BSC, B'raya Devt. robbed by Daim using CLOB?

When Daim was being charged, keen followers familiar with the Malaysian corporate scene were sceptical the authorities had any chance of getting him. A friend and distancely related to him confidently claimed Daim would cover his legal.

Rather sceptical with such claims since had long known a controlling shareholder of a PLC directed by one of the two acquisitive Tuns to sell his company to one of their son and not getting paid.

So much for them labelling Najib as "pencuri, penyamun dan penyangak." Since the owner have let bygone be bygone and gentlemanly moved on, lets just let it lay. 

However, it was recently made known that an owner of a stockbroking firm directed to merge into a financial group suffered the same ordeal. It dispel the notion that the Tuns legitimised their actions. 

CLOB and force takeover of MCA's MPHB 

It also reminded of a January 2024 Channels News Asia's report relating to the cancellation of Central Limit Order Book (CLOB), platform for Singapore to trade in Malaysian stocks taken off the Singapore Stock Exchange in 1998.

Extract of the report below:   

THE CLOB AFFAIR

Government official close to the situation told CNA that of particular interest are the corporate transactions that were widely seen as forced divestments by businessmen caught on the wrong side of the political divide and the closure in September 1998 of the so-called Central Limit Order Book, or CLOB, an informal trading platform that offered investors the trading in the stocks of a large selection of Malaysian listed companies in the Singapore bourse.

Singapore set up CLOB in 1990 after Kuala Lumpur banned the trading of stocks in Malaysian companies on the Singapore exchange. 

Malaysia grudgingly tolerated the CLOB platform because stockbrokers based in Singapore took some of the load from their overburdened Malaysia counterparts who could not cope with the deluge of business as the Kuala Lumpur stock exchange exploded during the boom years of the 1990s.

Then came the regional financial crisis and the political maelstrom with the open warfare between former premier Dr Mahathir Mohamad and his then-deputy and current premier Anwar Ibrahim.

Sharp differences between the two politicians on how to respond to the financial crisis morphed into a bitter political clash that resulted in Mr Anwar's sacking from government and imprisonment on corruption and sexual misconduct charges.

In September 1998, just days before Mr Anwar was sacked from government, Malaysia imposed capital controls, set the local currency at a fixed rate of 3.80 ringgit against the US dollar, and banned the trading of Malaysian stocks outside the country.

The move effectively froze billions of dollars worth of stock in 112 Malaysian companies that were trading on CLOB. 

Mr Daim, who was brought back to the government following Mr Anwar’s sacking and reappointed at finance portfolio, quickly approved a controversial plan by a close associate, Singapore businessman Akhbar Khan, to operate a lucrative concession to manage the return of the frozen equities, which at the time was valued at roughly US$4 billion.

CORPORATE SHAKEDOWN

The CLOB affair, which came under heavy public criticism, strained Malaysia’s bilateral relations with Singapore and coincided with one of the most extensive purges in corporate Malaysia, where business and politics have long intertwined.

Business personalities and groups linked to the deposed Mr Anwar were forced to pare down their controlling stakes in their companies in favour of parties linked to Dr Mahathir and Mr Daim, who at the time was both finance minister and also treasurer of the then-ruling UMNO party.

Malaysia’s anti-graft agency cracks down on former finance minister Daim, seizes his flagship property Ilham Tower

The most high-profile corporate shakedown at the time, which government sources noted is now part of the ongoing probe on Mr Daim, involved the change of control in early 1999 of one of the country’s largest conglomerates, Multi-Purpose Holdings Bhd (MPHB).

Tycoon Lim Thian Kiat was forced to sell his controlling interest in MPHB, which had stakes in banking, property, gaming and shipping, to a group of businessmen led by Mr Akhbar and entrepreneur Chan Chin Cheung, who was at the time a director in UMNO-controlled Renong Bhd.

The deal went through and it subsequently led to the carving up of the MPHB empire to groups tied to Mr Daim, with Mr Akbar securing control of Bandar Raya Developments Bhd (BRDB), which at the time ranked as one of the country’s most prestigious property developers.

Government officials noted that the ongoing investigations are zooming into Mr Daim’s alleged role in Mr Lim’s forced divestment at MPHB and how Mr Akhbar benefitted from the CLOB affair are in their initial stages.

Both businessmen are expected to provide statements to the MACC in the coming days.

Source: CNA/lz(kb)

It is the talk then that the billions of unclaimed CLOB money kept under trust was mobilised to takeover MPHB in which the prize jewels were Magnum and Bandar Raya Development.

Chinese common folks' savings robbed     

A little bit of history.

MPHB was an MCA initiative to move the Chinese from family owned businesses into corporate business as a response to NEP's corporatisation by mobilising Chinese savings through the cooperatives. 

MCA Youth Cooperative Society or Koperasi Serbaguna Malaysia (KSM) held 40% of the then MPHB till the Pan El debacle that eventually led to the imprisonment of then MCA President Tan Koon Swan by Singapore and coop collapse of the 80s. It caused the decline of MCA [read in The Developing Economies journal here].

A glimpse of the now defunct MCA's MPHB from this 2002 article from an ole reformasi days website below: 

Multi Purpose Holdings Bhd. (MPHB) had been in the eye of a storm which broke out after the 1999 jailing of former Deputy Prime Minister Anwar Ibrahim. MPHB, formerly controlled by Lim Thian Kiat (TK Lim), was long viewed as a proxy for the Malaysian Chinese Association (MCA), the ethnic Chinese-based party that holds up one end of Malaysia's governing coalition.

MPHB was formed by the MCA in 1975 and listed on the Kuala Lumpur Stock Exchange in 1982. It was developed as a Chinese corporate bulwark at a time when most of the businesses in the community were relatively small. It was the MCA's corporate counterweight against the United Malays National Organisation (UMNO)'s expanding business ventures. In earlier days, MPHB was headed by rising entrepreneur Tan Koon Swan, who later became MCA president.

When recession hit much of Southeast Asia in 1985-86, MPHB went into a tailspin, weighed down as it was by debts accumulated in the early '80s - thanks largely to aggressive expansion plans, which included a foray into the shipping business. That recession coincidentally saw the infamous collapse of Koon Swan's Singapore listed vehicle, Pan-Electric - and Koon Swan's political and corporate career; the Singapore Stock Exchange pursued him and won a conviction for stock manipulation.

By 1989, receivers were evaluating takeover bids for MPHB, a process that became intensely heated. The Hong Leong group, one of the more promising bidders, was accused of having links to UMNO, and an offer of RM562 million from the then-unknown TK Lim won the day. Ironically, Lim's family company, which operates a toll concession, was also perceived to have close ties with the UMNO leadership - especially then rising star Anwar Ibrahim.

Under Lim, MPHB was restored to health. He disposed of non-core assets, including some plantations, and added a bank along the way. However, the cash cow and main earnings driver remained Magnum, the country's largest numbers game operator.

If TK Lim's entry into MPHB in 1989 dominated the business pages, his departure was noted with only a barely audible squeak - an official notice to the Kuala Lumpur Stock Exchange (KLSE) that he had resigned all his various posts. The market laid his demise to Anwar's.

After Lim's departure, Akhbar Khan and his nephew, Mohamed Moiz Ali Moiz, moved in to the 40th floor headquarters at Menara MPHB. There, rumor has it, Akhbar and Moiz hatched plans to de-link MPHB from its related companies -- Malaysia Plantations and Kamunting. Nephew Moiz, no time waster, subsequently acquired Bandaraya Developments, the property development arm of MPHB.

Then Chan Chin Cheung, through his wholly owned Quantum Aspects, acquired 31% in MPHB from Kamunting. Chan was instrumental in acquiring control of the then obscure Renong Bhd. and subsequently turning it over to Tan Sri Halim Saad in the late 1980s -- Renong going on to be the giant corporate vehicle of UMNO before hitting a brick wall three years ago.

This is where we pick up pieces on Daim's part of the story. Both Akhbar and Chan are believed to be close allies of Daim, regarded as the real mastermind behind creation of Renong.

The takeover of MPHB, which controlled the Magnum betting cash cow, did not go down well with the Chinese community. Magnum, despite some problems encountered during the crisis, generates an annual RM 400 million cash flow and letting MPHB come under control of a proxy of UMNO -- or even a perceived proxy - risked dooming Mahathir's coalition. The Chinese vote, after all, proved very helpful in last year's general election and the poll might have gone very differently had appearances not been tended to.

So, to soften the blow of the takeover, six Chinese businessmen, led by MWE Corp. boss Lau Kim Khoon (also known by his Thai name Surin Upatkoon) took a 85% stake in Quantum Aspects -- while Chan's stake was reduced to 15%. One longtime follower of the MPHB saga called this a move to 'dilute' the fallout from the original takeover, although Kim Khoon's arrival was not enough to put out this fire because the deal still had Daim's modus operandi written all over it.

In November, five months after Daim's departure, two relative unknowns, Tan Kok Ping and Hamzah Zainuddin, sought and won seats on MPHB's board at the behest of unidentified folk "at the highest levels of government." Though they don't own an MPHB share between them, their "backing" proved enough to win them seats there - and on Magnum's board as well by November.

The changes on MPHB's board signal a change in shareholdings, say some observers. Tan purportedly has a note from a senior government official in support of their MPHB board appointments - and advice that Quantum Aspects should sell them some shares from their 31% stake in MPHB.

Very little is known about the two, except that there are shareholder factions within Quantum Aspects that support them. Their political proclivities are unclear at this point; the surest bet is that the MCA is unlikely to cede control of MPHB.

MPHB may not be the last politically connected stock to go through gyrations in Malaysia - but it may be the one that proves the undoing of Malaysia's system of business by political gamesmanship.

Read in full here.

MPHB has since evolved under Daim into MPHB Capital with Alliance Bank as part of the group. A 2010 article by Edge here gave an insight of the transformation.   

When the Chinese voters rejoiced the defeat of BN in 2018 with the help of the two Tuns, it may have slipped their mind that it was the Tuns that robbed the savings of their parents and grandparents almost 40 years ago. 

Doubt those frequent shoppers and diners of Bandar Raya Development's Bangsar Shopping Complex realised that. To paraphase the title of Mahathir's infamous poem, Cina pun mudah lupa.