“Oh Maika, I am but a fool…”

(Sammy Vellu and MAIKA Holdings)

By Hakim Joe
Posted by admin
Tuesday, 25 August 2009 08:20
(Originally published by Malaysia Today)

W
ould you jump at
the chance of
purchasing a GLC
share for RM5.00
if that particular share is
actively trading at the KLSE at
RM6.15? What if you were
offered 10 million of that GLC
company shares?

Let me calculate a bit here.

Every share I take up would
reap me an automatic profit of On 29 September 1990, Maika
RM1.15. If I were to sell the Holdings was specially offered
share immediately at a loss of 10 million Telekoms shares at
5 sen (at RM6.10) at the KLSE RM5.00 per share by the
and after the subsequent Malaysian Government. Then
deduction of the 0.15% Finance Minister DSAI told
remisier’s commission Parliament that Maika informed
(brokerage fee) and 0.05% the Finance Ministry that they
clearing fee, I would still end only had the financial
up earning RM1.028 per share. I resources to take up 1 million
could even negotiate with my shares and proposed that the
remisier as to his commission remaining 9 million shares be
if I were to trade 10 million allocated to three MIC-linked
shares, possibly down to companies of which the
something like 0.05% because he Government acceded to (3
will still be making RM30,500 million shares each).
from these transactions – not a
bad payday from one customer The three companies were
but not as good as the owner of Clear Way Sdn Bhd, a RM2 shell
the 10 million shares who company incorporated in October
potentially could make RM10.28 1988 with two shareholders
million. (Reman a/l Subramaniam and
Muniady a/l Sadayen), S.B.
Management Services Sdn Bhd, a
RM2 shell company incorporated
in December 1989 with two
shareholders (S.
Balasubramaniyam a/l M.S.

1/6
Survei and Sothinathan a/l Finance Minister DSAI in
Sinna Govinder) and Advance Parliament on 6 May 1992 after
Personal Computers Sdn Bhd being questioned by DAP’s Lim
(RM250,000 paid up capital) Kit Siang, nobody knew that 9
with four shareholders (S. million Telekoms shares had
Balasubramaniyam a/l M.S. been diverted to three
Survei, Sothinathan a/l Sinna companies instead to Maika. MIC
Govinder, R. Selvendra and President Samy Vellu
Isphare Kumar). immediately left the country
“on sick leave” to America.
SBMS and APC shares the same (Tun Daim Zainuddin was the
office at Damansara Town Centre Finance Minister in 1990.)
and the same shareholders
whilst R. Selvendra is a On 8 May 1992, the Anti
director of Maika Holdings. Corruption Agency (ACA) led by
Federal Territories ACA
It was also discovered that Director, Nordin Ismail, raided
as on 6 October 1990, the Arab- these three companies.
Malaysia Merchant Banking
Berhad had approved a RM50 On 10 May 1992, Deputy
million loan to finance Maika’s Finance Minister Abdul Ghani
acceptance of the entire 10 Othman said that it was
million RM5.00 Telekoms shares entirely up to these 3
from the Finance Ministry. Two companies “to ensure that the
days later on 8 October 1990, Indian community benefited” and
the Maika Board of Directors that it was Maika that had
decided that they were able and recommended these 3 companies
willing to take up the entire and not the Ministry of
offer of the10 million Telekoms Finance, and henceforth did not
shares. question the status of these 3
companies.
In February 1992, rumors
abounded that Maika did not
obtain the entire 10 million
Telekoms shares that was
allocated by the Finance
Ministry. A journalist from
Watan disclosed that “there
could have been some hanky-
panky in the allocation of
Telekoms shares to Maika
Holdings.” This was followed up
in April 1992 by a Tamil
magazine, Thoothan which
disclosed that there could have
been some discrepancy in the
distribution of the 10 million On 11 May 1992, Maika
Telekoms shares allocated to Chairman, Tan Sri G.
Maika by the Finance Ministry. Pasamanickam held a news
conference to publicly announce
Until the declaration by then that he knew nothing about the

2/6
allocation of the 9 million
Telekoms shares to the 3 companies. He also informed the
companies. He also said that he
“might bring up this matter” in
the monthly Maika board meeting
which was scheduled to be held
two days later (on the 13 May
1992).
On 12 May 1992, MIC Working
Committee member, Dr K.S.
Nijhar called for the
resignation of the Maika Board
of Directors.
On 14 May 1992, Maika members
were assaulted when peacefully
picketing outside Maika
Holding’s HQ in Petaling Jaya.
MIC Selangor Assemblyman for
Seri Cahaya, S. Sivalingam, was
allegedly the leader of a group
of Indians that assaulted the
Maika members.
On 15 May 1992, MIC President
Samy Vellu held a conference
(after his return from the US)
and said that Maika has never
recommended that the 9 million
Telekoms shares be allocated to
the 3 aforesaid companies.
Furthermore, SV said that Maika
was never allocated the entire
10 million Telekoms shares but
only a part of it due to its
past dismal performance. SV
also claimed that as of 5
October 1990, Maika had
abandoned the offer of the
entire 10 million shares but
instead approved the purchase
of only 1 million Telekoms
shares. He also said that the
allocation of 3 million shares
each to Clear Way, SBMS and ACP
were decided by the Ministry of
Finance and that none of these
companies belonged to him or
any of his family members and
that he did not have an
3/6
interest in any of these 3
press that these 3 companies
had pledged to donate the
entire net proceeds of the
share sales to Tafe College and
proceeded to issue documents of
these share sales and the Tafe
College building accounts. When
as by the press why he sold
these shares, SV stated for a
fact that he panicked after the
trading price of Telekoms fell
to RM5.30. As for the assault
of Maika members, SV declared
that he would himself have
“walloped” the Maika
shareholders if he had been at
the scene then.
It was also later discovered
that all these 3 companies had
loans from CIMB (through Rashid
Hussein Nominees Sdn Bhd) to
purchase the Telekoms shares,
utilizing these shares as
collateral and with conditions
that the share prices cannot
dip below RM6.50.
On 7 November 1990, CIMB
invoked this clause and force-
sale the 3 million Telekoms
shares held by Clear Way at
RM5.95 per share. Telekoms was
trading at RM6.00 at that time.
CIMB did the same for the other
5.5 million Telekoms shares
held by APC and SBMS at between
RM5.75 and RM5.95 per share.
Wait a minute here! Why only
5.5 million and not 3 million
shares each? Well, APC/SBMS
managed to hold back 500,000
Telekoms shares. How it was
able to do so if CIMB was
invoking their loan clause to
force-sell these shares is
unbelievable but Samy provided
no explanation (APC/SBMS sold
another 420,000 of these
Telekoms shares on April 1992 Telekoms shares. When Rama Iyer
at RM11.20). Another thing, why contradicted SV stating the
did Samy say 6 million shares Finance Ministry letter, SV
and not 3 million shares each? told him that the other 9
Are these supposedly two million Telekoms shares were
companies in fact operating as for allocation to “other MIC
one? bodies” and that he would
contact the Finance Ministry to
On 17 May 1992, Maika clarify the matter.
Managing Director, Tan Sri Rama
Iyer, contradicted Samy Vellu On 6 October 1990, Maika
saying that the latter has not received a letter dated 5
“told the truth” in his October 1990 from AMMBB
explanation of the Maika offering RM50 million to
Telekoms Scandal. Rama Iyer finance the purchase of the 10
said that he had personally million Telekoms shares. On 8
called the Treasury (after October 1990, the entire Maiko
being instructed by Arab- Board had a meeting and
Malaysia Merchant Banking officially approved the
Berhad) and had verbal purchase of the entire 10
confirmation from Munirah million Telekoms shares. A few
Abdullah Ng (Treasury Officer) days later, Maika received a
that Maika has been allotted 10 letter from the Finance
million Telekoms shares by the Ministry stating that the
Finance Ministry and that she initial letter of offer for 10
had a letter to that effect. million Telekoms shares was
Rama Iyer also said that he officially retracted and that
immediately dispatched a senior only 1 million Telekoms shares
Maika officer to collect this were on offer for Maika.
letter which was dated 27
September 1990 and then On 20 May 1992, Opposition
approached AMMBB Managing leader LKS produced evidence
Director Datuk Malek Merican on that Paari Vel was in fact the
4 October 1990 to raise the managing director of APC. In an
loan of RM50 million to finance APC namecard bearing Paari
the share allocation in full. Vel’s name and designation as
the MD, the London office
Rama Iyer also said that then address was listed at K.K.
Maika Chairman, Tan Sri C. Marketing Limited of 12,
Selvarajah concurred with his Whittington Road, Wood Green,
actions and asked him to inform London N22 4YD, England. (K.K
the MIC President to tell him of K.K Marketing stands for
of the share allocation by the Kumar Kandasamy whose son
Ministry of Finance, which he Isphare Kumar is listed as a
did the next day (at 6.10am). shareholder of APC.) BTW, Paari
However, during the telephone Vel is Samy Vellu’s son.
conversation, SV told Rama Iyer
that “there must have been a Also on this day, LKS
mistake as the offer to Maika proceeded to tear apart SV’s
was just for 1 million Telekoms documents on the share sales of
shares and not 10 million the 3 companies. One, Clear

4/6
Way’s accounts did not specify RM9,914,524.27. Simple
the 0.05% clearing fee. Two, subtraction of the two figures
its share financing interest show an outstanding of
was documented at 14.75% when RM8,971,720 and not
CIMB was only charging 11.25%. RM9,914,524.27. If indeed the
On the SBMS cum ACP accounts total outstanding is
(no trouble was taken to RM9,914,524.27, where did the
separate them), it was stated additional RM942,804.27 go?
that some of the proceeds of
the sale of the Telekoms shares
were used to purchase 3 million
Renong shares (no mention at
what buying price) and this
time the share financing
interest was calculated at
14.5%. No reasons were also
given as to why SBMS/ACP was
able to retain 500,000 of the
Telekoms shares.

As for the Tafe College

Building (TCB) accounts, LKS
questioned the validity of
these accounts as simple
arithmetic (like addition) were
done incorrectly (much like the
Home Ministry’s recent poll on
Lastly, the trading price of
ISA). The total income of
Telekoms shares had never fell
RM15,468,003.73 were tabulated
to RM5.30 as stated by SV
as from the Federal Government
during the press conference on
(RM8 million), donations from
15 May 1992. Between November
MIC branches (RM300,000), Clear
7th and November 15th, Telekoms
Way contribution (RM2,318,003)
traded at a low of RM5.85 and a
and from SBMS/ACP
high of RM6.15 and Between
(RM4,850,000). The correct
November 16th and November
figures should be RM15,468,003
27th, Telekoms traded at a low
not RM14,468,003.73 – where did
of RM6.00 and a high of RM6.90.
the 73 sen come from? The total
From December onwards, Telekoms
expenditure is even worse! The
never traded under RM7.00.
TCB accounts stated that a
total of RM24,662,528 were
It must be also noted that
used. The correct addition
the remisier handling these
comes to only RM24,112,528.
transactions was also a
Where did the difference of
director to both SBMS and ACP.
RM550,000 go?
By the way, the brokerage fee
for the 8.5 million Telekoms
Additionally SV stated that
shares came to a total sum of
the total expenditure incurred
RM505,470.00.
was RM24,662,528 and the total
payments made was RM15,690,808
On 24 May 1992, Maika’s
and the outstanding is

5/6
offices were broken into and
their offices ransacked.
Documents in pertinent to the
Telekoms shares allocation went
missing. The guard was also
assaulted. Earlier in the week,
employees of the weekly
Thoothan magazine were attacked
at their Jalan Ipoh office
premises (this magazine was
giving prominent coverage to
the Maika Telekoms shares
Scandal and on one of its
headlines, the magazine called
SV a liar and a thief).
In 1994, then chairman of MIC
public claims committee, V.
Subramaniam (also known as
Barat Maniam) made a startling
public accusation. He charged
that the accounts were
fabricated to make it appear as
if all the profits from the
sale of Telekom shares were
channelled to Maju Institute of
Education Development (MIED).
V. Subramaniam declared, "I
have come out with this
statement to prove that Samy
Vellu is a thief. He has stolen
(Telekoms) shares from the
Indian community."
In 1999, SV appointed his son
Vell Paari (of the K. Sujatha
fame) as CEO of Maika Holdings.
From a high of RM106 million in
1984, Maika’s assets fell to
about RM32 million in 1992
(after the Telekoms shares
scandal) and is in the process
of selling off all its assets
today (due to massive debts).
Vell Paari remained as the CEO
of Maika Holdings until today
and said that he would step
down once “he has cleaned up
Maika…” (more like clean out
though).
6/6
SV was cleared by the ACA
over the Maika Scandal and
nobody was arrested over it.
The 66,000 Maika shareholders
are still holding their breath
waiting for an explanation by
the Maika Board. As for the
Maika-Telekoms share scandal,
nothing was ever heard of it.
S. Sothinathan is now the MIC
vice-president and MP for Teluk
Kemang.
In October 2006, the MIC
Johor assemblyman for
Tenggaroh, the late S.
Krishnasamy assaulted the DAP
MP for Ipoh Barat, M.
Kulasegaran at the Maika annual
general meeting at the Legend
Hotel in KL. Even though
Kulasegaran lodged a police
report, no action was taken
against Krishnasamy.
A bit about Maika. Maika
Holdings was once touted as the
miraculous economic vehicle to
elevate the Indian poor from
the shackles of poverty.
Launched by MIC in 1982 as
their investment arm, the
original plan was to ensure
that at least RM30 million
worth of shares were subscribed
to but so successful was the
promotion campaign that by
1984, RM106 million was raised
from almost 66,400 shareholders
with SV being the largest
shareholder with 2.8 million
shares. From then onwards, it
was downhill all the way.
Let me continue the song, “Oh
Maika, I am but a fool, Darling
I love you, though you treat me
cruel…..”
Originally published by:
http://mt.m2day.org/2008/content/view/26061/84/