Shame on EPF!
Kevin GanPublished: Mar 20, 2001 8:18 AM | Updated: Jan 29, 2008 6:21 PM
The Employees' Provident Fund has totally no credible defence to put forward in its recent action to convert half of Time dotCom's debts into shares with consequent heavy losses. Perhaps it should come clean and admit that its decision was not based on financial prudence but a yielding to sordid political shenanigans.
Firstly, EPF had no right to risk its members' hard-earned savings in granting an unsecured loan of RM500 million to a risky crony-led company like Time dotCom. Having imprudently given out that loan, it went one step further into the quagmire of financial recklessness by agreeing to convert part of the loan to stocks in Time dotCom.
No creditable financial institution would agree to accept payment in a form that virtually guaranteed heavy losses. The abysmal flop of Time dotCom's IPO with the public subscribing only 12 percent of the shares offered clearly showed that the market has already rejected the IPO price as too high. The loss was certainly foreseeable. EPF should not insult the public's intelligence by saying that it was making a prudent financial investment in the company.
The original terms of the loan in 1996 was that EPF would be paid from the proceeds of Time dotCom's IPO. As Time dotCom's IPO was fully underwritten and the debtor had the cash in hand, why can't the terms of the agreement be fulfilled? EPF's scandal-laced action amounted to bailing out the banks which underwrote the IPO.
The banks which undertook to underwrite the IPO should bear the consequence of their business decision. Isn't this yet another example of how politically-connected business people in Malaysia do not have to bear the consequence of any bad decisions they make as losses are readily shunted to public institutions? With scenarios like this happening time and again, how can the management of top corporations in the country improve and compete in a globalised economy?
Neither can the EPF rationalise its actions by saying that it did not pay cash for the IPO. This is like saying that since you used your credit card to make a bad purchase, it is all right because you did not pay cash for it.
As for EPF, it amounts to a betrayal of trust. It could have insisted that it should be paid in cash from the IPO's proceeds, but it chose instead to shoulder heavy losses which amount to more than RM90 million after only one week of trading in Time dotCom's shares.
It is conceivable that political pressure was brought to bear in this financially imprudent EPF decision. The Investment Board of the EPF may have no power to reject the political pressure but they could have done the honourable thing and resigned. Their willing compliance makes them guilty accomplices in robbing the members' hard-earned savings. Are there no honourable men left in public service?
We have heard of trust betrayed in secrecy and in the dark. But for trust to be betrayed openly with impunity and contempt for the people who put the trust in you speaks of an abject corruption of morals that sadly points to how far we have regressed under the present leadership.
Firstly, EPF had no right to risk its members' hard-earned savings in granting an unsecured loan of RM500 million to a risky crony-led company like Time dotCom. Having imprudently given out that loan, it went one step further into the quagmire of financial recklessness by agreeing to convert part of the loan to stocks in Time dotCom.
No creditable financial institution would agree to accept payment in a form that virtually guaranteed heavy losses. The abysmal flop of Time dotCom's IPO with the public subscribing only 12 percent of the shares offered clearly showed that the market has already rejected the IPO price as too high. The loss was certainly foreseeable. EPF should not insult the public's intelligence by saying that it was making a prudent financial investment in the company.
The original terms of the loan in 1996 was that EPF would be paid from the proceeds of Time dotCom's IPO. As Time dotCom's IPO was fully underwritten and the debtor had the cash in hand, why can't the terms of the agreement be fulfilled? EPF's scandal-laced action amounted to bailing out the banks which underwrote the IPO.
The banks which undertook to underwrite the IPO should bear the consequence of their business decision. Isn't this yet another example of how politically-connected business people in Malaysia do not have to bear the consequence of any bad decisions they make as losses are readily shunted to public institutions? With scenarios like this happening time and again, how can the management of top corporations in the country improve and compete in a globalised economy?
Neither can the EPF rationalise its actions by saying that it did not pay cash for the IPO. This is like saying that since you used your credit card to make a bad purchase, it is all right because you did not pay cash for it.
As for EPF, it amounts to a betrayal of trust. It could have insisted that it should be paid in cash from the IPO's proceeds, but it chose instead to shoulder heavy losses which amount to more than RM90 million after only one week of trading in Time dotCom's shares.
It is conceivable that political pressure was brought to bear in this financially imprudent EPF decision. The Investment Board of the EPF may have no power to reject the political pressure but they could have done the honourable thing and resigned. Their willing compliance makes them guilty accomplices in robbing the members' hard-earned savings. Are there no honourable men left in public service?
We have heard of trust betrayed in secrecy and in the dark. But for trust to be betrayed openly with impunity and contempt for the people who put the trust in you speaks of an abject corruption of morals that sadly points to how far we have regressed under the present leadership.
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