Anwar should invoke the powers under Section 11 of the EPF Act 1991 and issue a direction to the EPF Board to make quarterly public reports of its sales and purchases of shares in the stock market

(Petaling Jaya, Saturday): The Finance Minister, Datuk Seri Anwar Ibrahim should invoke the powers under Section 11 of the EPF Act 1991 and issue a direction to the EPF Board to make quarterly public reports of its sales and purchases of shares in the stock market.

Section 11 of the EPF Act 1991 reads:
 

“11. The Minister may give to the Board directions of a general nature not inconsistent with the provisions of this Act as to the exercise of the functions and powers of the Board and the Board shall give effect to those directions.”

Although it is conceded that sales and purchases of shares by the EPF often involved a huge amount of shares, and any immediate information of such EPF shares could influence the stock market, this cannot be an excuse to justify a policy violating the principles of accountability and transparency, particularly to the nine million EPF contributors as to how their RM130 billion EPF funds are being invested.

Nobody is suggesting that the EPF must immediately make public its purchase or sale of shares which would have the effect of influencing the stock market because of its large volumes, but there is no reason why there can be no periodic report of its purchase or sales of shares which would not have any effect on the stock market. In any event, EPF is required by law to make periodic filings of its purchase or sales of shares to the Kuala Lumpur Stock Exchange.

During the winding-up of the Parliamentary debate on the Royal Address, when Anwar was giving the stock reply that the EPF did not give details of its purchase or sales of shares so as to avoid influencing the stock market, I had pointed out that nobody was asking for immediate report of individual shares dealings, but periodic reports in keeping with the principles of accountability and transparency.

Anwar promised to look into the possibility of directing the EPF Board to make periodic reports to the nine million EPF contributors on its shares dealings and the Finance Minister should make a quick decision on the matter in view of widespread public concerns as to whether  EPF funds are being used to bail out troubled companies.

In response to my earlier speech in Parliament with regard to EPF purchases of UEM shares, Anwar said that EPF held 65.91 million EPF shares on Oct. 31 last year, that these shares were not “new purchase” but were acquired before the crisis.

I believe that Anwar has been misled to give a misleading reply to Parliament on the EPF acquisition of 65.9 million UEM shares by October 31.

According to the Edge business magazine, based on EPF’s filings with the KLSE,  EPF bought 62 million UEM shares managed by portfolio manager as on 30th September 1997 and bought another 3.84 million UEM shares in the open market from Oct. 2 to 31.

It is very clear that 3.84 million shares were bought in October last year, in the fourth month of the economic crisis.  What percentage of the 62 million UEM shares were bought between July and October 1997?

If Anwar could be misled by EPF to give misleading answers in Parliament, it is all the more imperative that there must be a mechanism where the nine million EPF contributors could hold the EPF Board to accountability and transparency in their investment of EPF monies in the stock market.

(11/4/98)