Why has MAS created 141 “half-millionaires” in its MSS exercise, paying them more than three times what they would have been  entitled if they had completed their services with the national airline

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Speech on 2006 Supplementary Estimates (2)
by Lim Kit Siang  
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(Parliament, Monday) : Deputy Transport Minister Douglas Unggah Embas yesterday  confirmed that a “golden handshake” of as high as RM699,000 was paid out in the MAS mutual separation exercise (MSS) costing RM495.5 million and that 23 employees were given “golden handshakes” from RM600,000 to RM700,000 each.

Answering the question of Barisan Nasional MP for Tanah Merah, Shaari Hassan, Douglas said the MSS payments to 2,622 MAS employees range from RM2,600 to RM699,000.

In response to my supplementary question, the Deputy Transport Minister gave the following breakdown in percentage terms for different categories of MSS payouts:

Less than RM100,000- 28.3%
Between RM100,000 – RM200,000 -29.8%
Between RM200,000 – RM300,000 -24.2%
Between RM300,000 – RM400,000 – 12.3%
Between RM400,000 – RM500,000 – 3.0%
Between RM500,000 – Rm600,000 – 1.5%
Between RM600,000 – RM700,000 – 0.9%

From these figures, we can deduce the breakdowns of the number of the MAS employees who were in the various categories of MSS payouts:

Less than RM100,000- 742
Between RM100,000 – RM200,000 -781
Between RM200,000 – RM300,000 -635
Between RM300,000 – RM400,000 – 323
Between RM400,000 – RM500,000 – 79
Between RM500,000 – RM600,000 – 39
Between RM600,000 – RM700,000 – 23

This works out to 141 of the MAS employees who are paid more than RM400,000 MSS, or some 5.4% of the 2622.

If we take the median figure for each category to compute, we will get a total sum of RM71.95 million payout or 5.4% of the RM495.5 million  to the 141 MAS employees, based on the following:

RM650,000 x 23 = RM14.95 million
RM550,000 x 39 = RM21.45 million
RM450,000 x 79 = RM35.55 million

Total for 141       = RM71.95 million 

Douglas admitted that there were MAS employees with less than 24 months’ service left with the national airline who were paid MSS as the MAS payout is capped at RM700,000 and not eligible to employees with less than 12 month’s service left with the national airline.

There were 410 appeals but they were all rejected as MAS had agreed with the MAS Employees Union not to entertain any appeals.

Why did the Union agree that there would be no review for those rejected, which is totally against the rules of natural justice.

I have received complaints that certain union officials were in cahoots with the MAS management in the MSS payout and that several union officials had very good deals in the MSS exercise?  Is this true?  I call for a list to be released during the reply on the MSS payouts to union officials to demonstrate that the entire MSS exercise had been completely aboveboard.

I have been told that under the MSS payout, successful MAS employees get three or more times the payment of what they would have been entitled to if  they  had completed their services with the national airline. 

If this applies to the 141 who were paid MSS above RM400,000, MAS would have saved RM48 million alone, or RM330 million out of the entire MSS exercise involving  RM495.5 million, if they were allowed to complete their terms of service.

MAS must prove that there is accountability, transparency and integrity in the MSS payouts especially as the RM495.5 million came from public funds to help MAS to cut costs to become a viable airline and not to give bonanzas or create scores of instant “half-millionaires”.

Parliament is entitled to know what is the highest ratio of MSS payment compared to what an employee would have been entitled if the rest of the period of service had been completed, especially with regard to the 141 who received MSS payout of more than RM400,000.

The original MAS plan was a RM850 million MSS exercise to axe 6,500 employees to downsize its  23,000-strong workforce to affordability levels comparable to profitable peers such as Singapore Airlines (14,000) and Cathay Pacific Airlines (15,000) and designed to save about RM340 million per year in labour costs.

In the MSS exercise,   only 2,622 of MAS employees out of   4,238 who opted were successful in their severance options – or  only 40 per cent of the targeted 6,500 staff to be downsized had  been achieved in the MSS.

This means that if the original target of downsizing 6,500 staff is to be carried out fully, the total bill would exceed RM1 billion.

Is the Treasury to be raided again for the full completion of the MSS exercise in MAS?

As the MAS MSS is funded from the public coffers, and the MAS turnaround is one of the flagship projects of the Prime Minister, Datuk Seri Abdullah Ahmad Badawi, the MAS management owes not only the MAS employees but also the Malaysian public high standards of accountability, transparency, integrity and good corporate governance.

This is further reinforced by two other reasons – MAS being 80% owned by the government and the Malaysian taxpayers having to repeatedly fund billion-ringgit bailouts of the national airline in the past 12 years since the scandal of the Tajudin Ramli “privatization” of the government stake in MAS.

Parliament and the people should be given a full and satisfactory answer to the issues on the MAS MSS which have been raised.  In particular, why has MAS created 141 “half-millionaires” in its MSS exercise, paying them more than three times what they would have been  entitled if they had completed their services with the national airline.

Transport Minister, Datuk Chan Kong Choy has expressed his unhappiness at the frequent flight delays which had become a bane in domestic air travel in recent months.

We have in fact returned to the shameful and scandalous situation more than a decade ago when MAS was derided as “Mana Ada System” where flight delays were  the rule than the exception.  For MAS,  the Transport Ministry must investigate whether one major cause of the current  frequent MAS flight delays, causing great inconvenience and even hardships to the public, is the demoralization and dissatisfaction of MAS staff over the MSS among other issues.

(28/08/2006)