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By P Gunasegaram
One burning issue over the recent controversial privatisation of Malaysia Airports Holdings Bhd or MAHB, is the trading of MAHB shares by pension fund Employees Provident Fund (EPF) in the lead-up to the RM18 billion takeover.
There are many issues over the deal but we will deal here with just the sale of MAHB shares by EPF ahead of the announcement of the takeover by the consortium which included EPF. This issue alone involves an opportunity cost as high as RM686 million.
Post the deal, it resulted in the Minister of Finance 11 Amir Hamzah Azizan denying that EPF made losses trading MAHB shares while Ayer Hitam MP Wee Kah Siong of MCA in a reply said that Amir Hamzah did not answer the questions he raised.
Muddied and muddled
The whole thing is muddied and muddled by the fact that Amir Hamzah was CEO of EPF at the time the sales of EPF shares in the market were made - Wee says the trades took place between November 2022 and December 2023.
Amir Hamzah, formerly Tenaga Nasional CEO, was appointed CEO of EPF on March 1, 2021 when Muhyiddin Yassin was prime minister, succeeding Tunku Alizakri Alias who was appointed in August 2018 when Mahathir Mohamad was PM during the Pakatan Harapan administration.
Amir Hamzah was appointed Minister of Finance 11 on Dec 12, 2023 soon after the completion of the sales of MAHB shares on the market. PM Anwar Ibrahim continued to remain the Minister of Finance.
Who then is lying over the trading in MAHB shares? Did EPF make money when it sold the shares, and how much did it make? Did EPF lose an opportunity to make more money by selling out too early? And why? To answer the questions, we need to look at the chronology of events.
First, some background. Gateway Development Alliance (GDA) first announced its offer for MAHB at a price of RM11 a share in May last year. GDA is owned by Khazanah Nasional Bhd (40%), EPF (30%), BlackRock unit Global Investment Partners (25%) and the Abu Dhabi Investment Authority (5%), according to reports.
It succeeded in the offer, valuing MAHB at RM18.4 billion, earlier this month, and will soon take MAHB private.
Wee questions share sales
Wee had questioned again about two weeks ago the MAHB share sales in Parliament but was frequently interrupted by DAP MP for Kampar Chong Zemin, who questioned Wee’s allegations that losses had been made because of selling shares at a lower price and buying them at a higher price.
The gist of what Wee had said was EPF could not invoke the concept of Chinese walls (separation of information between departments) with respect to the share sale because EPF was not a bank but an investment firm which must take into account all information available before decisions are made.
He was obviously referring to the fact that EPF was part of the consortium which eventually made an offer at RM11 a share for MAHB, considerably lower than the market price at which EPF sold about a tenth of MAHB shares.
He also stated that just months after the last trades in December 2023, in Feb 2024, The Edge had reported that a consortium comprising Khazanah Nasional, EPF and others was mounting a takeover offer for MAHB. This indicated the takeover had been on the cards for quite a while before that.
Interruptions by Chong
He was interrupted repeatedly by Chong of DAP with the speaker eventually warning Chong not to do so and that he would be asked to leave if he continued.
EPF then had and still has a board representative on MAHB, Rohaya Mohammad Yusof who was appointed as a non-independent non-executive director on 1 October 2021. She is the chief investment officer of EPF, appointed in January 2020.
It is reasonable to assume that the board would have discussed the privatisation offer. So what should Rohaya have done? Informed the EPF of the situation of course.
And since this is information already privy to EPF, it should have put a stop order on all trading of EPF’s MAHB shares until the takeover was over. There is no question of Chinese walls - whether they were there are not, trading cannot take place at all because there is inside, confidential information involved.
But instead it transpires that EPF heavily sold shares of MAHB, as it turns out at considerably lower prices than the takeover offer. The six hundred million dollar question: was anyone else benefiting from this, why and how?
About 10% sold
Wee said in his questioning that the sale resulted in EPF whittling down its stake from 15.6% to about 5.7% in less than 13 months to Dec 2023. He asked why such a sale was made when airports throughout the world were recovering after the downturn brought about by Covid 19 in 2020 and 2021.
He said the shares were sold between RM6.80 to RM7.70 a share for a year from November 2022, resulting in an opportunity cost of RM539 million to RM686 million if EPF had kept the shares and accepted the takeover offer. The numbers seem to check out, based on my preliminary calculations.
He pointed out that EPF had the shares for a period of 24 years and it was strange that it should make a sale of a near-10% stake in a year when it had been holding the shares for two dozen years.
Amir Hamzah said on Feb 20 in Parliament that the EPF had made RM102 million from the sale of MAHB shares. He was replying to a question by Kampar MP Chong who wanted to know how much EPF made from the MAHB share sales.
But he sidestepped the question of opportunity cost which Wee had asked. With Chong’s interference, and a lack of time, Wee did not have time to question Amir Hamzah over the issue.
But Wee was not to be stopped. In a press conference at Parliament, he repeated the points raised earlier and said that his question over the loss of an opportunity cost was not addressed. Indeed it was not. He demanded an independent audit and an investigation.
Wee unhappy over reply
He conceded the profit was based on an earlier purchase at a lower price some 24 years ago but said Amir Hamzah did not address his questions. He said that the Minister of Finance 11 was CEO at the time of the 12-month period when the shares were sold.
Technically, Amir Hamzah was not lying but it was abundantly clear that he had deftly sidestepped the questions that Wee was asking - why did EPF sell down its stake which it had held for 24 years in MAHB from nearly 15.6 per cent to 5.7%? And did not the sale result in an opportunity cost of RM539-686 million?
This is not just a question for the EPF board to answer but one for the regulatory bodies, including the Securities Commission and Bursa Malaysia to investigate by tracing trading records to determine ultimate ownerships and make the necessary conclusions.
Amir Hamzah’s reply was inadequate to say the least. The questions raised by Wee are very valid and deserve a proper answer.
(P Gunasegaram says when valid questions elicit poor replies, there is trouble ahead.)
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