Parliament next month should refer Daim to the Committee of Privileges to inquire whether he had deliberately misled MPs when answering questions about the RM1.79 billion government buyback bail-out of Tajudin Ramli’s MAS stake

Media Statement
by Lim Kit Siang

(Penang,  Thursday)The Malaysian Airlines System (MAS) police report on January 9 and the police investigations into alleged million-ringgit  management irregularities at  the MAS  cargo division during   the tenure of  former MAS executive chairman and key shareholder Tan Sri Tajudin Ramli is  a most welcome  departure from the invariable past practice of government and  corporate cover-ups, especially  in government-owned or controlled companies, making Malaysia notorious as a country teeming with “heinous crimes without criminals” - starting with the infamous Bumiputra Malaysia Finance (BMF) scandal in the eighties. 

It has been reported that the alleged management irregularities centred on business arrangements between MAS and a Germany-based cargo handler controlled by Tajudin Ramli and focussed on contracts between MAS and ACL Advanced Cargo Logistic GmbH, a 60%-owned unit of Naluri Bhd., a listed Malaysian company in which Tajudin is the largest shareholder.  ACL operates a cargo facility in Hahn, Germany, that MAS in 1999 contracted to use as its global cargo hub.  

The management irregularities being investigated by the police can only be  the tip of an  iceberg as MAS has chalked up colossal debts of RM9.2 billion and accumulated losses of R2.5 billion, requiring repeated billion-ringgit bailouts at the public taxpayers’ expense - and the Malaysian public are entitled to demand a  full accountability as to how the national airline could end up as such a sick company, a national embarrassment and a burden on public coffers.  

It was reported that the management irregularities in the cargo division  were discovered in   an audit ordered by the government after taking control of MAS early last year  following  the scandalous RM1.79 billion buyback  bailout of Tajudin’s 29.09 per cent stake at RM8 a share when the market price was only RM3.68.

This raises the question as to why an audit was not conducted before the government’s  buyback  bailout of Tajudin’s MAS stake - which would have a very important bearing on the proper price of the government buyout. 

On March 21 last year,  the then Finance Minister, Tun Daim Zainuddin, gave a long and most unsatisfactory reply in Parliament during question time to justify the buy-back bailout of  Tajudin’s MAS stake which took place under his watch, but he  failed to address or  answer the  two most important questions, viz:

The  current police investigations into management irregularities in MASkargo Sdn. Bhd. have again brought to the fore  the  questions concerning  prudence, propriety, responsibility,  integrity, accountability and transparency of the decision to use RM1.79 billion public funds for the buy-back bailout of Tajudin’s MAS stake.  

Last month, the government announced a RM6.1 billion MAS restructuring exercise involving assets sale to enable the national carrier to retire some of its debts and provide RM820 million as working capital, which is just a creative way for a second round of government bailout for the national airline.

This was because the RM6.1 billion MAS restructuring exercise - which  involved the two key elements of   RM3.9 billion for the sale and leaseback of eight aircrafts and the disposal of properties worth RM2.2 billion - hinged on the government using public funds to take over the national airline’s debts and financing risks by  buying over the MAS aircrafts and properties. 

Had the government envisaged  when it decided on the first  RM1.79 billion bailout of MAS by relieving Tajudin of his MAS stake at more than double the market price, that to make MAS viable, the government would have to embark on a second round of bailout to the tune of RM6.1 billion to relieve MAS of its assets to enable it to fast-track recovery back to profitability?

When Parliament reconvenes next month, it should demand full accountability and transparency for the two rounds of government bailouts of MAS  within 12 months totalling  RM7.9 billion.

Firstly, it should censure the Public Accounts Committee for its  failure to convene hearings on the propriety of the government’s RM1.79 billion  buy-back bailout of Tajudin’s MAS stake, and in particular, why no independent valuation had been made before the decision was taken and why Tajudin got away with a bonanza instead of being forced to get a “hair-cut” for the government bailout.  

Secondly, former Finance Minister Tun  Daim Zainuddin should be referred to the Committee of Privileges for an inquiry to be held as  to  whether he had deliberately misled MPs when answering questions in the Dewan Rakyat  on March 21, 2001 about the RM1.79 billion government buyback bail-out of Tajudin Ramli’s MAS stake, particularly when he made the following statements and suggestions:  

The Parliamentary  Committee of Privileges should ask for documentary evidence to establish that there were  foreign investor interest in the MAS stake at RM15 per share - or even at RM8 or above - or Daim would have been  guilty of gross breach of privilege in misleading MPs with baseless information and untruths.  

On March 21 last year, Daim told Parliament: 

"With additional positive input like more effective management and solid support from the Government, the share value will be more than RM9, according to several international investment banking institutions and investment houses.”   

Daim has been proved to be grievously wrong, as the price of MAS share closed at RM3.74 yesterday - a far cry of his “more than RM9” despite a year of “more effective management and solid support from the Government”.  

Daim should be referred to the Committee of Privileges as no Cabinet Minister should be allowed to mislead Parliament with baseless information or untruths on matters of great public interest and importance as in the double government bailouts of the national airline  totalling RM7.9 billion.  


*Lim Kit Siang - DAP National Chairman