(Ipoh, Saturday): Since the shock announcement of the 6.7 per cent Employees Provident Fund (EPF) dividend for last year two weeks ago, the EPF Executive Chairman Tan Sri Sallehuddin Mohamed and the 19-member EPF Board had kept an obstinate silence, refusing to enlighten the nine million EPF contributors the full reasons for the lowest EPF dividend in 22 years, lower than 1985 when the GDP growth was -1 per cent but yet EPF could declare a dividend of 8.5 per cent.
The EPF Executive Chairman and the EPF Board turned completely deaf ears to the outrage of the EPF contributors, who want to know why the EPF dividend is such a historic low, when Amanah Saham Bumiputera could declare a dividend of 11.5 per cent for 1997, and when loan interest is going up as high as 14% in some banks and Fixed Deposit goes up as high as 11 per cent.
They also decline to set an example of good corporate governance by living up to the principles of openness, accountability and transparency and refuse to respond to important queries about EPF investment policy and decisions, in particular:
All in all, the EPF Executive Chairman and the EPF Board acted as if they are a law unto themselves, who are not accountable or responsible to the nine million EPF contributors whose RM130 billion provident fund they had been appointed to manage and be responsible.
The position of the EPF contributors seems to be worse than those of company shareholders who have recourse to ordinary general meetings or extraordinary general meetings to hold the company board of directors to account, but EPF contributors seems to be completely helpless in having no channel or avenue whatsoever to get the EPF Board and management to account for their stewardship of the RM130 billion EPF funds.
Since the shock announcement of the 6.7 per dividend by EPF, I had issued several statements reflecting the concerns and demands of the nine million EPF contributors for answers from the EPF, but they had been completely ignored.
DAP will consider the possibility of taking legal action to block EPF using EPF funds to bail out UEM, Sime Bank and KUB if EPF keeps an obstinate silence and refuses to be accountable and transparent on its investment policy and decisions concerning RM130 billion EPF funds.
The time has come for the EPF Executive Chairman and the EPF Board to be reminded that their salaries and allowances are paid from the EPF funds and that they are trustees and employees of the nine million EPF contributors, and not EPF bureaucrats who are answerable to no one.
The EPF Executive Chairman and EPF Board must devise a mechanism whereby the EPF contributors can give their inputs and express their concerns and receive appropriate responses.
For instance, the EPF contributors are entitled to know whether there was any conflict of interest when EPF purchased Sime Darby shares last year when the Sime Bank Chief Executive Officer at the time, Datuk Ismail Zakaria was a member of the EPF Investment Panel.
On 31st October 1997, EPF bought 128 million shares of Sime Darby. This was after the gravity of the Sime Bank had been fully revealed to top Sime Darby management as it was recently reported that a Price Waterhouse investigation into Sime Securities, the stockbroking arm of Sime Bank, had concluded on September 26 that Sime Securities "consistently breached" trading limits for single customers, with exposures reaching RM980 million in May when the approved trading limit was only RM150 million.
This resulted in Sime Darby reporting a group pre-tax loss of RM1.8 billion for the half year ended December 31, 1997, primarily because Sime Bank incurred an astounding pre-tax loss of RM1.57 billion in the six months to December 31 1997 which required it to have a fresh capital injection of RM1.2 billion.
When the EPF dividend of 6.7 per cent was first announced two weeks ago, trade unions leaders expressed mixed feelings, disappointment with the low dividend but happiness that "at least there is transparency".
I do not know how trade unions leaders could discover transparency in the EPF management and investment of EPF funds. In the last few days, however, MTUC has come out publicly to express opposition to the EPF proposal using RM1.5 billion of EPF funds to bail-out UEM by acquiring a reported 20 per cent stake in PLUS.
Trade union representatives on the EPF Board have claimed that "their hands are tied" as far as EPF�s investments are concerned; that EPF investments are handled by a special committee, the Investment Panel, where there is no trade union representative; and that the EPF Investment Panel is "separate and distinct from the Board" and that board members are only given a general report on the status of investments undertaken on a regular basis by the Investment Panel.
This is not the law and it is also against the assurance given by the government when Parliament debated the Employees Provident Fund Act 1991, when DAP MPs pressed for safeguards to ensure that workers� interests are protected in EPF investment decisions by the EPF Investment Panel.
The then Deputy Finance Minister, Datuk Abdul Ghani Othman made it very clear that under Section 18(2) of the EPF Act, "The Investment Panel shall be subject to such directions issued by the Board and approved by the Minister, from time to time."
It would appear that the trade union representatives on the EPF Board had misunderstood their powers and responsibilities as EPF Board members and their relationship with the EPF Investment Panel, resulting in their failure discharge their important duty to monitor investment decisions by the EPF Investment Panel through the issue of directions and review as to whether such directions had been adhered to. To make up for the failure to understand their true powers and responsibilities as EPF Board members and their relationship with the EPF Investment Panel, the five trade union representatives on EPF Board should demand an emergency board meeting to adopt a policy decision on three matters:
(21/3/98)