by Lim Kit Siang at the DAP Solidarity Dinner
at Sauk, Perak on Friday, 24th October 2008 at 9pm:
DAP to launch a nation-wide campaign to
protest the RM5 billion EPF loan to ValueCap to prop up share prices and
to protect the RM340 billion life savings of 12 million EPF members
On Monday, Deputy Prime Minister and Finance
Minister Datuk Seri Najib Razak announced that the government would
inject RM5 billion from the Employees Provident Fund (EPF) to double the
size of the highly-secretive government fund, ValueCap Sdn Bhd to RM10
billion to prop up the stock market.
The Malaysian Trade Union Congress (MTUC) President, Syed Shahir Syed
Mohamud has rightly come to the forefront to condemn the government's
move to boost up ValueCap to support the local stock market using RM5
billion from EPF, as the provident fund is the custodian of the workers'
money and not some sort of ‘automated teller machine' for the
This is the second government attempt to raid the EPF to support
ValueCap to prop up the stock market since the idea of ValueCap was
first mooted by the Mahathir administration at the end of 2002 to shore
up the stock market and bail out ailing companies.
In response to widespread criticism and objections that EPF funds would
be involved in the ValueCap operations, the EPF on 20th November 2002
came out with a strong denial clarifying that it had not appointed
ValueCap Sdn Bhd to manage the EPF’s investment fund. It also denied any
EPF involvement in the KLSE to shore up the stock market.
The EPF declared:
“The EPF invests in companies with sound fundamentals, long-term growth
potential and competent management. The EPF is always prudent and
professional in its approach when investing members' savings. The Fund
ensures that the investments are safe, not exposed to high risks and
gives reasonable returns to its members for their retirement.”
Why are EPF funds being used now to do what EPF had declared six years
ago that it would not do – “The EPF's investments are not used to bail
out ailing companies”?
Why is EPF departing from its “prudent and professional approach when
investing members’ savings”?
The ValueCap operations has been in existence for some six years but it
had always been shrouded in secrecy, with no accountability or
transparency whatsoever to Parliament or the nation, which is totally
against the principles of good governance and parliamentary
When the new government asset management company, equally owned by
government agencies Khazanah Nasional Bhd, Permodalan Nasional Bhd and
Kumpulan Wang Amanah Pencen commenced operations on 10th January 2003,
Malaysians were told that ValueCap had started with a RM10 billion cash
Second Finance Minister, Tan Sri Nor Mohamed Yakcop, who was then
Economic Adviser to the Prime Minister, was reported by New Straits
Times of 17th January 2003 as saying that ValueCap’s three shareholders
had transferred the RM10 billion to it equally “in actual cash, and not
in the form of shares” when “quashing rumours that the company did not
yet have the full amount available”.
Why then are Malaysians suddenly told five years later that ValueCap had
only RM5 billion and not RM10 billion investment fund? Where have the
balance of the RM5 billion gone to?
This is not the only instance of the totally opaque nature of ValueCap
operations, avoiding accountability though managing public funds.
The Public Accounts Committee should undertake an in-depth scrutiny of
the operations, management and investments of ValueCap for the past five
years and table a full report before the end of the current meeting of
Parliament to enable MPs to decide whether it should be allowed to raid
RM5 billion from the EPF for its new tranche of operations.
EPF monies are easy government targets for bail-outs, whether for ailing
companies or to recoup losses as a result of financial scandals.
The eighties provide a good example as it started the era of disastrous
government intervention in the market coupled with the lack of
accountability, transparency and good governance – a recipe which
produced the Maminco scandal (RM600 million losses in a secretive but
foolhardy and expensive foray to corner the international tin market in
London), the EPF-Makuwasa scandal (multi-million ringgit EPF losses when
EPF funds were hijacked unethically and illegally for stock market
operations in trying to recoup losses resulting from the Maminco
scandal), the RM2.5 billion Bumiputra Malaysia Finance (BMF) scandal
which involved the murder in Hong Kong of a Malaysian auditor Jalil
Ibrahim and the Bank Negara forex exchange market operation scandal
(RM30 billion losses caused single-handedly by Nor Mohamed who was
running the forex speculation operation in Bank Negara at the time).
The 12 million EPF members cannot allow their life-savings to be
imperilled by stock market speculation activities using the EPF funds,
which stand at some RM340 billion.
DAP will launch a nation-wide campaign to protest the RM5 billion EPF
loan to ValueCap to prop up share prices and to protect the RM340
billion life savings of 12 million EPF members
The protest-cum-protection campaign will start from Ipoh next Friday and
will be taken to the whole country to urge the government not to hijack
the workers’ hard-earned life-savings and “coffin money” to prop up or
bail out ailing companies facing bad times with a collapsing stock
market with the onset of the worst global economic crisis in 80 years.
Kit Siang, DAP
Parliamentary leader & MP for Ipoh Timor