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On March 19, 2008 NST (written by Zaidi Isham Ismail) reported EPF had obtained the Ministry of Finance's approval to invest USD 2 billion or RM 6.36 billion (RM 3.18 = USD 1).

1. As everyone should know, the new cabinet was sworn in after the report appeared on NST. How can a caretaker Minister of Finance have the legal authority to make such a decision for EPF to invest overseas another USD 2 billion?

2. In April 2005 when the Malaysian Central Bank announces liberalization, EPF invested USD 1 billion or RM 3.80 billion (at that time RM 3.80=USD 1) overseas, what happen to this pension money. Today that money is worth RM3.18b not RM3.8b or a RM 620 million losses unless EPF hedges this money via some futures forex contract.

3. In the same report, EPF reported that it has approval for USD 6 billion. How much foreign exchange losses???

4. The NST report says 2006's assets (RM259.9b) grew 10% to RM285.9b in 2007 to provide a dividend of 5.8%. Assets are expected to grow by 21%, year-on-year, to RM346b in 2008 to keep the same dividend rate. Simple math do not add up!

5. Today the Dow Jones had fallen to around 12000 from 15000. So have nearly all the bourses in the world with few exceptions like Brazil. It is fair then to assume that EPF's foreign investments are likely to receive a double whammy – foreign exchange losses and intrinsic losses as well.

6. Obviously, EPF accountholders are kept in the dark. Could these funds be invested in collusion secretly with fund management companies appointed by EPF like Nomura (with massive sub-prime losses and was fined for securities fraud) and some proceeds to certain individuals with creative accounting techniques?


The Beginning of this Sordid Mess – The Evidence

1. In April 2005 when Malaysia Central Bank announces liberalization. Pension funds, EPF and unit trusts can invest overseas.

2. In 2005 KWAP (Kumpulan Wang Amanah Pencen – Civil Servants Pension Fund) had a tough time finding a solicitor who had expertise to vet for an International Private Equity Agreement and make necessary changes. Their panel  interviewed 30 to 40 legal firms. They finally awarded this contract to vet to Messrs H.M.J. Shaharom & K.S. Wee. Even the fees were agreed upon.

3. However upon completion, KWAP were in for a surprise as the amended vetted agreement pertaining to exceptional clauses and irregularities were rjected by the mandarins at KWAP. Legal Work was done regardless upon agreed principle. The law firm sued for legal fees and won an order (was obtain) but KWAP uses delaying tactics by changing law from Zainal Abidin & Co to Shook Lin & Bok. Case drag to May and June 2008. This whole thing is under the purview of the Minister of Finance. It is believed the present Chief Secretary had no knowledge of this court case.

4. Was this investment again safe and was there any instrument to safeguard the USD depreciation? In 2005 at RM 3.80 to the dollar, the original USD 30m investment would be equivalent to RM 114m. However, at current rates that USD 30m would amount to less than RM 96m only resulting in a whopping RM 18 million translation loss in investment belonging to KWAP. Other related questionable charges and fees highlighted were not adhered to. Instead the International Private Equity went ahead in original unvetted or forensic taxed form.

5. None of these appeared in the mainstream media. Copies of these public documents are be downloaded here (about 30MB): HERE

Comments (25)

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written by Homeyasu, March 23, 2008 02:57:57

One thing for sure, part of this money went into YOU-KNOW-WHO'S pockets.
The other thing, did they get my mummy's permission?

The poor rakyat. Sigh. I thought my parents can rest their haggard souls after working their ass off for almost half a century. I thought... I thought...

If they are those people holding the abacus all the while, aren't they supposed to multiply the capital? It seems to me that the revenue is shrinking, the capital lost *snort* in transaction over currency. If at all the money were to dissipate into ether, they'll come out with the lame excuse that "...the US recession causes this.". Period. Of course, it WAS not their money, it WAS our money that inadvertently went into somewhere else. Go figure.

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written by mike1m, March 23, 2008 07:33:32

Pse brings this issue to parliament, it is the
peoples money they are swindling.

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written by Homeyasu, March 23, 2008 07:51:37

He thinks that we are all idiots. (One to many)
But he doesn't know that we handle calculator better than he does.
That's why he is busted.
And now we know who is THE idiot. (Many to one)

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written by apanama, March 23, 2008 07:54:09

ONE MORE, LAST TRY. getting allocation for overseas investments is an ongoing process. the last time when the KLSE was -0.8% in 2005, the EPF asked for more money to get more returns. at that time you and 1 were getting 3--4% dividend a year. in all likelihood, the money invested overseas are in safest bonds, given the volatile markets.

2006 KLSE 22% malaysian bonds 5.1%
2007 KLSE 32% malaysian bonds 3.8%
2008 KLSE -18% malaysian bonds 1.9% US BONDS 4.2%

do you know that more than 70% of their 300 billion ringgit funds are invested in bonds? to earn less than 2% and pay you 5.8% dividend last year is a tough job, dey. they need to get more profits from overseas. in investment parlance, it's called diversification. not putting all eggs in one basket in malaysia.

most pension funds worldwide invest a big chunk of their money in US government bonds. and US government bonds are having their best year since 2002. all because bank stocks are tumbling due to subprime crisis.

of course we do not know where EPF put their money overseas. but i'm pretty certain they are mostly in bonds. very safe bonds. so guys, please give EPF a break.

therefore, regarding your bullet points:
1. i think they got the approval long before the parliament was dissolved.
2. any smart and sane investors would hedge their forex exposure. i dunno if EPF did that.
3. $6 billion APPROVAL is not the same as INVESTED. so don't jump the gun.
4. the math looks fine to me.
5. no pension fund would be silly to put their retirement money in USstocks. have some respect, or give EPF the benefit of doubt.
6. pure conjecture and speculation, not supported by facts.

in the end, you are getting 5.8% dividend. your maybank and CIMB give up 3% a year on FD. lots of people took their money out of EPF to invest on their own. and so stupid because for every RM1 you take out, the fund managers eat you upfront by 10-20 sen, so called management fees. actually, they pay runners to get your money...that's not investing. that's pyramid scheme.

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written by Homeyasu, March 23, 2008 08:06:13

So you are trying to tell me that there's a big chance that we are on the US boat? As the boat sinks, we shall sink with it? Instead of putting on a life jacket and save ourselves?

No. No. No.

This is stupid. Now they are on PLAN A. Where there isn't any PLAN B to back-up PLAN A if all it fails? This is imbecile. Through mathematical theory and logic, the answer is NEGATIVE.

PS.. I want my money in one piece.

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written by krepot, March 23, 2008 08:10:02

CLASS ACTION SUIT AGAINST EPF AND FINANCE MINISTRY?

Can our newly elected MPs take the leading role.

Even if we lose, we will drag all the dirty laundry into court/public and in 4-5 years time when the next General Elections is due, this will be major blow for the government of the day, i.e. BN!

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written by Malaysiaku, March 23, 2008 08:40:51

Now where is the Agong's stand on this raping and robbing of the country? Isn't it time for the Agong to take his place to correct this stupid BN from robbing the country blind? It is against the law what BN is doing. If we do not stop them now, the country would be bankrupt. Obviously, there are interested parties involved in the deal will tend to get richer so these people HAVE TO BE brought to justice. I want my pound of flesh! Not to also forget what that Toyo guy has done just below March 8th.

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written by loosecannon, March 23, 2008 09:16:54

Are we going the way of Zimbabwe financially? A friend of mine who now lives in Zambia but previously in Zimbabwe told me that Zimbabwians who go about their daily grocery shopping now carry their money packed in stakes in large plastic bags. Shopkeepers don't even bother to count because it is too tedious to do so. Pension money which used to be sufficient to survive on can hardly buy a single loaf of bread.

We can thank our lucky star that we have a strong opposition for check and balance now. Imagine if we've voted back the BN with a 2/3 majority.

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written by penang1, March 23, 2008 09:26:11

This is stupid. Now they are on PLAN A. Where there isn't any PLAN B to back-up PLAN A if all it fails?

Plan A is simple. Get you and your employer to chip in to EPF, then they cook the book over and over and pocket the money for themselves.

Whether or not they invested in local or foreign bonds, it doesn't matter.

You know why? Because we have ABSOLUTELY NO IDEA what EPF is doing with our money.

They never open their book to us.

All we know is what they tell us - and they ain't tell us nothing !

Plan A is sucking our money dry, and Plan B?

Hey, where got money for Plan B?

EPF is bankrupt ! How to go for Plan B if it has no money?

Don't believe? Ask EPF to open their books lah? Then we the people can hire auditing firms to go through their books, and tell us exactly

HOW THE HUNDREDS OF BILLIONS HAVE DISAPPEARED

and

WHERE MONEY HAVE GONE TO.

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written by heavenwrites, March 23, 2008 10:38:56

Dear all Malaysian Bloggers, Tax Payers, Pensioners and Voters,

This is the right time we have to demand that the Citizens’ monies can only be invested with the approval from the Tax Payers through another Investment Committee headed by BR!!

I can’t afford to see the UMNO’s appointed candidates to own big big houses, big big cars, many wives and dozens of mistresses.

If I have to calculate the current sittings of 80/222, all Statutory Bodies must now have 36% Board Members made up of BR Leaders.

All Government Link Companies, Public Listed Companies and Statutory Bodies (“Victimized Institutions”) must now have 36% representatives from BR!

It is also right time for BR to set up a Committee to review all Victimized Institutions Directors’ remuneration and the possibly to reduce the size of the Board Members to have a far more efficient team.

We can expect a lot of resignations if the GLC Directors’ remuneration is reduced by HALF!!! If this happens, there are more capable and experienced and qualified candidates who can be appointed to do the job for half the pay that will guarantee better result.

To all my friends out there, please, please, please, please, please, please, please, please, move my ideas to the rest of the word!!!

Can anyone create another Blog to allow all Tax Payers to sign in and cast their votes either to approve or reject any major overseas investment that involves Tax Payers’ monies please!!!! There must be another consensus to deal with this monies laundering matter.

The idiots can’t even take care of the local investment and provide good return! What could have motivated them to invest USD2.0 billion in a market where we don’t have good and true knowledge? Could this be another Yacob’s scam?

Please all my Blogger friends, stop this internal bleeding at once!!!!

Thank you.

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written by miracle, March 23, 2008 11:00:48

i have this damn feelings when i read about this on that day ... i told my sister the same .. our money gone ... how can you have such an annoucement when cabinet are just form? I told her ... this person who instructed this must be aware that they will be down soon ... thus this is one way to take the $$ out of the country ...kut ...

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written by halimm, March 23, 2008 12:29:36

This is an opportunity to get the government to be more transparent in their dealings of the people's funds i.e. Petronas, EPF, KWAP, Tabung Haji, SOCSO and etc. While I agree with 'apanama' that all the decisions to invest overseas was made way much earlier, the subprime issue was detected in 2006 and the impact should have been assessed by then, namely weaker dollar and liquidity crunch. I had in fact predicted for this back then and already braced for strengthening of all currencies against dollar. But why do EPF still want to invest in USD?

I'm asuming that the investment is not so much in US Treasury, but in equity of commodity related companies. The mega growth in economies of China, India and some South America economies would definitely push up commodity prices, that's where our investment dollar should go to. Why USD? Or is there anything more that need to be disclosed further?

But then, how do the rakyat know that the top people in EPF or Petronas or others are making the wise decision? They should open up their book and be more transparent. We should press for that.

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written by cheekhiaw, March 23, 2008 14:45:33

HOW A DAIM IS MADE, FROM A FEW DIMES TO A DOLLAR

The answer to all the above is the issue of money, literally.

All the 'effects' we are seeing originate from the irresponsible expansion of money supply, the mother of all curi-duit schemes in modern history.

This scheme steals from you when you are asleep and awake.

It is led by no other than the US.

It costs only a few dimes to print a Dollar note. In the electronic accounts of 'modern banking', it costs close to nothing to 'expand money supply'.

It is the same all over the world and irresponsible governments use this mother of all curi-duit schemes to literally make money out of thin air.

The result of that is what economists call variously as inflation, foreign exchange losses etc.

All innocuous terms that hide the truth from the less well informed or initiated, which is the reduced purchasing power of their currency and money.

In the last 4 years, the Ringgit had perhaps lost 30% or more of its real value by way of this mother of all curi-duit schemes. Verify this against the price you pay for oil.

Over expansion of money supply do not just create inflation but has the tendency to shift wealth from the lower strata of society to the rich.

Thus the increasingly huge profits of businesses like oil and other mining companies around the world.

So you can see how a Daim guy got to be so rich and why he says his ‘favorite’ money making business is banking?

xxx

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written by budakindia, March 23, 2008 14:52:12

If I can't withdraw my money in EPF, I'll get that the hard way! Whatever their excuses is, I'll make sure I'll get back my money! Either they gave it to me or I'll force it out from them! I'm sure I'm not the only one in Malaysia will do the same! EPF be warned, if we don't get our money, we'll force it out from you! Don't force us to take that path! Even we have to demolish the whole building down, we will do that!

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written by Homeyasu, March 23, 2008 15:24:52

Hey, where got money for Plan B?

Expenditure> Your money was used for someone's cosmo-ride.
The Investment Plan> Your money is invested in other countries.

The main objective for the PLANs are to multiply the capital. Sure, they suck off all our money but via expenditure, they can do most of it. You must agree, whatever trades it is, regardless of region, money will surely drift into someone's pocket.

Going by the plans, you should only invest a certain amount of money in one sector and some in another. BUt it seems to me that they are digging up all and put it into one hole. That's why, there's no PLAN B.

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written by HARIMAU BIN ABDULLAH, March 23, 2008 16:06:28

EPF must not be used for gambling, and any investment must have the full consent of the public.

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written by penang1, March 23, 2008 16:27:14

there is too much emotions in your postings.
EPF publishes their annual accounts.
they are audited every year.
and they are only printed and distributed after the parliament has approved it.
to got EPF branches or website and ask for a copy. you are all entitled to one.

Oh, cool !

EPF publishes annual reports which are audited.

Yeah, Santa Claus _IS_ coming to town tonite !

C'mon, wake up!

There are financial reports, and then there _ARE_ financial reports.

The so-called reports from EPF is a waste of the paper they are printed on.

In it, there's NOTHING, absolutely ZERO.

Audit? Who audit them??

C'mon, fren, be real, okay?

In the aftermath of 838, you still want to repeat the bn lie?

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written by chaiksyn, March 23, 2008 16:29:12

Well Hell, my money is going down the drain...SOMEONE HAS TO DO SOMETHING! Hey people...its our money they throwing out the window!!!!!

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written by Chuang Tze, March 24, 2008 02:15:22

Dear BudakIndia and all fellow bloggers,

Not only do we have to "demolish" the EPF building if they default paying us the money, but we actually need to "demolish" the Govt. and put in politicians who will champion our cause of bringing to justice all these BNputras, & Umnoputras who have economically and financially plundered Malaysia, put them in the electric chair for treason (betraying the trust of the RAKYAT is tantamount to treason), and annex all their properties and assets here, & overseas.

These ill-gotten gains must be returned to the RAKYAT and these plunderers and Lanun must answer for their crimes against Malaysia & Malaysians !!

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written by stillnotproud2bmsian, March 24, 2008 02:41:06

HAH!! With some clowns we have in the current Cabinet, u think they had enough... They will suck us dry at greater rate knowing that their their time is running out!!

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