29.02.99
With the recent sealing of Agreement between the Stock Exchanges of
Malaysia and
Singapore on the solutions to the CLOB impasse, the saga of shame on
the
Malaysian authorities seems to be over. But it is not.
The final solution seems to embody only mild demands from the CLOB shareholders
compared to previous demands, but it is still morally indefensible
on the part
of the Malaysian authorities. In addition, it shows up the unrelenting
determination by the ruling power in Malaysia to squeeze illegitimate
profits
out of the CLOB shareholders.
Why must the Malaysian authorities insist on an unconnected third party
to
collect fees from the CLOB shareholders, before the Malaysian authorities
would
agree to implement a straightforward Agreement between the 2 Exchanges?
Under
that Agreement, entered into between the 2 Exchanges at the freezing
of CLOB
shares in September 1998, KLSE agreed to arrange for the transfer of
CLOB shares
to the Malaysian Central Depository (MCD) under individual accounts.
There is no possible justification for Effective Capital to come into
the
picture and asked for a fee (totaling almost RM 300 million), and for
KLSE to
support it exclusively, when there is no provision whatsoever in the
Agreement
(Sept 98) between the 2 Exchanges for any intermediary role by any
third party.
KLSE is absolutely competent to fulfil its obligation to migrate the
CLOB shares
without the participation of any parasitic third party.
The hands of the Malaysian ruling power in this debacle are obvious.
Both Prime
Minister Mahathir Mohamad and Finance Minister Daim Zainuddin have
publicly
uttered words of coercion to CLOB shareholders to accept the Effective
Capital
offer. CLOB shareholders and Singapore leaders had countered
by announcing
their intention to take legal action and to bring the matter up to
the World
Trade Organisation, if necessary. This latest flexing of muscles
by both sides
culminated in the signing of the Agreement between the 2 Exchanges
on 25th
February 2000, which contains a watered-down version of Effective Capital’s
previous offer, as well as another Option. The latter was thrown
in to provide
camouflage to the Effective Capital proposal, which would otherwise
be too
apparent as an act of naked greed.
In Effective Capital’s final offer, the fee is reduced from 2% to 1.5%
payable
to Effective Capital, and the staggered share release period is reduced
from 18
months to 13 months starting from 1st July 2000. The other Option
is a direct
deal with KLSE’s subsidiary Scans, whereby the fee is 1% payable to
Scan, and
the staggered share release period starts only from 1st January 2003
and lasting
9 months. The unreasonably long waiting period offered in the
Second Option
makes it an impracticable proposition and is unlikely to be taken up
by the vast
majority of CLOB shareholders. Its inclusion in the Agreement
has the effect of
making the whole deal look less unethical. It has thus saved
the face of the
Singapore Government and soothed the ego of CLOB shareholders for not
appearing
to have been clobbered. At the same time, it has somewhat repaired
Malaysian
leaders’ image, hitherto appearing as untrustworthy and greedy violators
of
foreigners’ assets in this Country over this issue.
To those Malaysians who have sighed relief that the long ordeal of the
CLOB
controversies is finally over and are rejoicing at the prospect of
foreign
investors, including Singaporeans, pouring their capitals into Malaysia
again,
they are well advised to pause and to reflect deeply into this whole
episode.
Daim Zainuddin is well known to have forged close ties with Effective
Capital’s
apparent owner Akhbar Khan. Daim had practically served ultimatum
to CLOB
shareholders earlier to either accept Effective Capital’s offer or
face the fate
of having their shares transferred to the Malaysian Government (Daim’s
brinkmanship was abetted by Mahathir who chorused that CLOB shareholders
had
better be reasonable). On the part of KLSE, it had ensured that
only Effective
Capital’s was put on the platter, by crudely brushing aside the other
Offer by
contender Bintang Melewar, on lame excuses.
The above series of events speak for themselves. Under these circumstances,
how
can any one dispel the pall of suspicion over our top political leaders
for
having manipulated KLSE for personal gains by milking the maximum possible
from
these foreign investors who had the misfortune of being trapped in
this infamous
sham? Imagine how daring and ruthless these “clobbers” were when
Effective
Capital’s first Offer was to buy all the CLOB shares at more than 50%
discounts
to the market price! These “clobbers” would have profited many
billions
(instead of the present RM 300 million) if they had their way then!
Irreparable damage has been done to the reputation of Malaysia as host
to
foreign capitals. That our top political leaders have been allowed
to indulge
in such crude display of greed and immorality with impunity is a poor
reflection
on the moral fibre of this Country.
Kim Quek.