DAP will lead 9.7 million EPF contributors to appear before the over 50 EPF offices in the country to demand accountability on EPF's role in the RM439 million lossses over the bailout of Time dotCom IPO shortfall and the lowest EPF dividend of 6 per cent last year in 25 years

---

Media Conference Statement
by Lim Kit Siang

---

Unfortunately, the country is often bombarded with outrageous examples of corporate misgovernance, whether the RM1.79 billion government bailout of Tan Sri Tajudin Ramli's 29.09 per cent of MAS stake through Naluri and the RM6 billion bailout for the two LRT companies, STAR and PUTRA - and the latest outrage is the use of government-linked funds and agencies to bailout the RM1.145 billion Time dotCom initial public offering (IPO) 75% undersubscription shortfall.

It is most unfortunate that the Employees Provident Fund (EPF), which manages a fund of the size of RM181 billion and according to EPF Chairman, Tan Sri Abdul Halim Ali, "one of the largest in the world", is in the forefront as an example of bad corporate governance as illustrated by his refusal to comply with the most elementary rules of accountability and
transparency to give information on  EPF's involvement in the RM1.415 billion bailout for Time dotCom IPO shortfall.

Yesterday, I had lodged a police report in Kuala Lumpur based on the The Sun report on Monday that EPF, Kumpulan Wang Amanah Pencen (KWAP) and Pengurusan Danaharta Nasional Bhd were  believed to have taken up the RM1.415 billion
unsubscribed public portion of the Time dotCom Bhd IPO - which would mean that these three agencies would have suffered an astronomical loss of RM439 million in the first  two days of the public debut of Time dotCom as a result of the 31 per cent crash of its IPO price.

The use of public funds to bail out the Time dotCom 75% IPO shortfall paying the IPO price of RM3.30 when the market had been quite unanimous in expecting a sharp plunge of its price on its public listing - losing to the tune of RM439 million as a result of a 31 per cent price crash in two days - tantamounts to criminal breach of trust and criminal misapplication of public funds.

If EPF had participated in the bailout of the Time dotCom IPO, then the EPF would be doing its worst for the 9.7 million  EPF contributors instead of "EPF doing its best for contributors" which was the heading of a letter from the EPF Chairman, Tan Sri Abdul Halim Ali which was published in the Sun on Monday claiming that the EPF's "decision to invest in any project, company or fund, has always been based on the criteria of security, liquidity and yield".

Halim would have to explain how from the three considerations of "security, liquidity and yield",  EPF can justify taking up the unsubscribed public portion of Time dotCom IPO, when EPF can now buy the Time dotCom shares in the market at 31 per cent discount of the IPO price?

If EPF had not participated in the bailout by government-linked funds and agencies of the RM1.415 billion Time dotCom IPO as not to partake in the staggering losses of RM439 million in two days of its public listing, why can't Halim declare so publicly?

Halim should be aware that he and other EPF officers and employees are servants of the 9.7 million EPF contributors and  trustees of the RM181 billion EPF monies and not  lords and  masters of this hoard of money as some EPF staff seemed to assume  in their rude and crude treatment of EPF contributors who went to the EPF Headquarters in Kuala Lumpur yesterday to demand accountability about the safety and quality of their EPF funds.

The principle must be established clearly and without a shadow of doubt that the EPF Board and management must practise not only good corporate governance but must adhere to the principles of accountability and transparency in their relations with the 9.7 million EPF contributors.

To establish this principle, DAP and the Barisan Alternative will lead  the 9.7 million EPF contributors to appear before the over 50 EPF offices in the country to demand accountability on EPF's role in the RM439 million losses over the bailout of Time dotCom IPO shortfall and the lowest EPF dividend of 6 per cent last year in 25 years.

Business Times today in a report "KWAP, Danaharta buy 14pc of Time dotCom for RM1.2b", states:

"STATE-RUN pension fund Kumpulan Wang Amanah Pencen (KWAP) and Pengurusan Danaharta Nasional Bhd have spent a total of RM1.17 billion to purchase unsubscribed shares of Time dotCom Bhd, following the public's dismal reception to the company's initial public offering last month.

"The two government agencies said in a statement to the Kuala Lumpur Stock Exchange that they purchased the shares at an issue price of RM3.30 a piece under a sub-underwriting arrangement.

"KWAP is now a substantial shareholder of Time dotCom, holding some  273.86 million shares or 10.82 per cent of the integrated telecommunications company.

"Danaharta, the agency tasked to remove bad loans from the banking system, also has a direct interest of 80.05 million shares that translates into a stake of 3.16 per cent.

"Shares of Time dotCom fell a third day to RM2.27 yesterday.

"This means that KWAP and Danaharta are sitting on a paper loss of slightly over 31 per cent.

"Their combined interests are now valued at about RM803 million based on yesterday's closing price.

"Apart from the two agencies, the Government's investment arm Khazanah Nasional Bhd had also acquired 30 per cent of Time dotCom for some RM2.1 billion prior to its listing on Monday."

1. If  KWAP and Danaharta had taken up RM1.17 billion of the unsubscribed public portion of Time dotCom IPO, as to suffer RM362 million losses in the first two days of its public debut, did EPF take up the balance of RM245 million of the Time dotCom IPO incurring a loss of RM77 million in two days?

1. Why had  the Pensions Trust Fund (KWAP) decided to be the "white knight" to bail out the Time dotCom IPO, to the extent of using RM904 million of the trust fund to buy 273.86 million Time dotCom shares, incurring an instant loss of RM280 million? I do not know who is the KWAP Chairman but he should show himself and explain why he and the KWAP Board of Management had betrayed the trust of 800,000 public employees in committing RM904 million of the trust funds in the Time dotCom at IPO price which incurred a 31% loss in the first two days of its  public debut. KWAP was not established as a fund to bailout crony companies but set up under the Pensions Trust Act 1991 to assume the Government's obligations in meeting the cost of pension and gratuity payments of the public sector. Total resources mobilised by KWAP reached RM15,126 million at end June-2000. It is clearly a gross mismanagement of public funds to invest some six per cent of the trust fund on a counter which all market analysts had declared would nosedive after its public debut. I have asked my office to find out the identities of the officers of the KWAP and to ask for a meeting to find out the reasons why they had jeopardised the pensions of the 800,000 public employees with  such atrocious judgement and  bad decision-making. If the KWAP Chairman is unprepared to have a meeting and be accountable for his actions, I would lodge a police report against the KWAP for criminal breach trust and criminal misuse of public funds in taking up  273.86 million unsubscribed shares of the Time dotCom IPO and jeopardising the safety and quality of the pension trust fund of 800,000 public employees.

1. It is shocking that Danaharta should be involved in the bailout of the Time dotCom IPO, as this has never been  the statutory purpose for which Danaharta was established by Parliament. Danaharta's statutory mission is "to re-energise the financial sector by removing the non-performing loans distractions and to maximise the recovery value of the acquired assets" and clearly not to be a vehicle to bailout failed IPOs of companies. The is clearly another case of gross misuse of powers and misapplication of public funds. Both Danaharta and the Finance Minister, Tun Daim Zainuddin, should explain why Danaharta had embarked on such an illegal operation outside its statutory powers and how the illegal Danaharta acquisition of 80.05 million Time dotCom shares could be undone.

1. The acquisition of 30 per cent of Time dotCom by the Government's investment arm Khazanah Nasional Bhd for some RM2.1 billion prior to its listing on Monday also raises many questions about its propriety, accountability and transparency - which would be dealt with on another occasion.