(Ipoh, Thursday): DAP MPs are seeking a meeting with EPF Chairman, Tan Sri Sallehuddin Mohamed to seek assurance that all EPF investment decisions in the financial crisis are in the best interest of the nine million EPF contributors and not to bail out any troubled stocks or companies.
There is growing concern among the workers in Malaysia about their provident fund in view of several highly controversial decisions and developments concerning the EPF, and the lack of accountability and transparency to satisfy the contributors that all EPF investment decisions are in the best interests of the EPF.
Some of these nagging concerns of the nine million EPF contributors are:
How much EPF funds had been used as part of the RM60 billion rescue fund to prop up the stock market as announced by Prime Minister Datuk Seri Dr Mahathir Mohamad, at a press conference during the UMNO General Assembly on Sept. 9 last year and the losses that have been incurred by EPF.
Mahathir had said that proceeds for the fund would come from the EPF, Khazanah Nasional Bhd, Pension Funds and Permodalan Nasional Bhd.
Although adverse public market reactions prevented the full deployment of the RM60 billion rescue fund, it is no secret that some billions of ringgit had been committed for this purpose, and the nine million EPF contributors are legitimately concerned as to the extent of drawdown of funds from the EPF for this purpose.
When Mahathir announced the RM60 billion share market rescue fund, the KLSE Composite Index was in the 820 point region. Today's kLSE CI opened trading at 536.68, or a loss of some 35 per cent.
If EPF funds had been deployed into the Kuala Lumpur stockmarket at the time, the nine million EPF contributors would be the losers. The EPF contributors are entitled to know the full details, why the EPF Investment Panel had agreed to be part of this RM60 billion rescue fund, and whether the rescue fund operation has finally been abandoned.
There are many other EPF investment decisions which calls for accountability and transparency.
One such important decision is with regard to EPF's investments in the UEM.
How much have EPF lost when it bought 65.91 million shares in UEM between Sept.30 and Oct. 31 last year, just before the outrageous RM2.34 billion acquisition 32.6 per cent or 722.9 million Renong shares. It has been estimated the losses would be in the region of RM400-500 million.
EPF should explain whether its purchase of the 65.91 million UEM shares was part of the strategy for UEM to bail out and prop up Renong - with disastrous results for the Kuala Lumpur stockmarket.
Yesterday, the share prices of UEM and Renong opened limit-down after having been suspended for 50 days, after the one-minute trading on the KLSE on Monday, where UEM reached the limit-down while Renong was on the verge of it before another suspension.
At the end of yesterday, Renong and United Engineers, tumbled 47 sen to 83 sen and 39 sen to RM1.88, respectively as investors gave cool reception to their cross holding strategy on a day when there was a strong showing of the KLSE CI which rose by 32.79 point or 6.5 per cent gain over Tuesday's finish.
What is the position of EPF at the UEM Extraordinary General Meeting on 14th February 1998 to approve or reject the acquisition of 32.6 per cent stake of Renong, and in particular:
(a) whether EPF agrees or objects to the participation of Renong, which owns 37.1 per cent equity in UEM, to vote on the question on whether to approve or reject the UEM acquisition of 32.6 per cent stake in Renong;
(b) whether EPF is satisfied that Tan Sri Halim Saad, the chief executive of Renong, has given adequate financial guarantee for his "put option", i.e. the option to UEM to dispose of its Renong (i.e. 722.9 million) shares to him at UEM's acquisition cost (ie. RM3.24 per share, or total about RM2,342 million) plus UEM's holding cost in two years.
The position of EPF at the UEM EGM on Feb. 14 must be one which has the support of the nine million EPF contributors. Before EPF takes a position at the UEM EGM on Feb. 14, it should consult with the EPF contributors, as the EPF investment managers are acting on behalf of the nine million contributors and have a duty to act in their best interest and should not allow extraneous considerations to intrude into their decision-making process.
Furthermore, EPF should clarify whether it is now considering buying over 20 per cent stake in PLUS for RM1.5 billion, to help UEM finance its RM2.34 billion equity purchase of 32.6 per cent stake in Renong Bhd.
I hope the EPF Chairman, Tan Sri Sallehuddin could meet DAP MPs well before the UEM EGM on Feb. 14, as the EPF must now act with greater accountability to the nine million EPF contributors, explain its proposed stand at the UEM EGM and listen to the views of the EPF contributors.
(15/1/98)