Samy Vellu somehow already knew there was a "mistake"
The Anti-Corruption Agency (ACA) have stated they find the MIC leader, Datuk Seri Samy Vellu, innocent of any criminal wrong-doing relating to the allocation of Telekom shares to Maika Holdings. Samy Vellu, who has consistently maintained his innocence, but not been consistent about very much else, would thus appear to have been vindicated.

Samy Vellu has certainly not been consistent about who the 10 million Telekom shares were supposed to go to. First he said they were to be allocated to Maika, the investment arm of MIC; but since Maika did not have the finances, the shares were allocated to other parties representing Indian interests. Then, it was made public that Maika in fact had arranged a loan that would have allowed it to take up the full 10 million Telekom shares. Following this, Samy Vellu changed his tune. The 10 million shares were not being offered to Maika but to MIC, he now said. And MIC it seems, allocated only one million Telekom shares for Maika, and the rest were for other companies that would make profits to be channelled to the MIC educational institution, Tafe College.

MOF letter

A letter was issued by the Ministry of Finance (MOF) offering Maika 10 million Telekom shares in the flotation of the utility company. Soon after getting this letter, Maika Chief Executive Officer, Tan Sri Rama Iyer, rang up Samy Vellu to inform him of the allocation.

Curiously, Samy Vellu immediately told Tan Sri Rama Iyer there had been a mistake and he would check with the ministry officials on how many shares were really offered to Maika.

Even before the MOF realised there had been a "mistake" in sending out the letter offering Maika 10 million Telekom shares Samy Vellu somehow already knew there was a "mistake". Subsequently, MOF officials "clarified" Maika was only being offered 1 million Telekom shares.

What was not clarified was how the mistake arose and on what grounds the MOF agreed to allocate 9 million shares to 3 other obscure companies supposedly representing the interests of the Indian community while Maika itself only received one million shares.

Maika Shortchanged

Samy Vellu has not been consistent in his public statements on whether the full amount was initially offered to Maika. Neither has the leader of the Indian party in the Barisan been consistent about why Maika was not to be offered the full 10 million shares.
Prima facie, not allowing Maika to get the full allocation of Telekom shares, and thus undermining Maika's profits, is a criminal breach of trust. First he said Maika could not afford the shares. When Tan Sri Rama Iyer produced the letter from Arab-Malaysian Merchant Bank offering Maika a loan to take up the full 10 million shares, Samy changed his tune and said the shares were not being offered to Maika because it had a poor track record in its investments.

But what was the record for the 3 companies that together took up the 9 million Telekom shares under instruction from MIC? Two of these companies were in fact shell companies with paid-up capital of RM2 each.

Is it pure coincidence that the leader of the opposition, Lim Kit Siang found letter-heads and business cards that showed Samy Vellu's son as director of one of the companies? Samy Vellu, of course, claimed these items were fakes.

Dubious dealings

Of the 3 companies that equally received the 9 million Telekom shares in October 1990, Clearway Sdn Bhd, sold its 3 million shares within a month for a net profit of RM2.3 million.

The other two companies, Advance Personal Computers (APC) and SB Management Sdn Bhd (SBM) which together received 6 million Telekom shares, sold 5.5 million shares also in early November 1990 for a RM2.1 million profit. With this profit, they bought 3 million Renong shares. The remaining half a million Telekom shares were sold only in March-April 1992, just about the time the Maika controversy became public.

The companies supposedly were to make profits from Telekom shares (which was a pretty sure thing given that it was an initial flotation) to be channelled to Tafe. It is hard then to fathom why APC and SBM used the money from selling the Telekom shares to buy shares in Renong.

Why did the profits not go straight to Tafe? Why were the funds instead put in Renong shares which appear not to have been sold until 1992?

Had these companies become the investment arm of Tafe? Who would underwrite the losses of this further investment? In fact the Renong shares purchased in November 1990 had gradually fallen in value and by the middle of 1992 were only about half their cost. If there had been profits from the Renong investment, who would have benefited?

APC and SBM held on to 0.5 million of the Telekom shares received in October 1990 and only sold these in 1992.

Why were the shares held for so long? Was there any guarantee that when the shares were sold the profits would go to Tafe? Is it pure coincidence that these shares were sold just about the time that the public were becoming aware that Maika failed to receive the 10 million Telekom shares it was supposed to have been allocated?

Puzzling ACA Decision

For those who have been following the Maika-Telekom issue, there is now a new puzzle. How, in spite of all these coincidences and curiosities, could an investigative body like the ACA come to the conclusion that there had been no wrong-doing on the part of Samy Vellu? Given his high position in government and allegedly close links to the Prime Minister, many would jump to the conclusion that the ACA investigation was a cover-up.

It is hard for the intelligent public to reconcile the conclusion of the agency with what is known from press reports. Prima facie, not allowing Maika to get the full allocation of Telekom shares, and thus undermining Maika's profits, is a criminal breach of trust.

Shareholders of Maika had put their faith in Samy Vellu and money in Maika. Many had borrowed as much as they could in order to buy Maika shares. Then it transpired that Samy Vellu had nominated 3 other companies to get the bulk of Telekom shares - taking away from Maika RM120m in profit if it had just held on to the extra 9 million shares up to today.

How could the ACA say there was nothing wrong in diverting profits from Maika to obscure companies with no established record? What were the facts that supported the ACA conclusion? Without going through all the facts discovered by the ACA it is not easy to see how it reached its conclusion.

If the report remains only for the eyes of the selected few, the credibility of the ACA will be affected. The agency must make public the reasons for its conclusion, or risk its acronym (ACA) being widely perceived as standing for something quite the opposite.

Ram
Bank Officer
Source: AM 1993 : 13(10)