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By Hakim Joe
Would you jump at the chance of purchasing a GLC share for RM5.00 if that particular share is actively trading at the KLSE at RM6.15? What if you were offered 10 million of that GLC company shares?
Let me calculate a bit here. Every share I take up would reap me an automatic profit of RM1.15. If I were to sell the share immediately at a loss of 5 sen (at RM6.10) at the KLSE and after the subsequent deduction of the 0.15% remisier’s commission (brokerage fee) and 0.05% clearing fee, I would still end up earning RM1.028 per share. I could even negotiate with my remisier as to his commission if I were to trade 10 million shares, possibly down to something like 0.05% because he will still be making RM30,500 from these transactions – not a bad payday from one customer but not as good as the owner of the 10 million shares who potentially could make RM10.28 million. On 29 September 1990, Maika Holdings was specially offered 10 million Telekoms shares at RM5.00 per share by the Malaysian Government. Then Finance Minister DSAI told Parliament that Maika informed the Finance Ministry that they only had the financial resources to take up 1 million shares and proposed that the remaining 9 million shares be allocated to three MIC-linked companies of which the Government acceded to (3 million shares each).
The three companies were Clear Way Sdn Bhd, a RM2 shell company incorporated in October 1988 with two shareholders (Reman a/l Subramaniam and Muniady a/l Sadayen), S.B. Management Services Sdn Bhd, a RM2 shell company incorporated in December 1989 with two shareholders (S. Balasubramaniyam a/l M.S. Survei and Sothinathan a/l Sinna Govinder) and Advance Personal Computers Sdn Bhd (RM250,000 paid up capital) with four shareholders (S. Balasubramaniyam a/l M.S. Survei, Sothinathan a/l Sinna Govinder, R. Selvendra and Isphare Kumar). SBMS and APC shares the same office at Damansara Town Centre and the same shareholders whilst R. Selvendra is a director of Maika Holdings. It was also discovered that as on 6 October 1990, the Arab-Malaysia Merchant Banking Berhad had approved a RM50 million loan to finance Maika’s acceptance of the entire 10 million RM5.00 Telekoms shares from the Finance Ministry. Two days later on 8 October 1990, the Maika Board of Directors decided that they were able and willing to take up the entire offer of the10 million Telekoms shares. In February 1992, rumors abounded that Maika did not obtain the entire 10 million Telekoms shares that was allocated by the Finance Ministry. A journalist from Watan disclosed that “there could have been some hanky-panky in the allocation of Telekoms shares to Maika Holdings.” This was followed up in April 1992 by a Tamil magazine, Thoothan which disclosed that there could have been some discrepancy in the distribution of the 10 million Telekoms shares allocated to Maika by the Finance Ministry.
Until the declaration by then Finance Minister DSAI in Parliament on 6 May 1992 after being questioned by DAP’s Lim Kit Siang, nobody knew that 9 million Telekoms shares had been diverted to three companies instead to Maika. MIC President Samy Vellu immediately left the country “on sick leave” to America. (Tun Daim Zainuddin was the Finance Minister in 1990.)
On 8 May 1992, the Anti Corruption Agency (ACA) led by Federal Territories ACA Director, Nordin Ismail, raided these three companies. On 10 May 1992, Deputy Finance Minister Abdul Ghani Othman said that it was entirely up to these 3 companies “to ensure that the Indian community benefited” and that it was Maika that had recommended these 3 companies and not the Ministry of Finance, and henceforth did not question the status of these 3 companies. On 11 May 1992, Maika Chairman, Tan Sri G. Pasamanickam held a news conference to publicly announce that he knew nothing about the allocation of the 9 million Telekoms shares to the 3 companies. He also said that he “might bring up this matter” in the monthly Maika board meeting which was scheduled to be held two days later (on the 13 May 1992). On 12 May 1992, MIC Working Committee member, Dr K.S. Nijhar called for the resignation of the Maika Board of Directors. On 14 May 1992, Maika members were assaulted when peacefully picketing outside Maika Holding’s HQ in Petaling Jaya. MIC Selangor Assemblyman for Seri Cahaya, S. Sivalingam, was allegedly the leader of a group of Indians that assaulted the Maika members. On 15 May 1992, MIC President Samy Vellu held a conference (after his return from the US) and said that Maika has never recommended that the 9 million Telekoms shares be allocated to the 3 aforesaid companies. Furthermore, SV said that Maika was never allocated the entire 10 million Telekoms shares but only a part of it due to its past dismal performance. SV also claimed that as of 5 October 1990, Maika had abandoned the offer of the entire 10 million shares but instead approved the purchase of only 1 million Telekoms shares. He also said that the allocation of 3 million shares each to Clear Way, SBMS and ACP were decided by the Ministry of Finance and that none of these companies belonged to him or any of his family members and that he did not have an interest in any of these 3 companies. He also informed the press that these 3 companies had pledged to donate the entire net proceeds of the share sales to Tafe College and proceeded to issue documents of these share sales and the Tafe College building accounts. When as by the press why he sold these shares, SV stated for a fact that he panicked after the trading price of Telekoms fell to RM5.30. As for the assault of Maika members, SV declared that he would himself have “walloped” the Maika shareholders if he had been at the scene then. It was also later discovered that all these 3 companies had loans from CIMB (through Rashid Hussein Nominees Sdn Bhd) to purchase the Telekoms shares, utilizing these shares as collateral and with conditions that the share prices cannot dip below RM6.50. On 7 November 1990, CIMB invoked this clause and force-sale the 3 million Telekoms shares held by Clear Way at RM5.95 per share. Telekoms was trading at RM6.00 at that time. CIMB did the same for the other 5.5 million Telekoms shares held by APC and SBMS at between RM5.75 and RM5.95 per share. Wait a minute here! Why only 5.5 million and not 3 million shares each? Well, APC/SBMS managed to hold back 500,000 Telekoms shares. How it was able to do so if CIMB was invoking their loan clause to force-sell these shares is unbelievable but Samy provided no explanation (APC/SBMS sold another 420,000 of these Telekoms shares on April 1992 at RM11.20). Another thing, why did Samy say 6 million shares and not 3 million shares each? Are these supposedly two companies in fact operating as one?
On 17 May 1992, Maika Managing Director, Tan Sri Rama Iyer, contradicted Samy Vellu saying that the latter has not “told the truth” in his explanation of the Maika Telekoms Scandal. Rama Iyer said that he had personally called the Treasury (after being instructed by Arab-Malaysia Merchant Banking Berhad) and had verbal confirmation from Munirah Abdullah Ng (Treasury Officer) that Maika has been allotted 10 million Telekoms shares by the Finance Ministry and that she had a letter to that effect. Rama Iyer also said that he immediately dispatched a senior Maika officer to collect this letter which was dated 27 September 1990 and then approached AMMBB Managing Director Datuk Malek Merican on 4 October 1990 to raise the loan of RM50 million to finance the share allocation in full.
Rama Iyer also said that then Maika Chairman, Tan Sri C. Selvarajah concurred with his actions and asked him to inform the MIC President to tell him of the share allocation by the Ministry of Finance, which he did the next day (at 6.10am). However, during the telephone conversation, SV told Rama Iyer that “there must have been a mistake as the offer to Maika was just for 1 million Telekoms shares and not 10 million Telekoms shares. When Rama Iyer contradicted SV stating the Finance Ministry letter, SV told him that the other 9 million Telekoms shares were for allocation to “other MIC bodies” and that he would contact the Finance Ministry to clarify the matter.
On 6 October 1990, Maika received a letter dated 5 October 1990 from AMMBB offering RM50 million to finance the purchase of the 10 million Telekoms shares. On 8 October 1990, the entire Maiko Board had a meeting and officially approved the purchase of the entire 10 million Telekoms shares. A few days later, Maika received a letter from the Finance Ministry stating that the initial letter of offer for 10 million Telekoms shares was officially retracted and that only 1 million Telekoms shares were on offer for Maika.
On 20 May 1992, Opposition leader LKS produced evidence that Paari Vel was in fact the managing director of APC. In an APC namecard bearing Paari Vel’s name and designation as the MD, the London office address was listed at K.K. Marketing Limited of 12, Whittington Road, Wood Green, London N22 4YD, England. (K.K of K.K Marketing stands for Kumar Kandasamy whose son Isphare Kumar is listed as a shareholder of APC.) BTW, Paari Vel is Samy Vellu’s son.
Also on this day, LKS proceeded to tear apart SV’s documents on the share sales of the 3 companies. One, Clear Way’s accounts did not specify the 0.05% clearing fee. Two, its share financing interest was documented at 14.75% when CIMB was only charging 11.25%. On the SBMS cum ACP accounts (no trouble was taken to separate them), it was stated that some of the proceeds of the sale of the Telekoms shares were used to purchase 3 million Renong shares (no mention at what buying price) and this time the share financing interest was calculated at 14.5%. No reasons were also given as to why SBMS/ACP was able to retain 500,000 of the Telekoms shares.
As for the Tafe College Building (TCB) accounts, LKS questioned the validity of these accounts as simple arithmetic (like addition) were done incorrectly (much like the Home Ministry’s recent poll on ISA). The total income of RM15,468,003.73 were tabulated as from the Federal Government (RM8 million), donations from MIC branches (RM300,000), Clear Way contribution (RM2,318,003) and from SBMS/ACP (RM4,850,000). The correct figures should be RM15,468,003 not RM14,468,003.73 – where did the 73 sen come from? The total expenditure is even worse! The TCB accounts stated that a total of RM24,662,528 were used. The correct addition comes to only RM24,112,528. Where did the difference of RM550,000 go? Additionally SV stated that the total expenditure incurred was RM24,662,528 and the total payments made was RM15,690,808 and the outstanding is RM9,914,524.27. Simple subtraction of the two figures show an outstanding of RM8,971,720 and not RM9,914,524.27. If indeed the total outstanding is RM9,914,524.27, where did the additional RM942,804.27 go? Lastly, the trading price of Telekoms shares had never fell to RM5.30 as stated by SV during the press conference on 15 May 1992. Between November 7th and November 15th, Telekoms traded at a low of RM5.85 and a high of RM6.15 and Between November 16th and November 27th, Telekoms traded at a low of RM6.00 and a high of RM6.90. From December onwards, Telekoms never traded under RM7.00. It must be also noted that the remisier handling these transactions was also a director to both SBMS and ACP. By the way, the brokerage fee for the 8.5 million Telekoms shares came to a total sum of RM505,470.00.
On 24 May 1992, Maika’s offices were broken into and their offices ransacked. Documents in pertinent to the Telekoms shares allocation went missing. The guard was also assaulted. Earlier in the week, employees of the weekly Thoothan magazine were attacked at their Jalan Ipoh office premises (this magazine was giving prominent coverage to the Maika Telekoms shares Scandal and on one of its headlines, the magazine called SV a liar and a thief).
In 1994, then chairman of MIC public claims committee, V. Subramaniam (also known as Barat Maniam) made a startling public accusation. He charged that the accounts were fabricated to make it appear as if all the profits from the sale of Telekom shares were channelled to Maju Institute of Education Development (MIED). V. Subramaniam declared, "I have come out with this statement to prove that Samy Vellu is a thief. He has stolen (Telekoms) shares from the Indian community." In 1999, SV appointed his son Vell Paari (of the K. Sujatha fame) as CEO of Maika Holdings. From a high of RM106 million in 1984, Maika’s assets fell to about RM32 million in 1992 (after the Telekoms shares scandal) and is in the process of selling off all its assets today (due to massive debts). Vell Paari remained as the CEO of Maika Holdings until today and said that he would step down once “he has cleaned up Maika…” (more like clean out though). SV was cleared by the ACA over the Maika Scandal and nobody was arrested over it. The 66,000 Maika shareholders are still holding their breath waiting for an explanation by the Maika Board. As for the Maika-Telekoms share scandal, nothing was ever heard of it. S. Sothinathan is now the MIC vice-president and MP for Teluk Kemang. In October 2006, the MIC Johor assemblyman for Tenggaroh, the late S. Krishnasamy assaulted the DAP MP for Ipoh Barat, M. Kulasegaran at the Maika annual general meeting at the Legend Hotel in KL. Even though Kulasegaran lodged a police report, no action was taken against Krishnasamy.
A bit about Maika. Maika Holdings was once touted as the miraculous economic vehicle to elevate the Indian poor from the shackles of poverty. Launched by MIC in 1982 as their investment arm, the original plan was to ensure that at least RM30 million worth of shares were subscribed to but so successful was the promotion campaign that by 1984, RM106 million was raised from almost 66,400 shareholders with SV being the largest shareholder with 2.8 million shares. From then onwards, it was downhill all the way.
Let me continue the song, “Oh Maika, I am but a fool, Darling I love you, though you treat me cruel…..”
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