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Press Statement by Lim Guan Eng in Petaling Jaya on Wednesday, 16th July 2008: 

A Royal Commission of Inquiry into the RM 800 million ringgit MV Agusta scandal to determine how Proton lost RM 500 million when it could have earned RM 300 million  

DAP agrees with the call by former Prime Minister Tun Dr Mahathir Mohamad for a Royal Commission of Inquiry into the RM 800 million ringgit MV Agusta scandal to fully disclose mismanagement and financial misjudgments by Proton Holdings Bhd, action against those responsible and new measures to be implemented against such weaknesses. This follows the shocking announcement by Harley Davidson Inc two days ago that it will purchase Italian motorcycle manufacturer MV Agusta, once owned by Proton Holdings Bhd, for US$109 million (RM352 million), making the total sale proceeds of RM 800million.

Proton Holdings had bought MV Agusta in 2006 for RM368 million which it had then sold for only one euro (RM5) to an unknown company in Italy - Gevi SpA. In justifying the sale for one euro Proton had said here were no operational, engineering, and technological synergies between Agusta, the motorcycle maker, and Proton as a carmaker.

Proton bought a 57.75 percent stake in MV Agusta in December 2004 for 70 million euro (RM367.6 million), which was treated as goodwill and written off. However Proton lost more than RM 500 million in the sale for one euro because it had to assume the additional provisions relating to MV Agusta in the accounts of the Proton group for the financial year ended March 31, 2006, amounting to RM136.2 million.

After MV Agusta was sold off for one euro(RM5), Gevi SpA sold Husqvarna, a division of MV Agusta which manufactures scrambler sporty off-road motorcycles, to a German company BMW for 90 million euro (RM450 million). Now MV Agusta has been bought by Harley-Davidson Motor Cycles of the United States for RM350 million.

Public interest therefore requires a full accounting from Proton on how it went so terribly until BMW can pay RM450 million for one third of MV Augusta and Harley Davidson pay RM 352 million for the remaining stake which Proton sold only one euro at a loss of more than RM 500 million.Tun Dr Mahathir is correct to state that Proton appears to have lost approximately RM800 million by selling Agusta for only RM5 stating that the buyer of MV Agusta “invested one euro and made 160 million euro,".

Malaysians have a right to know what type of management can makes such a decision that allows other foreign companies to benefit at our expense. Instead of losing RM 500 million, Proton could have earned RM 300 million if it had sold to BMW and Harley-Davidson. Proton has refused to anwer despite Khazanah Malaysia, the Malaysian government's investment arm, holding about 42.74 %t of Proton.

Public interest requires full accountability and transparency. Unfortunately Proton’s refusal to give full disclosure leaves requires an establishment of a Royal Commission of Inquiry into this RM 800 million MV Agusta scandal in the interests of good corporate governance and social responsibility. Malaysians wants answers to this RM 800 million question.

* Lim Guan Eng, Penang Chief Minister & DAP Secretary-General