umno's bailouts

From: DAP MALAYSIA <dap.malaysia@p...>
Date: Wed Mar 14, 2001 11:50am
Subject: [BUNGARAYA] Police report on EPF and Time dotCom

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Media Statement by DAP National Chairman Lim Kit Siang in Kuala Lumpur on Wednesday, 14th March 2001:

Police report against EPF to allow police to initiate investigations on Sun report on EPF's taking up unsubscribed public portion of Time dotCom and to ascertain the losses suffered by 9.7 million EPF contributors after the counter crashed by 31 per cent of its IPO price in first two days of debut
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A police report has been lodged based on the The Sun report dated Monday,
12th March 2001, that EPF, Kumpulan Wang Amanah Pencen (KWAP) and
Pengurusan Danaharta Nasional Bhd "are believed to have taken up the
unsubscribed public portion of the Time dotCom Bhd initial public offering
(IPO)".

The Sun report states:
"EPF takes up unsubscribed Time dotCom shares?
"By Sidek Kamiso

"Kuala Lumpur: Kumpulan Wang Amanah Pencen (KWAP), the Employees Provident Fund (EPF) and Pengurusan Danaharta Nasional Bhd are believed to have taken up the unsubscribed public portion of the Time dotCom Bhd initial public offering (IPO).

"Time dotCom's initial stock sale of 571 million shares at RM3.30 each under
its IPO was undersubscribed by 75% when applications closed on Feb 13. Only
142.86 million shares were subscribed.

"An official familiar with the listing exercise said Time dotCom is believed to have submitted to the Registrar of Companies (ROC) the Form 29B, which
contains details of the purchase of the two institutions and Danaharta.

"The purchase by the three funds would allow Time dotCom to meet the listing
requirement.

"Under the KLSE listing requirement, a company with more than RM100 million
in paid-up capital is required to have at least 1,250 shareholders and not less than 25% of the shares must be held by the public.

"An announcement on the shareholders including the parties taking up the
unsubscribed shares is expected this week.

"The company will make its debut on the Kuala Lumpur Stock Exchange today."

On 17th February 2001, I had issued a media statement asking EPF and other
government-linked funds and agencies to declare whether there is any
government directive that they take up the Time dotCom subscription shortfall and warned that EPF monies should not be tapped for the bailout of the Time dotCom IPO.

My statement said:

"Although Time dotCom's RM1.89 billion IPO fell flat on its face making
double history as the country's biggest offering as well as the biggest flop when it was undersubscribed by 75 per cent, Tan Sri Halim Saad is laughing all the way to the bank.

"This is because Time dotCom will be Malaysia's only telecoms unit with zero debt with some RM 900 million in cash as the joint lead underwriters Commerce International Merchant Bankers Bhd, Perwira Affin Merchant Bank Bhd and Affin-UOB Securities Sdn Bhd had fully underwritten the issue and would now have to pay RM1.415 billion cash for the unsubscribed portion.

"This will have far-reaching implications not only for the banking industry
but raises the question about the future of corporate restructuring in the
country.

"I had yesterday said that Malaysian taxpayers are very concerned that the
government would be embarking on another scandalous bailout - this time the
RM1.4 billion bailout of the Time dotCom IPO undersubscription fiasco by
using government-linked funds and agencies like EPF, SOCSO, Tabung Haji to
take up the shortfall."

I had then posed the following question:

"Why was the full issue of RM1.89 billion fully underwritten by the underwriters concerned when the market reaction to the IPO at RM3.30 per share was that it was over-priced and that its value was more at RM2 per share? Was there any political pressure and/or any undertaking that government-linked funds and agencies like EPF, SOCSO, Tabung Haji and other public trust and provident funds would be tapped to make up for any shortfall in the event of undersubscription?

"As the market is quite unanimous that when Time dotCom makes it public
debut next month, its share price will nosedive below the IPO price, managers of EPF, SOCSO, Tabung Haji and other government-linked funds and agencies should declare whether there is any government directive, written or unwritten, that they take up the subscription shortfall.

"In any event, these government-linked funds and agencies should be aware
that the public are very vigilant and want full transparency to ensure that these funds should not be tapped for another bail-out operation for a private company, however well-connected politically, to buy up the undersubscribed IPO portion of Time dotCom at RM3.30 per share."

A day earlier, on 16th February 2001, I had said in a media statement that it was clearly not in the public interest for government-linked funds and agencies to be tapped to mount another bail-out operation to buy up the undersubscribed IPO portion at RM3.30 per share and warned that after 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, another billion-ringgit bailout for Halim Saad's Time dotCom IPO "will be the last straw to break the camel's back".

On its first two days of nightmare debut on the market, Time dotCom crashed
by 31 per cent of its initial public offer (IPO) price, dropping to RM2.43 on Monday and RM2.28 yesterday.

This would mean that if the Sun report is correct that EPF, KWAP and
Danaharta had taken up the RM1.415 billion unsubscribed public portion of the Time dotCom IPO shortfall, these three institutions would have suffered a astronomical loss of RM439 million in the past two days as a result of the 31 per cent crash of its IPO price, which is a criminal breach of trust and a criminal misapplication of public funds.

The EPF Chairman, Tan Sri Halim Ali, had neither responded to concerns
expressed in the past month by the 9.7 million EPF contributors about the
misuse of EPF monies for the bail-out of the Time dotCom IPO, nor issued any
denials in the past two days in response to the Sun report that it was one of the three government-linked agencies which had taken up the unsubscribed public portion of the Time dotCom IPO.

In his letter to the Sun on Monday, Halim said 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".

What basis of security, liquidity and yield can EPF plead in justification for 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?

It is a criminal breach of trust and criminal misuse of public funds for the EPF to use the savings of 9.7 million EPF contributors to participate in bailing out the RM1.415 billion Time dotCom IPO undersubscription shortfall when the stock could be bought from the market at one third its price.

The 9.7 million EPF contributors are entitled to an immediate public accounting from the EPF Chairman as to whether EPF had suffered the bulk of the staggering RM439 million losses in the last two days as a result of taking up the RM1.415 billion unsubscribed public portion of Time dotCom, the actual amount invested by EPF in the Time dotCom and the actual losses suffered as a result of the 30 per discount over its public offer price in the last two days, the reasons for the EPF decision as well as why the EPF has declared the lowest dividend in 25 years when it declared 6% dividend for last year.

This police report against the EPF for possible criminal breach of trust and
criminal misuse of EPF monies for taking part in the bail-out of the RM1.415
billion Time dotCom IPO undersubscription shortfall when all market analysts
expect the counter to nosedive on its public listing debut is based on the
precedent set by the police itself in lodging a police report on the Mingguan Malaysia report of March 4, 2001 that Parti Keadilan National Youth chief Ezam Mohamad Nor had said that he was launching street demonstrations every day to topple the government in order to initiate investigations.

The lodging of the police report and police investigations on EPF and Time
dotCom do not absolve Halim Ali from his responsibility as EPF Chairman to
comply with the principles of accountability and transparency to the 9.7 million EPF contributors to explain without any delay whether EPF had suffered the bulk of the staggering RM439 million losses in the last two days as a result fo taking up the RM1.415 billion unsubscribed public portion of Time dotCom.

- Lim Kit Siang -