The Finance Ministry today disputed allegations that the prime minister's son, Mokhzani Mahathir, had a stake and an interest in the privatisation of Pos Malaysia Bhd.

Deputy Finance Minister Shafie Mohd Salleh told the Dewan Rakyat during question time this morning that the accusation was baseless and pure malice since Mokhzani was no longer a shareholder of Phileo Allied Bank (PAB), which was awarded the privatisation of the country's postal service.

"I hope that those who make such an accusation in future, will investigate the facts first. If you were to check with the Registrar of Companies, you will find that the prime minister's son does not have any interest directly or indirectly in the company, nor is he represented on the board," Shafie said.

He was replying to a question by Abd Rahman Yusof (Keadilan-Kemaman) who asked whether the Economic Planning Unit was aware that PAB, which was controlled by Avenue Assets Sdn Bhd, is owned by the prime minister's son.

In May, the government sold Pos Malaysia to PAB at a price of RM800 million. The bank is to pay RM550 million in cash and the balance through a five-year, five percent convertible loan from the government.

The government can convert its loan into an equity, and therefore has the option of becoming a major shareholder in PAB at anytime over the five years.

Mokhzani, the second son of Dr Mahathir Mohamad, had owned Avenue Assets which has a large share in PAB.

He, however, divested himself of all his corporate interests in April. He said then that his decision was made to protect his father's name as his involvement in business was giving rise to allegations of nepotism.

Support for privatisation

According to Shafie, Pos Malaysia's total asset as at Dec 31, 2000, totaled RM1.2 billion while liabilities stood at RM626.4 million, giving a net asset value of RM570.7 million.

In reply to another question by Dr Syed Azman Syed Ahmad Nawawi (PAS-Kuala Terengganu), Shafie said that Pos Malaysia's pre-tax profit in 1995 totaled RM28.9 million, rising to RM83.3 million in 1996 but dropping to RM64.7 million in 1997.

It rose to RM82.8 million (1998) and RM99.4 million (1999) before dropping again to RM69.7 million (2000).

He also said that the government was confident that with the privatisation, Pos Malaysia will be able to increase the quality of its service and procure profits that will benefit its employees .

"For the information of this Hall, the government has given its explanation to Pos Malaysia's management, staff and union and from feedback, these groups gave their utmost support to the privatisation," he said.