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.