The mega-billion-ringgit suit filed by Umno-created tycoon Tan Sri Halim Saad against the government three days before the 13GE Nomination Day on April 20, 2013 to demand full settlement of an over RM2 billion deal that forced him to relinquish his controlling stake in Renong Bhd more than a decade ago has re-opened questions about the nations’ biggest corporate catastrophe in the nation’s 56-year history.
This was the RM2.34 billion UEM-Renong deal in 1997 which precipitated the biggest crash in the Kuala Lumpur stockmarket in the 1997 financial crisis, causing the Kuala Lumpur Composite Index to fall by 19.58 per cent, from 667.29 to 536.62 points in three days, wiping out RM70 billion of the investors’ funds in the stock exchange.
In his mega-billion-ringgit suit, Halim, once the sole corporate nominee of the ruling Umno, was offered RM1.3 billion in cash and property as well as control of a private waste management company, roughly valued at RM2 billion, in exchange for his disposal of Renong in the 2001 agreement.
But Halim had since only received RM165 million despite giving up his business empire and will be demanding the remainder.
The Edge Malaysia reported that Halim attempted to pressure the government into full settlement, but in 2010, former Prime Minister Tun Dr Mahathir Mohamad told him the agreement would not be honoured.
The Edge Malaysia article wrote: “Halim held numerous meetings with Dr Mahathir — even after the latter quit as premier in November 2003 — and Nor Mohamed to push for a full settlement but he was repeatedly fobbed off. “Some time in April 2010, Halim met with Dr Mahathir to try to seek a resolution to the matter but was told that the government would not be honouring the agreement.
“Businessmen familiar with the situation say that Dr Mahathir told Halim that he had been informed by Nor Mohamed that the assets taken over by Khazanah belonged to Umno.”
The article said Halim then met with Tan Sri Nor Mohamed Yakcop, then a minister in the Prime Minister’s Department in charge of the Economic Planning Unit, who confirmed Dr Mahathir’s words.
The suit, set to be one if the biggest corporate battle in the country, will expose for the first time the “behind-the-scenes dealings in several multibillion dollar transactions and contract awards that shaped corporate Malaysia between the mid-1980s and the early part of this decade” – including “insights into how Umno created a political money-making machine around Renong and its associated concern, United Engineers Malaysia Bhd (UEM).
“It will offer Halim’s account of how he ceased to be a business nominee of Umno and also provide a personal confession of the gruelling years the businessman went through as he battled to keep debt-laden Renong afloat,” the magazine wrote.
In November/December 1997, both in and out of Parliament, I had posed questions about the multi-billion ringgit UEM-Renong corporate catastrophe, but none of answers have been forthcoming.
The time has come for these questions to be answered.
On 26th November 1997, I posed four questions, viz: “Firstly, Renong executive chairman Halim Saad had said that the UEM purchase of 723 million Renong shares was made in a series of transactions on the open market.
“However, in the past month, the trading volume of Renong shares on the open market amounts to some 112 million shares, which represents only about 15 per cent of UEM’s deal even if every share was bought up by UEM. This would mean that some 611 million Renong shares (or 85 per cent ) were bought through off market trading.
“Secondly, UEM announced that it had acquired 723 million Renong shares, representing a 32.6 per cent stake, from the open market for RM2.4 billion or an average of RM3.24 per Renong share. However, in the month before November 17, when the deal was announced, the price of Renong never reached RM3.24 per share – the highest being RM3.22 per share on 15th October and the lowest being RM3 per share on 14th November and RM2.90 on November 17.
“Thirdly, who are the seller or sellers for which UEM paid a premium price of RM3.24 a share, when Renong was last traded for RM2.90 before the announcement of the UEM-Renong deal, and was traded last Friday at RM1.80 per share before suspension of the counter yesterday.
“Fourthly, what are the bank or banks which lent UEM the RM2.4 billion to pay for the 723 million Renong shares.
“Can the UEM management give full and satisfactory answers on these four issues to establish the accountability and transparency of the UEM-Renong deal, which had been the single corporate decision which had precipitated the biggest crash in the Kuala Lumpur stock market in the four-month economic crisis, causing the KLSE Composite Index to fall by 19.58 per cent, from 667.29 to 536.62 points in three days, wiping out RM70 billion of the investors’ funds in the stock exchange.
“When the market reacted in outrage as well as panic to the UEM-Renong deal, which was seen as a UEM bail-out of Renong to the detriment of the UEM minority shareholders, it was Halim Saad who, as Renong executive chairman, gave a press conference where he emotionally refuted speculation that it was a bail-out attempt, and asked: ‘Isn’t that a good deal for UEM? Why do you say it is a bail-out for Halim Saad and Renong?’”
In Parliament on 11th December 1997, I posed ten questions on the UEM-Renong deal, viz:
“Yesterday, I had specifically raised five questions: whether it is true that the RM2.34 billion UEM-Renong deal is actually a bail-out for Tan Sri Halim Saad in his US$800 million purchase of Philippines’ National Steel Corporation (NSC) from Wing Tiek Holdings Bhd, through his proxy, Abdul Rashid Manaf, through the shell company Hong Kong-based Hottick Investment Ltd as well as take over the liabilities.
“Today, I want to pose five further questions:
Can Malaysians expect answers to these 12 Questions in the first meeting of the 13th Parliament, 16 years after the multi-billion ringgit UEM-Renong catastrophe?