Press Statement by Lim Guan Eng in Penang on
Monday, 15th December 2008:
Protect workers rights by cancelling the RM 5 billion injection of EPF
funds into Valuecap following the Federal Government’s failure to
convince EPF members that it will not be used to bail out
I have received many queries and expressions
of concern by workers from Penang about the security of the government
injecting RM 5 billion of Employees Provident Fund(EPF) into the
Valuecap Sdn Bhd investment fund to buy under-valued stocks. Deputy
Prime Minister Datuk Seri Najib Razak should reveal the full list of
shares bought from the RM5 billion EPF injection, to assure the public
that the monies will not be used to bail out politically connected
Najib’s failure to do so has only strengthened public demands that the
Federal Government proves its protection of workers rights by cancelling
the use of RM 5 billion of EPF funds for Valuecap Sdn Bhd. So far, the
public does not know whether the value of the shares bought by the RM 5
billion funds have increased.
There have been concerns that the RM5 billion injection from EPF was
meant to pay off Valuecap’s loans of approximately the same amount which
are due early next year to its shareholders. Valuecap owes RM5.1 billion
to Khazanah, the Pension Trust Fund Council (KWAP) and Permodalan
Nasional Berhad (PNB), but the government says the three institutions
have agreed to extend the loan.
Why should EPF funds be channelled to a company that can not even fully
pay up its loans but have to get an extension? Worse, EPF’s unaudited
investment income in the third quarter had fallen more than 60 per cent
from the second quarter will certainly put pressure on the government to
defend the move to lend the retirement fund’s money to Valuecap.
EPF said the drop was caused mainly by the fall in income from equities.
The investment income shrunk 60% to RM 2.06 billion during the third
quarter of this year compared to the same period last year. The lower
results were primarily due to provision of allowances amounting to RM
2.29 billion for diminution in value of equity investments due to the
deterioration in market value.
The public has a right to demand full accountability from EPF in
demanding answers as to what were the investments it made that required
RM 2.29 billion in write-offs? And also which companies were the main
culprits for such losses?
Such poor performance and 60% drop in investment income has raised
serious qustions about EPF’s ability to maintain dividends at the same
rate as last year of 5.8%. The EPF and its Investment Panel must
seriously address these issues because the poor performance has raised
doubts about its professionalism, expertise, management ability and
integrity in managing RM 332.41 billion in contributions and assets
belonging to nearly 6 million Malaysian workers
The poor performance of EPF’s investments has highlighted the dangers of
EPF’s RM5 billion loan to Valuecap, which is for the stated purpose of
investing in what the government says, are under-valued stocks. The
question is who determines what company to be invested and how much they
are under-valued is still hidden in a shroud of secrecy and wrapped in
mystery. Unless these questions are answered, not only will the
interests of workers be unprotected but the Federal government is not
complying with the CAT principles of good governance by practicing
compentency, accoutability and transparency.
Lim Guan Eng, DAP
Secretary-General & Penang Chief Minister