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EPF needs to explain why it discontinue the RM1.4 billion claim against it six former executives

by Richard Teo

EPF has an obligation to explain to its contributors why it has discontinued the suit filed in 2005 against Rashid Hussain and five former top executives.

A writ of summons to the value of RM1.4 billion was filed against the six by RHB Capital, RHB Securities Sdn Bhd and RHB Equities Sdn Bhd at the Kuala Lumpur High Court sometime in 2005.

The six former top executives were sued” for breach of fiduciary duties, breach of trust,breach of
contracts of employment/or negligence in relation to certain margin financial facilities granted by RHB Equities during their tenure as Directors and/or Officers of RHB capital, RHB Securities and RHB Equities.”

The suit was filed by major shareholder Utama Banking Group in 2005 and during the course of the trial evidence adduced seems to indicate a clear breach of fiduciary duties. Dubious huge loans for margin financing was given without any collateral and proper approval.

Surely such obvious dereliction of duty should eventually bring to book those responsible for the loan fiasco.The loan claimed in the suit was not a paltry sum but for a mind boggling sum of RM1.4 billion.

Despite public opposition to the pension funds acquisition of the RHB group, and despite Rashid Hussain’s total debts of RM3.5 billion ringgit which included a bond repayment of RM265 million due in June 2007, EPF proceeded to acquire the entire parent firm for RM3.9 billion ringgit including warrants and convertible loan notes. At the same time the fund also made an offer of RM8.75 billion ringgit bid for RHB Capital at RM4.80 per share.

What perhaps remain a mystery was why EPF did not accept Kuwait Finance offer of RM2.19 ringgit (compared to EPF offer of RM1.80) for each Rashid Hussain share and RM7.35 (compared to RM4.80 offered by EPF) for each RHB Capital share? Why was it so adamant in acquiring a loss and heavily indebted entity when a better offer was on the table?

What EPF needs to explain to the EPF contributors is why after having acquired control of
the RHB group it has decided to discontinue the much publicised RM$1.4 billion claim.

The fundamental question remains as to why was EPF so generous in foregoing what seems like a legitimate claim of RM1.4 billion claim against the six former top executives of RHB? Was there any covert attempt to conceal the main purpose of EPF’s acquisition of the RHB group? Was EPF used as a vehicle to acquire the equity of the RHB group with the intention of discontuing the civil suit against the six defendants?

All these perplexing questions need to be answered so that confidence can be restored to the pension fund.

20 Replies to “EPF needs to explain why it discontinue the RM1.4 billion claim against it six former executives”

  4. When politicians treated EPF savings as their own piggy bank to benefit themselves and their cronies, there isn’t a cause to worry as the money keep coming in and what more when you can get away with it. Only Malaysians will be so stupid as to being force to save and let their money goes missing without knowing how it will affect them in the future. How can anyone help this poor Malaysians when they keep voting for thieves to steal right under their noses?

  5. It is the season for forgiveness again, whether it be during Islam, Christian or Buddhist festive season.

    So forgive and forget. Easy isn’t it? To many, especially bankers, they are used to writing off of things and start afresh. Easiest thing to do with the least least white hairs.

    If you lose RM 1.5 billion, but could recover this loss through another means e.g. through the additional RM 1.5 billion increase in funds and price from a FRESH and NEW investor, why bother about the earlier “loss” then? The new invester “sucker” has already made good for you. So any incoming new investor e.g. them Mid-East Arabs, should not be too ready with their check-books.

    Further, crooks know how to cover their tracks and to make things difficult for any potential pursuers. So guilty they may appear to be but they may have made any potential suits against them very difficult to succeed. But we should try especially when it involves alot of hard earned public money.

    But what about the regulators? The legal suits may reveal considerable shortcomings in their regulatory work. An example would be their poor performances before and during the 1997 Asian Financial crisis. Their lax supervision led to many financial institutions collapsing and needing rescue due to poor governance but has the regulators ever been held to account? Remember Noh Mohd and the RM 30 billion plus losses? What is the real story behind this? It would seem you get REWARDED for fiascos. Tan Sriships are the norm too. Its “our culture” too to hide embarrasment.

    Also, many errant “tycoons” have never been held to account for their business failures either caused by themselves or because of market conditions. For example. Many cronies saw their companies collapsing during the recent financial crisis costing investors and the general public billions of ringgit.

    Have they been asked to account for their many dubious deeds? NO. Have they remained rich and well off all this while? YES.

    Many have ensured that even if the worst happened to their companies, they have already taken care of their OWN and private lives to live out their lives in comfort. I need not have to explain how they milked their companies high and dry and in some cases with impunity. So they remain well off and leading luxurious and comfortable lives in comfort and in low profile.

    Many do not seek publicity as it would attract new queries as to how they obtained their wealth. They do not need to be listed in the top 40 richest men but if you include them in, then the list could see many new low profile, but filthy rich, names.

    Shouldn’t Tun Daim’s name be there, being the richest of the rich? And his long list of cronies? You think Tajudiin Ramli or Rashid Hussein (personally, or through their families) are in the poor house? See for example, this article in the Star Biz 20th December 2007:

    ”
    Wan Azmi lists firms in London

    Sweetener maker PureCircle latest to float on AIM

    By IZWAN IDRIS

    PETALING JAYA: Although Land & General Bhd (L&G) founder Tan Sri Wan Azmi Wan Hamzah has kept a local profile in recent years, he remains the shrewd investor with a string of successful listings overseas.

    The most recent was PureCircle Ltd, a maker of plant-based sweetener, which went public last week on London’s Alternative Investment Market (AIM).

    Early backers of the biotech firm, including the Kelantan-born Wan Azmi, sold 14.28 million shares to the public at 170p each to raise £23.4mil (RM157mil) for expansion.

    According to the listing document, PureCircle was founded in Malaysia in 2002 and is headed by managing director and co-founder Magomet Malsagov.

    It also showed Halfmoon Bay Enterprises Ltd as the company’s second biggest shareholder with a 10.3% stake post-listing.

    Halfmoon Bay is Wan Azmi’s family investment vehicle. The same firm used to own shares in Amway (M) Holdings Bhd when Wan Azmi was the company’s chairman.

    Wan Azmi withdrew from the local corporate scene after the collapse of his flagship company, Land & General Bhd (L&G), due to the Asian financial crisis in 1997. His other known listed firm, Rohas-Euco Industries Bhd, is on the verge of being taken private by Temasek Team Sdn Bhd, a company that Wan Azmi, his wife and associates have set up for the exercise.

    Wan Azmi, 57, has maintained a 6% stake in L&G.

    While he stayed in the background at home, the protege of former finance minister Tun Daim Zainuddin had stepped up his international ventures in recent years.

    At least three companies he is involved in, including PureCircle, were floated in London over the past two years.

    They include Steppe Cement Ltd, in which Halfmoon Bay and another of Wan Azmi’s private entities are among the major shareholders.

    Steppe Cement, which was floated on AIM in September 2005, has several cement manufacturing complexes in Kazakhstan.

    In an interview with StarBiz in October this year, Steppe Cement chief executive office Javier Del Ser Perez said that he, Wan Azmi and Malaysia-based investor David Crichton-Watt each owned a third of the shares in the cement maker.

    The company is worth £286mil (RM1.9bil) at the current market price of 251p.

    Wan Azmi and Perez also have stakes in a Kazakh real estate company known as Chagala Group Ltd, which was listed on the London Stock Exchange’s main market in February this year.

    Wan Azmi and Crichton-Watt have been business partners for over a decade.

    In the StarBiz interview, Perez said both Wan Azmi and Crichton-Watt were invited by Kazakhstan President Nursultan Nazarbayev in 1995 to look at opportunities in the then fledgling nation.

    Meanwhile, PureCircle is said to the world’s biggest producer of Redaudioside-A (Reb-A), a natural high-intensity sweetening extracted from the Stevia plant.

    The company’s stock hit a high of 186.5p on its first day of trading, but has since drifted back to near the IPO level. At Tuesday’s closing price of 178.5p, the company had a market value of £232.6mil.

    ”

    Ah so. Many remained with oodles and oodles of money despite their (public) companies going bankrupt. They and their families remained extremely well off. Would you not say from the article that Wan Azmi could be in the list of top 40 richest men? But he’s not there!!! So too the many similar and well known names. Tun Daim?

    So how many Bumiputras should be on the list but are not? And how do they account for their wealth when many of the shareholders of their failed companies have to WRITE OFF their personal investments? Does any regulatory agency wish to find out?

    But it is well known fact that many of these low profile super-duper rich have hidden their assets through nominees and front men and women They remained well hidden in the background, unaccounted for, apparently “unconnected”, BUT it is they who call the shots. Our law says identify the “ultimate shareholder(s)” BUT it does NOT say IDENTIFY WHO CALLS THE SHOTS, i.e. WHO really and actually controls?

    So what about EPF? Who ultimately calls the shots? And WHY???

    An additional RM 1.5 billion could translate into an additional 0.25% return for each contributor. Could contributors then sue the EPF board for the RM 1.5 billion that they have forgone?

    Accountabilty, transparancy, integrity. Not mere empty slogans of “Cemerlang, Terbilang, Gembilang”.

  6. EPF need to do a lot of things but it has never felt obligated to. The fact of the matter is most of EPF contribution comes from Chinese. Its why its the prefered bailout vehicle and you don’t see PNB or LTAT or even Khazanah doing it.

    If the government don’t care that the non-bumis are unhappy and only want to fool them, why should EPF be any different?
    After all Chinese pay the most taxes but do they get to say where most of the money goes? Hell, they say the crumbs that they give out should be grateful. My parents, who gave birth to me and put me through schools, don’t feel that the monies I gave them is owed to them but my government who keep taking money from me, feels that taking care of me in my old age and providing education for my children is a privillege.

  7. Mr Teo, it’s the affairs of those days for margins and loans pre-approved by the bosses and officers subsequently had to scramble for the documentations and forms. Many margins were without proper documentations.

    Secondly, as directors of the lending institution Mr Rashid is liable, that is the first impression we have. But could Mr Rashid be prosecuted without revealing details of the beneficiary(ies)? You have pointed out that Kuwait FH wanted to offer a higher price but instead EPF took over at cheaper price – the reason Kuwait FH wanted proper due-diligence. By having EPF, many things would be conveniently covered. That itself already show EPF was taking orders from someone else.

    My point, push EPF, but better, push for a strong DAP showing this general election. We can do more that way. (Note: I wish you have some financial writers working with you.)

  8. If there are any wrongdoings, can the opposition parties please take those responsible to court on behalf of all the EPF contributors?

    It is time to teach those responsible to act responsibily.

    Can the opposition parties make VCDs or DVDs and pass to the rakyats especially those in rural areas, where they do not have access to internet, and inform them of the many wrongdoings that are going on? Most have dvd or vcd players but might not have computer.

  9. Well guys, this is nothing new. Even when the issue is greatly covered, the culprit still gets away with it. Why?

    Generally Malaysian accept these things as a way of life. Secondly, the Malay majority only have few newspapers to rely on and they are full with government agenda. The elite on the other hand, keep taking the country’s wealth into their pockets.

    Do you expect to see change in these scenario?

    Malaysia “should” be better than Singapore. We are blessed with so many natural resources, etc. But why are we trailing behind with so many problems?

    I would say.. We should try our best and leave everything else to God… Let God punish them.

  10. Sama-sama, orang kami.

    This is how NEP works. As Najib declared recently: under NEP, other races are not affected or deprived; Malays and bumiputras only get what they deserve or what is due to them under the Constitution.

    Not happy, sue lah. AG will throw it out straight away. No case.

  12. If Bank Utama chose to forgo the suit, nobody cares. But if it is EPF, whose money comes from the contributors (and true enough, majority are Non-Malays), EPF must make public its reasons. Hoping that our opposition can bring this up in the next Parliamentary session, irrespective of when is the GE.

  13. EPF money is NOT my money. The money belongs to
    people, why we care if it looses RM1.5 billion?? says
    the EPF Director!! After all, we cannot be sacked!!
    We are Elite Umnoputras… we are above the LAWs!!

    Important point is that we make enough money for
    our own purses and you can forget all that losses ma…!!

  15. there are just too many scandals and abuse of power…till we all don’t know which to follow up with… before one can be settled, another 2 crop up.. and goes on and on… I think till Uncle Lim great grand children , he will still be following up… all the present and past bn ministers should should be put in a military court .. for treason.
    Vote them out? They will use the EPF money to buy votes to keep them in power… all our EPF money is only is slip.. and you can’t withdraw them .. you think the money is safe? They use your money to pay you to vote for them..

  17. Hi

    PM Badawi should seriously consider closing the “RED TAPE” because it only can arrest Small flies. Now he should enforce “GREEN TAPE” to arrest the high profiles. But the problem face by PM Badawi is that no one in his parliament righteous. Except DAP.PKR and PAS. I think three of your leaders to Met PM Badawi and discusses on the “Green Tape” Question what about PM himself close the eye lah opposition. Better expedite if all the money will run out and the fuel 1 ltrs will cost RM 10.00. Then everyone will have to push the car and highway will be jam and Samy vellu will scold jangan main-main di sini ini adalah highway bukan byway

  19. Good topic. What is needed here is to get more detail and publicise it as much as possible. Probably it shall be a success if another Royal Inquiry Commission can be set up to check all ” cover-up ” corruption cases.

    Just get some interview, simple marching to submit memo and get it publicise on youtube. Probably YB LKS can give a hand by highlight the issue in the Parliment and separate the news widely through internet. This is EPF , hard-earned money of all Malaysian. I believed there will be great support

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