A to Z of the great Maika Holdings betrayal
Feb 20, 08 3:30pm
Maika Holdings was touted as an economic vehicle and a miracle to lift the Indian poor from the shackles of poverty, Maika was launched with much hype and hope. The poor Indians – traditional MIC supporters, the lower middle-class and the working class Indians as well as a vast majority of plantation workers – were mesmerised into responding enthusiastically.
The poor plantation workers put their life savings into the venture, some scraping the barrel, others mortgaging their property and pawning the last of their jewellery. A vast majority also took loans at exorbitant rates to invest in a venture that promised dreams of hopes and tantalising prospects.
It’s not only the poor Indians who responded to this call to rally behind MIC’s efforts to secure seven percent of corporate ownership for the Indian community – which at that time had been stagnating at under one percent since 1960.
Although the original plan by the MIC was to ensure that at least RM30 million worth of Maika shares were subscribed, so successful was the promotion campaign that by 1984, a phenomenal RM106 million was raised from almost 66,400 shareholders.
A large majority of the shareholders are poor plantation workers. The largest individual shareholder with almost 2.8 million shares was MIC president S Samy Vellu. The amount invested in Maika was even larger than that obtained by MCA’s Multi-Purpose Holdings when the company commenced business.
When it started operations, Maika had one of the biggest cash reserves among Malaysian companies. At a time when business conglomerates like YTL, Berjaya, Malaysian Mining Corps, etc were practically unknown entities, Maika was already well known and if properly managed, would have been a billion dollar company now.
However, in its 25 years of tortured history, Maika investors have known nothing but pain and sorrow. The new dawn of a golden opportunity that was promised to the Indian poor never arrived. Instead, each passing year only witnessed dashed hopes and broken promises that littered the chequered history of Maika. Many of the investors had since passed away, their spirits broken by the betrayal of the leader they trusted.
What went wrong?
It is a case of bad management, poor investment, sheer arrogance and pure greed.
In spite of a number of major acquisitions made into some important companies – like the United Asian Bank (UAB), United Oriental Assurance (UOA), Malaysian Airlines System (MAS), Malaysian International Shipping Corporation (MISC), TV3 and Edaran Otomobil Malaysia Bhd (EON) – Maika’s performance has been mediocre.
There wasn’t any fanfare when Maika was allotted 10 million shares of Syarikat Telekom Malaysia Bhd (STMB). It was assumed in 1990 that Maika had been allotted all the shares it had subscribed to. No details were made known at that time.
Sometime in the middle of February 1992, the shroud of secrecy surrounding the Telekom shares allocation was ripped apart. Then, all hell broke loose.
A journalist from Watan disclosed that "there could have been some hanky-panky in the allocation of Telekom’s shares to Maika Holdings.
This was then followed by another report in a Tamil magazine, Thoothan on April 1, 1992, which disclosed that there could have been some discrepancy in the distribution of the 10 million Telekom shares allocated to Maika by the Finance Ministry. Malaysians learned for the first time (two years after the share issuance), that Maika acquired only one million and not the entire 10 million shares that were allotted to Maika Holdings.
Samy Vellu, through the Tamil Nesan and at MIC meetings, tried to explain by insisting that the cash flow problem faced by Maika did not allow Maika to take up all 10 million shares. But, one of the directors, a one-time ally of Samy Vellu, Vijendran, issued a statement insinuating that the truth may not have been told.
When this matter was raised in parliament, then finance minister Anwar Ibrahim disclosed that since Maika had stated that it could take up only one million shares, the remaining nine million shares were allocated to three companies proposed by Maika because to his "ministry’s knowledge, the three companies represented the interests of the Indian community" (The Star, April 30, 1992).
Note: At the time of share allocation in 1990, Tun Daim Zainuddin was the finance minister.
Maika did not reject the shares
The mystery deepened and bewildered the shareholders when another Maika director, Pasamanikam, contradicted the statements made by Anwar and Samy Vellu. According to Pasamanikam, Maika did not reject the Finance Ministry’s offer and did not propose that the nine million shares be allocated to any other company. He further revealed that Maika had indeed raised a RM50 million loan to facilitate the acquisition of the entire 10 million shares even before the Finance Ministry had withdrawn its offer. A tidal wave of questions engulfed the share holders:
1) Why did the Finance Ministry cancel the initial offer of the 10 million shares and subsequently allot only one million shares to Maika?
2) Who was responsible for the retraction of the original offer?
3) Who lied to the Finance Ministry?
4) Who informed them that Maika had recommended that the nine million shares be given to three companies?
5) Who supplied the names of these three companies?
6) Who coerced the Finance Ministry to change their mind?
7) Who aborted this offer? (There was no earthly reason for the Finance Ministry to change its mind on its own after having allocated 10 million shares).
According to GK Rama Iyer, former managing director of Maika Holdings Bhd – as revealed in his press release dated May 16, 1992 :
Samy Vellu was informed at 6.10am on Oct 5, 1990, that Maika had been offered 10 million STMB shares and of the probability of obtaining full loan financing and that Maika intended to take up the entire allocation of 10 million shares. Indeed, a letter dated Oct 5, 1990, from Arab-Malaysian Merchant Bankers Bhd. (AMMBB) – offering RM50 million to finance the purchase of the 10 million shares was received on Oct 6, 1990.
There must have been a mistake
He further clarified that Samy Vellu replied that "there must have been a mistake. The offer to Maika should be for one million and not 10 million"
According to Samy Vellu, the remaining nine million shares were for allocation to "other MIC bodies".
"Further, Samy Vellu stated that he would contact the ministry to clarify the position."
It was then, after Samy Vellu had contacted the Finance Ministry; that the letter of offer was retracted and Maika’s allocation reduced to only one million shares.
Why did Samy Vellu prevent Maika from acquiring the 10 million shares?
Wasn’t Maika his brain-child to raise the corporate wealth of the Indian community so that their economic welfare would be secured?
Wasn’t he the leader of MIC which launched Maika as a business venture to enrich the community which had long been associated with deprivation and poverty?
This was God-sent wealth. Why did he prevent this wealth from reaching Maika?
Imagine how much Maika would have made from these shares for which it only paid RM5 per share. When Telekom shares were first traded, it fetched a price of RM6.15 per share and that too during a bearish market. By mid-1992 the share price was hovering around RM11-RM13.
According to an article in the Aliran Monthly – 1993:13(10):
Samy Vellu had taken away from Maika RM120 million in profits (which it would have attained had it just held on to the 10 million shares until 1993).
They don’t deserve 10 million shares
Samy Vellu made it extremely clear that he personally decided to allocate only one million shares to Maika. According to Samy Vellu, "I could have given all the shares to Maika Holdings if not for their past business record. They don’t deserve 10 million shares because of the dismal performance of the Maika management. They have to learn to do business on their own and not depend on shares and make money out of it". (New Straits Times May, 16 1992)
His autocratic style and arrogance comes through so forcefully: "I could have given all the shares to Maika Holdings…," he boasts. "They don’t deserve 10 million shares…," he berates.
It is very apparent that he keeps a very tight hold on Maika. That being the case, how could Maika undertake any business venture without his knowledge and blessing? Shouldn’t he be part of the debacle that is haunting Maika today? Shouldn’t he also shoulder the blame for "the dismal performance of the Maika management?"
And why should he give nine million shares to three obscure companies?
SB Management Services Sdn. Bhd and Advanced Personal Computers Sdn Bhd were in fact shell companies with paid-up capital of RM2 each. The third company is Clearway Sdn. Bhd.
Samy Vellu decided on the shares allocation – not the Ministry of Finance!
On what criteria did Samy Vellu decide that the three companies deserve to get the Telekom shares instead of Maika?
What business experience and success could these companies boast about to warrant their being chosen from among all the other Indian businesses in the country?
Serious conflict of interest
There was a serious case of conflict of interest involved in this scandal. A director of Maika was also a shareholder and director of one of the three companies, all of which divided the nine million Telekom shares equally. Lim Kit Siang named this person as R Selvendra on May 7, 1992.
Two of the three companies – Advance Personal Computers and SB Management Services – shared the same business address: Level 2, Block F-North, Damansara Town Centre, Damansara Heights, Kuala Lumpur.
These two companies had the same company secretary: S. Balasubramaniam.
Significantly, S Balasubramaniam and S Sothinathan were both directors and shareholders of these two companies.
Note: Sothinathan is none other than the present MIC vice-president and MP for Teluk Kemang.
Samy Vellu rewarded a person who helped him hijack the Telekom shares by making him a deputy minister and could also probably groom him for future leadership of MIC.
Do we need leaders like this?
If the 10 million STMB shares were allocated for the MIC, who would be the natural inheritors of these shares on behalf of the Indian community – Maika with its 66,400 shareholders or three insignificant private companies with six shareholders? Does this information in any way suggest that these three companies represented the interests of the Indian community?
Who lied to the Finance Ministry that these "three companies represented the interests of the Indian community"?
What was the motive for diverting nine million shares to three private companies?
Those who sought to find the answers were threatened or beaten up. One brave soul who went on a crusade to expose this scandal was stabbed in Penang. Whenever questions regarding Maika were raised at MIC meetings presided by Samy Vellu, it was alleged that thugs would suddenly appear beside the person asking the question and that would be the end of the affair to seek answers.
On May 13, 1992, the then Selangor assemblyman for Seri Cahaya S Sivalingam (now deceased), had also acted as a thug when he led an assault on Maika shareholders who were peacefully picketing against the Maika Telekom shares scandal outside the Maika headquarters.
In October 2006, the MIC Johor assemblyman for Tenggaroh, the late S Krishnasamy assaulted M. Kulasegaran the DAP MP for Ipoh Barat at the Maika annual general meeting (AGM) at Legend Hotel. Even though Kulasegaran lodged a police report, no action was taken against Krishnasamy.
Some years ago, it was claimed that at one particular MIC meeting at the Dewan Sri Pinang in Penang, chaired by Samy Vellu, a Maika shareholder wanted to know the position of Maika. It was alleged that Samy Vellu told this shareholder that he would provide the answer after the adjournment for refreshment. In the meantime two thugs confronted this shareholder and told him that if he wanted to return home in one piece it was the right time to go home. When the meeting resumed, Samy Vellu reportedly called for the shareholder to repeat his query. But since he wasn’t there, Samy Vellu continued with his meeting without touching on the subject of Maika.
What is puzzling is the fact that in spite of so much overwhelming evidence, the Anti- Corruption Agency (ACA) after 17 months of investigation cleared Samy Vellu of any wrong-doing but unfortunately without clearing the doubts in the minds of the Malaysians.
In 1994, the then chairman of MIC public claims committee, V Subramaniam – also known as Barat Maniam – made a startling public accusation. He charged that the accounts were fabricated to make it appear as if all the profits from the sale of Telekom shares were channelled to MIED. In challenging Samy to take him to court, he declared, "I have come out with this statement to prove that Samy Vellu is a thief. He has stolen (Telekom) shares from the Indian community."
Maika Scandal refuses to be buried
In spite of 25 years of history, the Maika scandal refuses to be buried. It keeps on surfacing, haunting and hounding the perpetrators of a crime that robbed the poor of their fair share. The controversy surrounding the Maika-Telekom shares scandal appears to be far from over.
Promises were made; time and again, that Maika shareholders will get their hard earned money back. But not a penny was paid. At each Maika annual general meeting, the shareholders continue to press for answers. Often the meeting degenerates into violence as ‘thugs’ linked to the MIC president rough up those who dare ask questions.
Samy Vellu appointed his son Vell Paari as CEO of Maika Holdings in 1999. He is now in the process of selling off the few remaining assets of Maika Holdings.
Samy Vellu is very much in control of MIC, and he runs the party as a feudal organisation where he makes all the decisions. He has systematically hounded many capable leaders out of MIC to maintain his iron grip in the party. His deputies and committee members are loyal minions who will not hesitate to do anything and everything he says. After years in power, MIC is now a rotting mass, particularly in the head. Instead of serving the Indian community, MIC has become a party that serves only its leaders while millions of Indians face untold misery. The poor Indians have remained poor while those close to Samy Vellu became rich beyond their own expectations.
MIC exists for the benefit of its leaders, not the poor Indian community.
Now Mr Prime Minister, can you just ignore these contentious issues that have destroyed the lives of thousands of your citizens?
If P Uthayakumar can be arrested under the Internal Security Act (ISA) for merely trying to help those pillaged by Samy Vellu, kindly also take action against Samy Vellu.
The entire Indian community awaits your response and our votes hang on your action.
Editor’s Note:
The above article was forwarded to Malaysiakini anonymously.
And to make it worse, DBKL soon followed up their action by replacing the new road signs with ones that contained – above the romanised lettering – their equivalents in the Arabic script Jawi.
Tan also raised the question as to how much money was involved in the whole re-naming exercise.
He also raised the issue of when DBKL was going to finalise its local agenda policy as promised when its Kuala Lumpur Structural Plan 2020 guidelines was gazetted more than three years ago on Nov 4, 2004.
