Aliran Media Statement
http://www.malaysia.net/aliran
Another Bailout
The Finance Ministry's bailout of Tajudin Ramli's Naluri Bhd appears to
be another case of
"privatising the profits and socialising the losses."
The deal will see the Ministry buying Naluri Bhd's 29.09 per cent stake
in loss-making
Malaysia Airlines System Bhd (MAS) at more than twice the market price.
In effect, Naluri will
receive a premium of 121 per cent or close to RM1 billion more than market
value as the
Finance Ministry (and, by extension, Malaysian taxpayers) will be paying
RM8 ringgit per
MAS share when the market price was only RM3.62 on 20 December.
The premium will relieve Naluri, saddled with RM888 million in bank borrowings,
and Tajudin,
reportedly burdened with huge personal debts, of much of their financial
difficulties. Tajudin is
chairman of both MAS and Naluri.
MAS has posted four straight years of losses and is saddled with over RM9
billion in debts.
Its financial position today is much worse than it was when Naluri acquired
the shares; so
there is no justification for the Finance Ministry to pay any premium over
market price.
Even if there was a premium to be paid - which considering MAS' financial
woes sounds
ridiculous - how can the Finance Ministry justify paying a 121 per cent
premium? Was there
an independent valuation carried out?
Recently Finance Daim Zainuddin announced Khazanah's pending purchase of
20 per cent of
TimeDotCom Bhd shares and added that the "price per unit share would be
based on a
professional evaluation by a consultant" - an independent one, we presume.
The people have
a right to know if a similar independent professional valuation was carried
out to determine
the MAS share value.
The news of the Naluri-MAS deal comes together with the revelation that
Halim Saad is
deferring payment on the exercise of his put option in the Renong-UEM deal.
Halim
announced that he would only be paying the RM3.2 billion for the 31 per
cent stake in Renong
Bhd he is buying from United Engineers (Malaysia) Bhd (UEM) in instalments.
He is now
expected to pay RM300 million in three equal tranches next year and the
balance on 14 May
2002. Halim's deferred payment and the disposal of Renong assets to UEM
for RM5.43
billion have triggered a selldown on Renong and in particular UEM shares.
Prime Minister Mahathir Mohamad has condemned foreign critics for suggesting
that the lack
of transparency and reforms in corporate governance was pulling down the
Malaysian
stockmarket. If the government would only care to listen, it is not just
foreign analysts but also
many concerned Malaysians who are critical of what are widely perceived
as incestuous
deals and wheeling-and-dealing, often at the expense of minority shareholders
and other
ordinary Malaysians.
As long as mismanagement goes unpunished and favoured but troubled tycoons
are allowed
easy escape routes, confidence in the Kuala Lumpur Stock Exchange and the
economy in
general will not improve.
Although the authorities have introduced some minor reforms in the capital
markets, they
seem to be missing the wood for the trees. Certainly, the introduction
of measures such as
T+3 will help to curb unscrupulous market players. But the government should
take a closer
look at why there has been much criticism and uneasiness over recent major
deals.
Anil Netto
Executive Committee Member
21 December 2000