Tajuddin Bailout: Securities Commission Must Reprimand GLCs

Despite the nationwide furore over the directive given by Minister in Prime Minister’s Department, Datuk Seri Nazri Aziz to all Government Linked Companies (GLCs) to withdraw from civil suits against Tan Sri Tajuddin Ramli, none of the GLCs which are listed on Bursa Malaysia have made any public announcement over the matter.

According to The Malaysian Insider, the directive from the Nazri, who claimed to have the mandate of the Government said that:

This is to inform you that the government of Malaysia and the Finance Ministry has agreed to settle all civil claims against Tan Sri Dato Tajuddin Ramli and others to be withdrawn immediately in view of the fact that the government and the Finance Ministry have agreed that the said cases will be settled out of court… For your information the government has given me the mandate to act for the government in this matter.

Nazri’s letter also directed the lawyers acting for the GLCs and Danaharta to hand over their cases to the firm of Hasfarizam Wan and Aisha Mubarak, a well-known UMNO lawyer.

Such a directive from the Minister dated 8th August to public-listed entities should have been immediately disclosed on Bursa Malaysia as the litigations involved billions of ringgit in claims and counter-claims which are surely “material” to finances of these companies.

The Board of Directors of these companies must also immediately state their immediate position vis-à-vis the letter from Nazri to allow investors, particularly the minority shareholders to weigh their investment options.

The listed companies involved include Telekom Malaysia Bhd, Axiata Group Bhd, CIMB Bank Bhd, Atlan Holdings Bhd and Malaysia Airlines Bhd (MAS). None of these companies have issued any announcements pertaining to the matter as at the time this statement is issued, nearly a week after the government directive was given.

The failure to disclose material developments on a timely basis may subject the company and/or its director and officers to penalties under the Listing Requirements and the Securities Industry Act, including a fine not exceeding M$1 million, a suspension of trading of the company’s securities; and/or the delisting of its securities.

The Securities Commission (SC) must act without fear or favour and reprimand these listed companies for failing to make the necessary disclosures to protect the public and shareholder’s rights. SC must also require these companies to publish the Government’s directive in full to ensure that investors are not confused by “hearsay” over the exact content of the letter.

The blatant interference by the Government will also rock investors’ confidence in our stock markets as it becomes questionable if the Board of Directors will act in the best interest of these companies, or will be nudged to comply with arbitrary government decrees.

SC which has worked hard over the years to improve Malaysia’s reputation for poor corporate governance since the Asian financial crisis especially over the then RM3.2 billion bail out of Tan Sri Halim Saad, must not allow this incident to reverse the progress it has achieved.