The Enron collapse is not only the biggest business failure in United States history but probably its biggest corporate and political fraud as well.
Once America’s seventh largest company, the energy conglomerate with sales last year of US$101 billion folded in the space of two months as its share price plunged from US$85 to barely 50 cents.
It has been described as “a collapse with a rapacious and bitter human dimension” as thousands of Enron employees, obliged to keep their pension funds in company stock, saw their retirement funds wiped out - although executives of the company cashed in shares and options to the tune of an alleged US$1.1 billion in the 18 months before Enron filed for bankruptcy protection on 2nd December last year.
What is even more shocking is the revelation that Arthur Andersen, the firm of accountants that audited Enron’s books, had admitted that thousands of documents relating to the audit had been destroyed by its employees - a behaviour unheard of in the accounting world, where records are everything.
But Enron is also a political scandal as it was a “cash machine” for American politicians, foremost among them the nation’s political first family - led by George Bush Senior and Junior, the 41st and 43rd Presidents of America.
The developing Enron corporate scandal should make Malaysians think and worry as to what is hidden away in the numerous local corporate scandals, requiring for instance the RM6.1 billion MAS second government bail-out and the RM3.2 billion biggest corporate pardon for Halim Saad’s RM3.2 billion UEM “put option” debt and whether they should be exposed to the full glare of publicity and public scrutiny to expose the dark secrets of gross abuses of power, criminal breach of trust and misappropiration of public funds.
Members of Parliament, whether Barisan Nasional, Barisan Alternative and DAP should learn from the lessons of the Enron scandal in the United States and demand a full inquiry into the RM6.1 billion MAS second bailout and the RM3.2 billion biggest corporate pardon for Halim Saad’s RM3.2 billion UEM “put option” debt in the way the Enron corporate scandal is being probed in the United States.
A study of the recently-announced RM6.1 billion MAS restructuring proposals involving assets sale to enable the national carrier to retire some of its debts and provide RM820 million as working capital to fast track its recovery back to profitability showed that it is simply a second government bail-out - a year after the outrageous RM1.79 billion government buy-back of 29.09 per cent stake in MAS to bailout Tan Sri Tajudin Ramli’s Naluri Bhd. at the sucker’s price of RM8 per share, which was more than double the market price of RM3.68 when the deal was signed on 20th December 2000.
The RM6.1 billion MAS restructuring exercise would involve two important
elements:
As the RM6.1 billion for the purchase of the eight MAS aircrafts
and the various MAS properties would come from the government, in the form
of Ministry of Finance Incorporated special purpose vehicles (SPV),
this would mean a double government bail-out of MAS after the RM1.8 billion
bail-out in December 2000 to buy back Tajudin’s MAS stake to enable Tajudin
to laugh all the way to the bank at the taxpayers’ expense!
This is probably the first case in the world of a double government bail-out of a troubled or failed company - paying RM1.8 billion at more than double the market price to become the largest shareholder of MAS and then one year later, committing another RM6.1 billion to inject cash into the national carrier by using various government vehicles to buy over some of the MAS assets.
This is a very creative double bail-out of MAS, but is it in the interests of the Malaysian taxpayers?
If the government is to inject RM6.1 billion to bail-out MAS, why should it throw away RM1.79 billion in December 2000 to reward Tajudin to relieve him of his MAS stake at more than double the market price?
Before the end of last year, there was another great corporate scandal - the biggest corporate pardon in Malaaysian history when RM3.2 billion UEM “put option” debt of Tan Sri Halim Saad was arbitrarily and unaccountably cancelled!
The cancellation of the RM3.2 billion UEM "put option" debt raised many disturbing questions.
In the past, “bail-outs” whether through "buying assets" or to "inject" finance into corporations were meant for companies but never for an individual - as in the case of the biggest corporate pardon for Halim Saad which in the final analysis, involved the cancellation of a private debt arising from a private commercial contract.
The cancellation in no manner helped United Engineers Malaysia Bhd (UEM) or Renong. It helped Halim --- pure and simple. This outrageous use of public funds is both immoral and a breach of the public trust.
Also in question is whether the Board of Directors of UEM and Renong, which are partly owned by the the Minister of Finance Incorporated via Khazanah, (its investment arm), had discharged their fiduciary duty to their shareholders in cancelling Halim Saad’s RM3.2 billion “put option” and private debt!
Have the Directors, who are subject to the provisions of current Company law, the right to cancel Halim Saad’s RM3.2 billion debt obligation without first making provision for a write-off. Or will the Ministry of Finance, through another “creative bail-out”, have to finally bear responsiblity for the biggest corporate pardon for an individual in Malaysian history from the taxpayers’ monies?
The RM6.1 billion MAS second government bail-out and the RM3.2 billion biggest corporate pardon for Halim Saad’s RM3.2 billion UEM “put option” debt are proof that good governance, accountability and integrity remain major problems although Tun Daim Zainuddin has stepped down as Finance Minister.
DAP calls for Royal Commission of Inquiry into the RM6.1 billion MAS second bailout and the RM3.2 billion biggest corporate pardon for Halim Saad’s RM3.2 billion UEM “put option” debt in the way US Congress and other US authorities are probing the Enron corporate scandal.
(15/1/2002)