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According to the Wall Street Journal, all the individuals named in the proceedings were involved in promoting the conspiracy, or they were allegedly in a position to stop the misdeed, but refrained from doing so.
THE CORRIDORS OF POWER
By Wayne Arnold
The New York Times
December 27, 2002
First he lost control of Malaysia's national airline, then one of its biggest cellular operators. Now Tajudin Ramli, the tycoon whose corporate empire has been besieged by the very government that helped him build it, appears to have lost control of his flagship holding company, too.
Malaysia's bad-debt agency, Pengurusan Danaharta, appointed special administrators earlier this week to take over day-to-day operations at Mr. Tajudin's aviation holding company, Naluri. The move came after the agency scrapped a 510.9 million ringgit ($134 million) deal to sell Mr. Tajudin's 45 percent stake in Naluri to recover some of the roughly 1 billion ringgit he owes Danaharta.
''We have to make sure that our rights are protected,'' said Izhar Hifnei Ismail, an agency spokesman. ''What we really want to see is that whatever value there is preserved.''
Seizing control of Naluri also gives the agency control of roughly 900 million ringgit ($236 million) left over from the government's much criticized, 1.8 billion ringgit buyout in late 2000 of Mr. Tajudin's stake in the Malaysian Airline System, the flag carrier. Naluri's new administrators will now be able to open Naluri's books, repeating a process that has already produced charges of financial misconduct against Mr. Tajudin at the two other companies he used to run.
The unraveling of Mr. Tajudin's holdings and the surrounding scandal are part of a purge by Prime Minister Mahathir Mohamad of the entrepreneurs he once relied on as nation builders. In their place, he has promoted a group of technocrats, like those who run Danaharta, to overhaul corporate Malaysia.
While it no longer has a business of its own, Naluri owns stakes in four small airlines, including World Airways in the United States. It also owns part of a Malaysian aircraft parts company with Boeing. Executives at Naluri said they were prohibited from commenting by the special administrators. Mr. Tajudin was unavailable, they said.
A former merchant banker, Mr. Tajudin rose to prominence in the late 1980's under Daim Zainuddin, then the finance minister. Mr. Tajudin's company, Technology Resources Industries, bought Naluri, then called Malaysian Helicopter Services, from the struggling Malaysian Airline System in 1991. The same year, Technology Resources bought the country's sole cellular operator, Celcom.
Mr. Tajudin capped the rapid expansion of Malaysian Helicopter in 1994 by turning around and paying 1.79 billion ringgit in cash for the central bank's controlling stake in Malaysian Airline System, financing the purchase with a huge loan backed by his own shareholdings.
Mr. Tajudin's borrowing caught up with him, however, when the Asian financial crisis hit Malaysia in 1997. While Technology Resources and Celcom managed to win restructuring deals with creditors, Mr. Tajudin tried in vain to sell his stake in Malaysian Airline to pay off debts.
In late 2000, the government -- with Mr. Daim doing a reprise as finance minister -- finally bought out Mr. Tajudin, paying Naluri the same price per share it had paid for Malaysian Airline seven years earlier. The bailout, which paid Mr. Tajudin more than twice the prevailing market price, provoked widespread public outrage and was followed by the ouster of Mr. Daim.
Since then, the airline's new managers have asked the police to investigate allegations of irregularities involving a contract with a Naluri cargo venture in Germany.
The new owner of Technology Resources has made similar accusations. Mr. Tajudin lost control of the company last spring when he failed to make payments on roughly 1 billion ringgit in personal loans backed by his stakes in Technology Resources and Naluri. Securities regulators refused to let him use the funds raised by the sale of his Malaysian Airline stake, much of which is still at Naluri. Danaharta, which had bought the loans from local banks, in turn sold his stake in Technology Resources to Telekom Malaysia.
This summer, Danaharta agreed to sell Mr. Tajudin's stake in Naluri to a little-known company called Valiant Entity. Local newspapers have linked Valiant to Mr. Tajudin, but Danaharta said it had no evidence of a connection. Either way, when Valiant failed to provide Danaharta with a required letter of credit for the purchase by a Dec. 17 deadline, Danaharta called off the sale and appointed special administrators for Naluri from KPMG.
Taking over the management of Naluri is an extraordinary move: the agency usually takes over only deeply indebted companies that it deems beyond restructuring. Naluri has no debts. But Mr. Tajudin remains Naluri's chairman and largest shareholder. In August, Naluri proposed buying back roughly 830 million ringgit in stock from its shareholders.
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