PAS vice-president Husam Musa took on the government over its plan to merge government-owned financial services company Avenue Capital Resources Berhad and ECM Libra Bhd in which Umno Youth deputy chief Khairy Jamaluddin has a direct stake.

He said he was piqued that the proposed merger of Avenue Capital and ECM Libra - a boutique investment company - was announced less than a month after Khairry, who is also the son-in-law of Premier Abdullah Ahmad Badawi, acquired a RM9.2 million three-percent stake in ECM Libra.

"It seems that the link between Finance Minister (Abdullah) - who would be approving the proposed merger - and his son-in-law (Khairy) as the end-receiver is getting clearer," Husam added.

On the proposal to have ECM Libra involved in the management of the merged entity in the event that it is finally approved, the PAS leader claimed it goes against the present practice of the Ministry of Finance (MOF).

He asked who will manage the new entity after the merger, pointing to the ruling that shareholders are barred from managing government-linked companies.

"The MOF must take note of the procedure set by its former minister Dr Mahathir Mohamad which bars shareholders from being involved in the management of government-linked companies (GLCs).

"In the announcement of the proposed merger, it was stated that the new entity will be managed by ECM chief executive officer Lim Kian Onn and chief operating officer David Chua (both ECM shareholders).

"Why is the government releasing the managing of Avenue Capital when it holds a far bigger stake than ECM? Further, why is ECM exempted from the ruling?" he questioned in a press statement.

It has been reported that in the merged entity, the government through MoF will be the single largest shareholder with a 17% stake. Pantai Holdings Bhd and ECM Libra's Lim will have 8% each while other ECM partners, Kalimullah Masheerul Hassan and Chua, hold 6% each.

Khairy in control

According to Husam, the merger will allow Khairy to have control over Avenue's over 40 secured business deals from other GLCs, including Tenaga Nasional and Telekom said to be worth RM3 billion.

"For the record, the MOF had rejected KUB Malaysia Berhad's offer to buy over 32 percent of the ministry's stake in Avenue Capital."

Husam - who had been threatened by ECM over his earlier statement questioning Khairy's acquisition of the RM9.2 million of the company's shares - again raised the Singapore factor.

"As Pantai Holdings owns 17 percent stake in Avenue Capital, Singapore-based company Parway Holdings - which was allowed by the government to acquire 31 percent stake in Pantai - now has a direct stake within Avenue Capital, a GLC.

As the new proposed entity has also announced plans to carry out a full range of investment banking services, Husam said this would mean that a foreign force will be penetrating the country's investment banking activities.

"Singapore has already penetrated commercial banking activities following the MOF's approval to allow Singapore-based Temasek Holdings Limited to buy Malaysian company Malaysia M Plant's 15 percent state in Allied Bank."

He also said if the merger is approved, a foreign interest will also be allowed to penetrate the control of Pos Malaysia as Avenue Capital has 18 percent stake in the postal company which is valued at RM600 million.

"As a Malaysian citizen, I am very disappointed to learn how easy the nation's assets and interests are transferred to another country."

He also demanded that MOF be not allowed to approve the proposed merger until the conflict of interest between Abdullah as finance minister and Khairy as the director of ECM Libra is clarified.

"The decision made by the sons of former premier Dr Mahathir Mohamad, who had disposed all their shares, must be emulated."

Wants answers

Husam said the Finance Ministry owes Malaysians an explanation of its recent decisions to allow foreign interests to own stake in government-linked companies and without following proper procedures.

He said the ministry must also explain why ECM was allowed to manage the new entity of Avenue in which the government owns a 15.4 percent stake.

Contacted by malaysiakini, Husam said the statement proved his determination to question the lack of transparency in the business dealings involving government-linked companies.

Asked if he had been served by any court documents by ECM Libra, the Kelantanese politician said 'no'.

"I will not bow to their threats of civil suits. I will continue until I get some satisfactory answers from the government."