparency for the two rounds of government bailouts of MAS  within 12 months totalling  RM7.9 billion.

Firstly, it should censure the Public Accounts Committee for its  failure to convene hearings on the propriety of the government’s RM1.79 billion  buy-back bailout of Tajudin’s MAS stake, and in particular, why no independent valuation had been made before the decision was taken and why Tajudin got away with a bonanza instead of being forced to get a “hair-cut” for the government bailout.  

Secondly, former Finance Minister Tun  Daim Zainuddin should be referred to the Committee of Privileges for an inquiry to be held as  to  whether he had deliberately misled MPs when answering questions in the Dewan Rakyat  on March 21, 2001 about the RM1.79 billion government buyback bail-out of Tajudin Ramli’s MAS stake, particularly when he made the following statements and suggestions:  

• that no special considerations were given to Tajudin in the buying of MAS shares from Naluri.
• that the purchase was not to save Tajudin or Naluri but to save MAS.
• the suggestion that the RM8 per share for Tajudin’s MAS stake was the best price possible in the national interest, when he said that if the people and MPs “are not happy with this purchase decision, the Government can sell the shares back to Naluri”. 
• when without producing any supporting evidence, he popped up the figure of RM15 for the first time ever and  gave the impression that Tajudin was quite reasonable in wanting to release his MAS stake to the government at not less than RM15 and that there was foreign investor interest in MAS at this price - which was most  outrageous as  Tajudin had told a foreign news agency  when the deal was concluded that he was lucky in getting a  good price of RM8 a share  to  enable him to settle Naluri’s entire debt of RM927.4 million,  while the balance of RM864.5 million would  be for new business ventures but would  in the meantime be  placed  in banks to  earn RM24.2 million a year.  

The Parliamentary  Committee of Privileges should ask for documentary evidence to establish that there were  foreign investor interest in the MAS stake at RM15 per share - or even at RM8 or above - or Daim would have been  guilty of gross breach of privilege in misleading MPs with baseless information and untruths.  

On March 21 last year, Daim told Parliament: 

"With additional positive input like more effective management and solid support from the Government, the share value will be more than RM9, according to several international investment banking institutions and investment houses.”   

Daim has been proved to be grievously wrong, as the price of MAS share closed at RM3.74 yesterday - a far cry of his “more than RM9” despite a year of “more effective management and solid support from the Government”.  

Daim should be referred to the Committee of Privileges as no Cabinet Minister should be allowed to mislead Parliament with baseless information or untruths on matters of great public interest and importance as in the double government bailouts of the national airline  totalling RM7.9 billion.  

(21/2/2002)