United Engineers (Malaysia) Berhad, thoroughly immersed in debt and
with liabilities it cannot meet, has joined hands with the cash-rich Telekom
Malaysia Berhad, to offer to buy the frozen CLOB Malaysian shares in what
is said to be a 25 per cent discount at KLSE prices on 29 June. Those who
opt to sell it to this consortium would get the less valuable Class B stocks
in these two companies. Curiously, the government goes out of its way to
insist it had had no influence in the offer. The Prime Minister said so.
The finance minister, Tun Daim Zainuddin, said so. But the latter is more
explicit: the government did not
instruct Telekom to make the offer, despite its golden share. The question that arises is: since this would impinge on Telekom's ability to run a decent telecommunications service, why did not the government step in and stop it. If UEM were not linked with Renong, both indirectly linked to the Penghulu, could it have joined hands with Telekom to make the bid? Is UEM hoping this exercise would give it some breathing space from its current financial woes? What is the rationale of the offer, other than the hype we are given of how good it is for the CLOB shareholders, how it gets the best offer todate? What is dangerous about it is a seemingly blatant attempt to bring all the cash cows of government-controlled listed companies under the empire of one man. Telekom Malaysia has a golden share held by the government which represents 51 per of the equity, besides its own shareholdings.
The CLOB affair is Singapore's responsibility. The Stock Exchange of
Singapore went into it with its eyes open, fell foul of KLSE regulations,
could not reregister the shares for scripless trading because it fell foul
of the regulations for reregistering. The Singapore government has disclaimed
responsibility for the debacle, leaving the 172,000 depositors in the lurch.
These 172,000 depositors are not registered on the KLSE books but with
Singapore's Central Depository. The SES does not say why the shares could
not be reregistered, the KLSE rightly insists it is not its problem, Malaysia
deflects every attempt
to turn it a bilateral issue. Into this comes two offers: from Dato' Akhbar Khan, the Singapore business man close to Tun Daim and whose niece marries the Renong chief, Tan Sri Halim Saad, over the weekend; and the other from a Mahathir crony, Tengku Abdullah ibni Almarhum Tuanku Abdul Rahman, the brother of the former Yang Dipertuan Agung (King) and son of the man whose face is on every Malaysian banknote. These two offers represent, willy nilly, the Mahathir and the Tun Daim
factions. As I see it, the latest offer is a Penghuluvian riposte, but how could he, as finance minister, allow Telekom Malaysia's involvement in a deal in which Telekom would almost certainly be the loser. If this deal goes through, I predict, that with the National Front government in place with the Prime Minister still the prime minister Telekom would be saddled with debt just as Petronas threatens to be.
The government's insistence it is not involved in the UEM-Telekom offer
is curious. Why did it have to emphasise its non-involvement? How, when
and where was that raised? If the newspapers carried it, and a public furore
followed, then there could be some justification for coming clean. But
the assurance came just because there was no furore. The government second
guesses -- usually wrongly -- public reaction. It wanted to nip the furore
in the bud, and come, in its view, clean. But as in every such attempt,
it raises more questions than answers. Powerful individuals in government,
as opposed to the government itself, are caught in the CLOB fiasco. The
shares of one listed company controlled by a son of the Prime Minister
had 37 per cent shares listed on CLOB; a crony had 59 per cent of his flagship
company so listed. Malaysian business men with empires built on cards are
caught as well. They dealt on CLOB to hide their stock market operations
and, not to put a fine point to it, to manipulate share prices. The Malaysian
government's initial statement is correct, but these offers are lifelines
extricate these business men to enable them to recover control of companies whose shares are locked in the CLOB fiasco. It is this that gives rise to the present shadow play of saving 172,000 shareholders on an unrecognised parallel market from ruin. The government should make a clear, unequivocal statement in Parliament, with no ifs, buts, maybes, on the issues, the state of play, the number of Malaysians on the CLOB register, how many of them have lost control of their companies by the shares being locked there, the parties involved, their losses. The Singapore authorities clearly miscalculated in the CLOB affair; should Malaysia compound that by subterfuge attempts as this?