RM5b + RM5b = RM10b worth of questions

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The first 5 billion ringgit question is of course related to state investment company Valuecap. That’s the RM5 billion taken from our EPF money to be used by Valuecap to “invest” in the stock market.

But Malaysian Insider raises a new question. It claims that Valuecap owes its three shareholders RM5.1 billion, which is due to be repaid in February 2009.

This debt, in the form of interest-bearing unsecured bonds, raises questions over plans for the Employees Provident Fund to lend RM5 billion to Valuecap to invest in the stock market.

In March 2003, Valuecap borrowed RM5.1 billion from shareholders Khazanah, Kumpulan Wang Amanah Pencen and Permodalan Nasional Bhd to invest in the stock market. At the time, world stock markets were bracing for a looming war in Iraq which followed on the September 2001 attacks on the US.

Valuecap’s bonds were due to be repaid in February 2006, but the company was given another three years to this coming February. At the end of 2006, the three shareholders each held RM1.7 billion in these bonds, according to documents obtained by The Malaysian Insider.

Since these debt instruments were not listed and are not tradeable, the three shareholders are probably still holding these bonds today.

Recently, the government proposed that EPF lend Valuecap RM5 billion to invest in the stock market. In view of its impending obligation to repay its shareholders, however, questions arise over whether the loaned funds will be used to redeem the bonds.

As at the end of 2006, Valuecap’s investments were valued at RM4.8 billion. Since then, the stock market has lost 21 per cent of its value. If Valuecap’s investments have tracked the stock market, these could be worth RM3.8 billion currently.

Then there is Petaling Jaya Utara MP Tony Pua’s call on the Finance Ministry and Khazanah to explain their involvement in Silterra Malaysia Sdn Bhd, which lost RM1 billion last year. This is compounded by the alleged loss of RM5.17 billion that Khazanah Nasional is said to have invested in the semiconductor wafer manufacturer since 1994, reports Malaysiakini.

Tony is concerned that Silterra is now seeking an additional RM8.5 billion for its expansion efforts.

I think the Finance Ministry has some serious explaining to do. It should come clean and make public the accounts of these two entities – Valuecap and Silterra – and tell us exactly how much, if any, has been lost. The Ministry should also explain to the public exactly what it intends to do with the RM5 billion from EPF.

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Ravin Perumal

Hi Anil. Perhaps you can also look into why EPF can only offer 4-5% while Amanah Saham Bumiputera can come up with 8-9%. Is it only incompetence on EPFs behalf or are the “extras” being re-routed elsewhere. I believe the contributors are being (taken for a ride). We are talking about a lot of money here, more than the billions you just mentioned.

Yow Chuan

The stock market clearly is in a bad shape, but the blackmarket might be thriving, hence the “no recession” claim?

BrightEyes

The EPF. A giant ATM for the use of the government to bail out their friends in time of need. Which is basically anytime.

PlainTruth

Valuecap and Silterra are classic examples why a resources rich Malaysia with an NEP mentality are miles behind a resources poor but meritocratic Singapore.

Born2reign

Dear assiseesit, You may say they (govt) is not touching your money but they will strike you and everyone with infaltion. If the money supply is doubled, a RM1.00 curry puff will then cost RM2.00. If your income remains the same, the govt has just halved your savings assets. The UMNO Malays are so short sighted. They ‘fight’ our local Chinese and Indians, but they forgot to fight globally with those competitors from China and India. UMNO is not bothered with the progress of the country and rakyat. UMNO will protect its plunder with all its might, that’s why they… Read more »

Non-partisan

We should learn and capitalise from China’s struggles with democracy: According to a China expert James Kynge China Shakes The World, the political reform agenda in china always gains pace whenever there is an economic slowdown. This is because the government needs to address domestic problems when external problems are challenging. The opposisiton should see this an opportunity. Najib already has caught on, not so much because of March 8 th results but he senses things may get worse economically and people will no longer have the stupidity to talk about racial quotas. Everyone has to pull up their socks,… Read more »

amoker

I had a friend who used to work there. She said that they behave like any government funded projects – did not care what they are spending on. Then, they knew that their technology is obsolete but still put in the money. She then resigned.

Also, how much money did we invest in that ‘IT entrepreneur” who ran away?

But my real frustrations is with the Sarawak government who continue to bulldoze the aluminium smelting plant.

colimac

you can take a donkey to the water and id the donkey still doesn’ wants to drink water ,then there is nothing much to do. not enough of evidence and all has been investigated are common findings.these are a groupof power craxy people who wants money to be their bedfellows.what to do???

Ganesh

Read about Malaysian Ostrich economics here….. Asia Times 31 Oct 2008 Malaysia’s ostrich economics By Anil Netto KUALA LUMPUR – Malaysia is bracing for an economic slowdown, as the government gradually comes to grips with the fact that the country is not as isolated as it hoped from the mounting financial turmoil in the United States and Europe. Already dark clouds loom on the economic and financial horizons. This week, Deputy Prime Minister Najib Razak, who is also finance minister, said the government would review its 2009 economic growth forecast of 5.4%. He said that budget deficit forecasts may also… Read more »

Ganesh

Why pump in RM5 bil to the Bursa? It is a global recession lah. It is 1997 back again. However much you put in, even RM100 bil, Bursa will still collapse, so will, all other stock exchanges globally. For heaven’s sake, it is a global recession lah. The whole whole is either in recession or going into recession. We live the Ostrich theory and we are in complete denial. Our politicians are misleading everybody by stating that we will stand strong against a global recession. How can we? Like Chedet pointed out, we are an export based economy. If our… Read more »

asiseesit

They can Value-Brag all they want.

They are not touching my money!!!

Eagle has landed

Well Anil, whatever issues raised, the government with their own stride and know how will come up with all the smokescreen and cover up. They are not bordered and will not admit anything-a sorry state of affair when they are in the state of denial.
Pray to GOD that Malaysia will be safe and sound and AOK.

Antares

This is precisely why the Umnoputera Billionaire’s Club will resort to any dirty trick just to prevent a change of government – and it also explains why Najib is such a hot favorite for Umno president….

Han2

Oh, I forgot to add the RM5 billion lost by Khazanah!

And we are not going to be economically affected by the current economic turmoil, did somebody say?

Han2

These are all only the ‘exposed’ deals Anil. RM5 bil loan from EPF to Valuecap, the RM5.1 billion they owe on maturing bonds, the RM8.5 billion requested by Silterra is not equalled to RM10 billion.

It is RM5b + RM5.1b + RM8.5b = RM18.6 billion!

In digits its more scary RM18,600,000,000.00!