RM4.6b bailout: Shahrir calls for probe
Aug 22, 07
Vocal member of Parliament Shahrir Samad today said the authorities must
investigate for possible corruption involving the country's troubled port
operator which has piled up over a billion ringgit in debts.
As the extent of Port Klang's debt problems filters out in the local financial
press, there has also been widespread speculation of a possible bailout from
the government of Prime Minister Abdullah Ahmad Badawi.
The bailout, if pushed through, could become the biggest in Malaysia's history,
said Shahrir, chairperson of government's powerful Public Accounts Committee.
Shahrir said government's main economic agenda before the scandal broke out was
its budget report due out next month.
"But (now) we must certainly look into this matter which seems very serious,"
Shahrir said.
With mismanagement of funds appearing to be the case "then we must speak to the
relevant authorities of Port Klang and a full-scale investigation will be
conducted," said Shahrir.
"It is up to government when to allow the police and the Anti-Corruption Agency
to take the matter even further," he said.
The issue remains "politically sensitive," Shahrir said, noting that the
premier has repeatedly pledged transparency in all government dealings.
The prime minister, who is widely expected to call for general elections next
year, has kept silent on the issue.
RM4.6 billion debt
The Port Klang Authority operates the 1,000-acre Port Klang Free Zone (PKFZ)
shipping area that opened in western Malaysia last year.
It has racked up debts totalling RM4.6 billion and the management has been in
disarray, reports said.
The problem was further complicated when Dubai-based Jebel Ali Free Trade Zone
Authority announced last month it was pulling out of a deal to manage the zone
for "strategic reasons."
The country's main opposition party DAP subsequently filed a police report
seeking an investigation into the allegations of corruption that it said led to
Port Klang's woes.
Several government bailouts of state-linked prominent companies, including Bank
Bumiputra and Perwaja Steel, damaged public confidence in the 1990s
SPECIAL REPORT: Poser over mega 'ghost town'
Jun 25, 07
Six months after its completion, the ambitious Port Klang Free Zone resembles a
ghost town, with only about a dozen tenants scattered about the site instead of
the anticipated crush of clients.
PKFZ - modeled after the highly successful Jebel Ali Free Zone in Dubai - was
conceptualised as the regions hub of choice for the export and transhipment of
manufactured goods.
An estimated RM4.6 billion of government money has been spent in the
mega-project.
But was it worth it? There was also accusations of conflict of interests and
abuse of power.
Malaysiakini investigates in this four-part series.
Part 1: Poser over mega ghost town
Part 2: Sticky situation for Chor?
Part 3: PKFZ land sale under scrutiny
Part 4: Price-tag shoots up to RM4.6 billion
Follow-up stories
Cabinet 'orders probe' on Transport Ministry
PMs first mega-bailout in the making?
Blood runs deep in troubled RM4.6b PKFZ
PKFZ: Documents attest to inflated price
PKFZ: Cops blamed for RM3 bil waste of funds
PKFZ scandal: Break the business-politics nexus
Chan dodges questions on PKFZ scandal
Jitters over PKFZ extends to IDR
Some of the Histories of Bailout in Malaysia
Martin Jalleh - May 27, 05
The cult and culture of privatisation continues in Bolehland. It is being
pushed, promoted and peddled by the present government, one which won the
general election on a platform of change, but with little to show except for
the prime ministers towering humility.
The countrys assets are placed in the hands of the handpicked children,
cousins, cronies and courtiers of the political elite. Only a year in
existence, and they are out to sell the last bits of the countrys silver.
The promises of privatisation are played up to the full as profitable public
utilities are turned into private monopolies as the process of privatisation
ironically paves the way for lesser accountability and transparency.
Privatisations costly price will, quite evidently and eventually, be paid by
the people and their children. Blessed are the young, for they shall inherit
the countrys debts.
Contrary to what is often portrayed, the history on privatisation in Bolehland
speaks little of benefits but far more of huge debts by conglomerates and
costly and controversial bailouts by the government.
Often the objective of reduced fiscal burden on the government has backfired,
with the government having to pay higher costs with public funds to bail out
failed privatisations. We see this in the results of the mindless
privatisation of the Mahathir years.
Lest we forget, below are some examples of the wheels of the privatisation
express having come off the rails and the people having to pay the price for
the privatisation derailments. Its about time that the tell-me-the-truth
prime minister faces the truth about privatisation.
IWK: Pure pong
The citizens of Bolehland can still remember what a stink the former government
raised with its RM200 million bailout of Indah Water Konsortium (IWK), the
financially hobbled concessionaire managing the national sewerage system.
But that was not all that the country had lost. According to then DAP national
chairman Lim Kit Siang, the soft loans granted by the government to IWK
amounted to about RM1.4 billion and they were clearly irrecoverable losses.
KPB: Sunken ship
Who can forget former prime ministers Dr Mahathir Mohamds rescue of
Konsortium Perkapalan Bhd (KPB), then owned by his son Mirzan, which was
submerged in debts of about RM1.7 billion, by using funds from Petroliam
Nasional Bhd (Petronas)?
The Petronas-controlled national shipping carrier Malaysian International
Shipping Corporation Berhad (MISC) was used to acquire KPBs shipping assets
with cash said to be as much as RM1 billion.
Proton: Sad saga
The previous government fueled controversy by using Petronas funds yet again to
buy 27 percent of the national car maker Perusahaan Otomobil Nasional Bhd, or
Proton, for about RM1 billion, thereby making it the controlling shareholder.
The stake was held by the DRB-Hicom Group Bhd, which was deeply in debt. The
deal was announced after Proton, reported a net loss of RM19 million in the
nine months to December 31, 1999.
MAS: Ailing airlines
The government bought back a controlling stake in the Malaysia Airlines System
Bhd (MAS) at the same price for which it sold it in 1994. But the carrier,
which had a light debt load then, was grounded by its RM9.5 billion debt and
was headed for a fourth straight year of losses. Bankruptcy was imminent.
It was believed that the government paid close to RM1 billion more than market
value for the stake of the airline's then chairman, Tajudin Ramli, a protégé of
then finance minister Daim Zainuddin. The former chairman had no experience in
the airline business before he took over the company and was widely blamed for
running the airlines into the ground.
Time dotcom: Damned dot
The manner in which the government rescued Time dotCom, a subsidiary of Time
Engineering (then saddled with a RM5 billion debt), itself a publicly-listed
company of the Umno-linked Renong Group, added yet another ugly dot to its
integrity. In a land where anything is possible, Bolehlanders watched in
disbelief when:
Kumpulan Wang Amanah Pencen (KWAP) or the Pensions Trust Fund (which came
under the office of then finance minister Daim Zainuddin) coughed up RM904
million to buy 273.9 million unwanted Time dotCom shares, incurring an instant
loss of RM280 million.
the Employees Provident Fund (EPF) spent RM269.28 million on 81.6 million
Time dotCom Bhd shares (the unsubscribed public portion of its initial public
offering [IPO]) at RM3.30 when the share was hovering between RM1.96 to RM2.10,
eventually suffering a loss of over RM100 million belonging to the rakyat.
Danaharta (the agency tasked to remove bad loans from the banking system)
and Khazanah Nasional (the government's investment arm) got involved in the
bailout when it was clearly not their mission to be a vehicle for such
bailouts. (Khazanah acquired 30 percent of Time dotCom for some RM2.1 billion.)
LRT: Ride over rails
The rakyat was again taken for a ride over the privatisation express when, in
another privatisation reversal, the government raised RM6 billion (in what was
known as Malaysia's biggest-ever rescue via bond issue) to bail out Kuala
Lumpurs light-rail transit operators Projek Usahasama Transit Ringan Automatik
Sdn Bhd (Putra) and the Sistem Transit Aliran Ringan Sdn Bhd (Star).
Putra, which belongs to Renong Bhd (former Umnos investment arm), defaulted on
its RM2 billion loan in 1999. The government through the EPF again, gave Star
more than RM600 million in loans even when the company was operating at a loss
resulting in EPFs equity stake of RM135 million being subsequently written
off.
Both companies were allowed to continue to operate and manage the LRT systems
despite their mismanagement and incompetence. Taxpayers had to foot the
mega-bills.
PSC/Navy project: Troubled waters
Recent reports have it that Pak Lah is trying to unwind the country's biggest
privatised contract, a problem-plagued RM24.3 billion deal (signed in 1998) for
navy patrol vessels awarded to PSC Industries Bhd, a Malaysian company
controlled by Amin Shah Omar Shah.
The deal, which also gave PSC control of the government's main naval shipyard
and the exclusive rights to service the Malaysian Navy's entire fleet, was
intended to be the springboard for Malaysia to create its own
marine-engineering industry.
The government, which already has advanced more than RM2.5 billion to PSC, is
increasingly skeptical that Amin Shah can deliver the patrol vessels. The first
two ships built by PSC have failed to pass pre-delivery trials. PSC itself is
in deep financial trouble.
Gov't bails, public wails
Other bailouts which bewildered the citizens of Bolehland included the
following:
the perceived bailout of Renong/UEM with the EPFs acquisition of UEM equity
and UEMs subsequent securing of a RM800 million loan from government and
well-connected banks such as Malayan Banking, Bank Bumiputra, Bank of Commerce
and RHB to implement a controversial purchase of Renong equity from the
companys executive chairman Halim Saad.
the bailout of Renongs National Steel Company (NSC) in the Philippines
through the Hongkong-based company Hottick which secured loans, apparently
without collateral, from government-owned Malayan Banking and Bank Bumiputra,
as well as RHB Bank and Bank of Commerce. Hotticks loans totaling RM3.09
billion were eventually taken over by Danaharta.
the bailout of Tan Sri Ting Pek Khiings Ekran Berhad which received RM950
million compensation from the government over the Bakun Dam project.
the Park May-Intrakota bus bailout, the Monorail bailout, etc.
Rope to hang
In light of the depressing scenario described above, the decision by Pak Lahs
government to privatise basic services like water and healthcare (which runs
contrary to assurances made before the last general election), can only be seen
as defying all logic and wisdom.
The string of de-privatised projects make evident the fact that continued
privatisation would only serve as more rope for this country to hang itself
economically. Privatisation in Bolehland has brought more failure than fortune,
more bailouts than benefits.
The only thing that the public gains is private debts. The only clear reality
is that the government continues to lack transparency and accountability. This
country cannot afford to have more bailouts.
All that glitters is not gold including privatisation - will Pak Lah listen to
these truths?
---------------------------------
MARTIN JALLEH is a writer and researcher in a non-government organisation.
Not affiliated to any political party, he believes that every Malaysian should
care enough for his/her country by speaking up and standing up for the truth.
---------------------------------
Real people. Real questions. Real answers. Share what you know.
