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| The saga of Telecoms Shares A clarification 14 years later
by Tan Sri Dato G. Vadiveloo
It is public knowledge that Maika Holdings Berhad (MHB) did not at any time apply to the Government for an allocation of STMB shares that were offered to the public in 1990. What Tan Sri G.K. Rama Iyer did was to approach Dato Seri Samy Vellu and follow up with his letter dated 28.9.1990 seeking Dato Seri�s good offices to obtain an allocation of 1 million STMB shares. The MD of MHB also enclosed a draft letter addressed to the PM and sought �saham STM sejumlah 1,000,000 untuk MHB�. Copies of the letter dated 28.9.1990 and the draft letter dated 29.9.1990 are enclosed herewith. The draft letter clearly indicates that the MD of MHB was not aware that, upon the application of MIC, the Ministry of Trade and Industries (MITI) had by letter dated 22.9.1990 already approved 10 million of STMB shares to MIC and had sent the said letter of approval to Arab-Malaysian Merchant Bank (AMMB), the principal underwriters of the public offer. A copy of said letter dated 22.9.1990 was also forwarded to the Ministry of Finance (MOF) with instructions that �Urusan pem-bahagian saham-saham ini akan diuruskan oleh Kementerian Kewangan�. Upon receipt of the MD�s letter dated 28.9.1990, Dato Seri Samy Vellu requested the MOF to allocated 1 million shares to MHB and to allocate the balance of 9 million shares to the three companies which had undertaken to channel the profits to Maju Institute of Educational Development (MIED), which owns Tafe College. However, on 4.10.1990, the MD of MHB contacted Cik Munirah of the MOF by phone without the knowledge and consent of Dato Seri Samy Vellu, who was entrusted with the responsibility to obtain the STMB shares for MHB. The MD did not even inform the Chairman of MHB or its Board before contacting Cik Munirah by phone. It is also doubtful whether the MD revealed to Cik Munirah that he had written letter dated 28.9.1990 to Dato Seri seeking his help to secure 1 million STMB shares for MHB.
Apart from the fact that the 10 million shares were allocated to a non-applicant in such great haste, how or why the letter of allocation was prepared and addressed to Maika Holding on 27.9.1990 even before the first ever letter dated 28.9.1990 from MHD regarding the STMB shares, is puzzling indeed. Cik Munirah obviously did not know of the existence of MHB until the phone call on 4.10.1990 from the MD since she addressed the said letter to �Pengarah, Maika Holding ... No. 1, Jalan Rahmat/Tuan Ismail� when it ought to have been addressed to �Pengurus Besar, Maika Holdings Bhd ... No. 1, Jalan Rahmant, Off Jalan Tun Ismail�. The letter of allocation dated 27.9.1990 was invalid and of no effect whatsoever since there was no entity known as �Maika Holding� nor a road known as �Jalan Rahmat/Tuan Ismail.� In any case, the MOF had no powers to alter the name of an allotee mentioned in the letter dated 22.9.1990 from MITI, which was the approving authority for special allocations. It is therefore not surprising that Cik Munirah soon realised her mistake and retracted the initial offer of 10 million shares to MHB and issued a fresh letter of offer of 1 million shares on 6.10.1990. Incidentally, the press release dated 16.5.1992 by the MD was not a contemporaneous statement as claimed by him. The press release was made 20 months after the events whereas the Board Paper dated 6.10.1990 and tabled at the special meeting of the Board of MHB on 8.10.1990 was in fact the contemporaneous statement made by the MD. In his Board Paper dated 6.10.1990, the MD stated that the price of STMB shares might drop below $5/- �if the Gulf crisis persists� and that �one can expect a lot of STM sharres to be unloaded in the market, especially by employees of STM. It may again depress the price�. Furthermore, despite a stockbroker�s valuation of the STMB shares at $7.00, the MD�s assessment was that the offer price of $5/- was high and that the Net Asset Value was only $2.70. The MD therefore recommended that �MHB purchase 1 mittlion shares of STM allocated by the Ministry of Finance�. A copy of the Board Paper is enclosed herewith. It should be noted that the members of the Board of MHB were not aware of the actions taken by the MD to obtain the STMB shares. The Board Paper did not mention anything about the letter dated 28.9.1990 nor about the phone calll made by the MB to Cik Munirah on 4.10.1990. There was no complaint whatsoever by the MD regarding the retraction nor any suggestion that the MOF had wrongly deprived MHB of its rightful allocation of 10 million shares. The MD in fact described the offer by MOF as �a good gesture to the Company�. It is also pertinent to note that the MD did not make any attempt to contact Cik Munirah nor any of her superiors after the meeting on 8.10.1990 in order to obtain the 10 million shares initially offered to MHB. The three companies arranged their own loans with the shares as collateral and signed as Margin Trading Facility Agreement which stipulated that the borrowers must top-up if the share price was below $7.00 upon listing so that the bank had a cushion of $2.00 at any time. Unfortunately, the shares were traded at $5.80 or thereabouts upon listing and none of the companies was in a position to top-up as required by the bank. Hence the shares were sold soon thereafter and the proceeds of sale were used to pay off their respective loans to the bank and the profits were handed to MIED to purchase furniture, fittings and equipment for Tafe College. Therefore the statement by Ram that Dato Seri Samy Vellu had taken away RM120 million in profit from Maika is completely untrue. The Press Statement dated 7.5.1992 by Lim Kit Siang revealed that the son and brother-in-law of Dato Seri Samy Vellu were not directors of SB Management Services Sdn Bhd and Advanced Personal Computers Sdn Bhd which had a issued capital of RM250,000.
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It should be noted that the members of the Board of MHB were not aware of the actions taken by the MD to obtain the STMB shares.
