Monday, April 05, 2010

DAP wants EPF, MRCB probed for insider trading

The DAP’s Tony Pua demanded today that the Employees Provident Fund (EPF) be investigated for alleged insider trading of Malaysian Resources Corporation Bhd (MRCB) shares following the government’s announcement last week that 3,000 acres of land in Sungai Buloh would be developed into a new hub for the Klang Valley.

MRCB is likely to be appointed master developer of the Sungai Buloh project which Prime Minister Datuk Seri Najib Razak last week said would be a joint venture between EPF and the government.

Pua, who is Petaling Jaya Utara MP and DAP economic strategist, claimed today that the EPF and MRCB appeared to have engineered the fund’s control of 33.7 per cent of the company’s shares during its recent rights issue exercise.

Following the rights issue, EPF made a general offer to buy the rest of the company’s shares at RM1.50 each.

Pua said that EPF was already in control of more than 41.5 per cent of MRCB shares on March 29, a day before Najib announced the project.

“At the point of EPF’s rights issue on 4 December 2009, EPF had a 30.6 per cent stake in MRCB. Since the rights issue was oversubscribed by 1.74 times, as disclosed, EPF should have at best maintained its percentage ownership of MRCB with a 30.6 per cent allocation of rights issues.

“However, EPF was, for one reason or another, allocated a disproportionately higher percentage of rights issued. which was 171.47 million of 455.39 million, or 37.7 per cent of the rights issued, resulting in EPF owning 33.78 per cent of MRCB,” he said.

Pua said that under takeover rules, the investor must make an offer to buy the remaining shares once it has more than 33 per cent of a listed company.

“EPF was forced to make a general offer to purchase all shares of MRCB at the price of RM1.50 per share on 4 March 2010. EPF had in fact continued to actively purchase shares from the open market since and has increased their stake in MRCB to approximately 41.5 per cent as of 29 March 2010.

“It is hence clear now that the rights issue has been an exercise intended and engineered to allow EPF to increase its stakes in MRCB, including via the general offer which was made.

“While the above may appear above board under the normal circumstances, the fact that the Prime Minister announced the 3,000 acres mega-development joint venture project with EPF, which is touted to appoint MRCB as the developer on the 30 March 2010, throws up the very obvious question of insider trading on the part of EPF in the entire exercise above,” he said.

Pua said that it was “completely ridiculous” if EPF now claims that they did not know of the project.

“Discussions on the above joint venture must have been concluded well before 30 March, for the rumours of the project being awarded to EPF and MRCB had been circulating in financial circles since the end of 2009.”

Pua said that EPF and MRCB should be investigated under the Capital Market and Services Act (CMSA) 2007. Those found guilty of an offence under the law can be punished by imprisonment not exceeding 10 years or a fine of not less than RM1 million.

“The failure of the Securities Commission to investigate the above transactions will seriously jeopardize our efforts in promoting confidence and trust in Malaysia’s capital market and in helping the market to function efficiently based on adherence to internationally-benchmarked principles of corporate governance,” he said.

courtesy of Malaysian Insider

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