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EPF Boleh! [Must Read]
By Martin Jalleh

25/3/2002 3:25 pm Mon


The "biggest" fund manager in Malaysia - with funds totaling RM181 billion in 2001 - pays to its contributors the "smallest" dividend ever in 38 years -- accompanied by a multiple of excuses!

It is rich enough to buy almost half of the total listed shares in the country -- but can only afford a paltry dividend of five per cent - whilst other funds like Permodalan Nasional Berhad have been able to chalk higher dividends!

It could pay a dividend of 8.5% during the 1986 economic crisis and 6.7% at the height of the economic downturn in 1997 -- but only 5% based on a year when the economy was "recovering" and economic fundamentals strong.

It is richer than any bank in the country or perhaps even all the banks put together, yet it says it can only pay a dividend equivalent to the fixed deposit rate offered by banks in the country!

It says it is committed to the country's progress or what it terms, "the nation's socio- economic development" -- yet it has been giving its contributors "progressively" lower annual dividends after 1995.

Its chairman blames "a higher provision for diminution in the value of equity and increasing doubtful loans" for the abysmal dividend - but remains mum on why the Fund has been categorising more investments as "doubtful loans".

In 2001 it had categorised RM1.41 billion of the fund's investments as "doubtful loans" -- a big increase from the RM754 million for 2000 - thus leaving the public with serious doubts over the "doubtful loans".

More than a quarter of the total "doubtful loans", estimated around RM500 million, was used to rescue the ailing telecommunications company Time dotCom Bhd. in 2001, which has become a big black dot on its credibility.

It lost, in that year, some RM110 million of the people's money in this dubious transaction - yet it still insisted that it was an investment which it had no doubts on, and one that was "based on sound financial considerations".

Its Chairman could still declare very proudly: "Every single sen of the rakyat's money is safe, there is no danger of their money being lost as it is invested in a very prudent manner" (The Sun, 13.04.01)!

He said it even in spite of the loss of massive amounts of public funds due to its "prudent strategies" in bailing out companies such as Perwaja Terengganu Sdn Bhd (RM600 million loss) and Sistem Transit Aliran Ringan Sdn Bhd (STAR).

(It gave STAR more than RM600 million in loans even when the company was operating at a loss -- resulting in the Fund's equity stake of RM135 million being subsequently written off and it's share of the loss amounting to RM96 million in 1999!)

Then there were the stupendous losses through its associate/subsidiary companies such as Malaysia Building Society Bhd, YTR Harta Sdn Bhd, Affordable Homes Sdn Bhd, Malaysian Capital Venture Sdn Bhd, Project Banda Samarian, etc.

No one really knows the actual extent of EPF's "prudent" losses through the years - and they are not telling - in spite of the eloquent promise in their Mission Statement to "communicate openly and sincerely".

Its Chairman had used the excuse of 'the external financial environment" being the reason for the low five per cent dividend -- there was not a word on its internal weaknesses, woes and warts -- which have become so glaringly evident, and for a very long time too.

Its "primary mission", it wants everyone to know, is "to provide retirement benefits for our members" -- yet in recent years it has come out with an increasing number of schemes for contributors to withdraw money early instead of strengthening their retirement position.

Its Chairman says "proper accounting is done for all investments after detailed deliberations by a panel who knows the market" -- but he forgets to add that the investment panel reports to the Finance Minister and is not answerable to the Board!

This farce, this fiasco...this folly...before the whole nation continues -- only the Employees Provident Fund can!

Martin Jalleh
23 March 2002