How to make millions by ripping off poor Indians
The Maju Institute of Education Development (MIED), MIC's education arm, has been mired in controversy after it was found that the cost of the Asian Institute of Medicine, Science and Technology (AIMST) in Semeling, Kedah, which opened its doors two years ago, had ballooned from an earlier estimate of RM230 million to over RM500 million. Let us see why.
THE CORRIDORS OF POWER
Raja Petra Kamarudin
Samy Vellu gives MIED CEO show-cause notice, again
MIC's Maju Institute of Education Development (MIED) chief executive officer P. Chitrakala Vasu has been issued a show-cause notice by party president Datuk Seri S. Samy Vellu.
The notice, which demands a reply within 14 days, is for Chitrakala to explain some discrepancies in the accounts of MIED, which runs the party's Asian Institute of Medicine, Science and Technology (AIMST) in Semeling, Kedah through a subsidiary company, MIED Capital Sdn Bhd.
"Yes, I received the notice a few days ago and am currently preparing a letter to explain the whole accounts procedure. Actually this is not the first time he (Samy Vellu) has given me such a notice.
"He issued about seven notices against me dated Dec 31, 2008 and at that time I was only given a day to reply. I replied to all the seven notices on Jan 2. This second round is only one notice, which I received on Jan 29. I will reply this notice too within 14 days," she said today.
Breaking her silence since the fiasco erupted in late December, Chitrakala said after she replied the seven show-cause notices, she was "advised" to go on leave by Samy Vellu.
Asked whether the show-cause notices pertained to the MIED accounts, she said it was not only on the book-keeping of the MIED but also "the whole thing".
"I think he (Samy Vellu) wants me out of MIED. I have been with the MIED for 14 years and now he is looking for things to kick me out. It is like a fault-finding mission," she added.
She said there was nothing for her to hide as everything which she undertook during her tenure as MIED CEO was based on instructions from the MIED board of directors, which Samy Vellu chairs.
MIED, the party's education arm, has been mired in controversy after it was found that the cost of AIMST, which opened its doors two years ago, had ballooned from an early estimate of RM230 million to over RM500 million.
Late last month, Tan Sri M. Mahalingam, a signatory of MIED cheques, was removed as MIC treasurer-general by Samy Vellu, who said the move was part of MIC's rebranding exercise and that there was a need to inject new blood into the party. Chitrakala Vasu has been on leave since.
The party top echelon had, last month, appointed a three-member independent panel of lawyers to investigate the financial woes of the MIED and the reason for the increase in costs.
The panel was also entrusted with the task of reviewing all MIED contracts given out for the construction and maintenance of AIMST.
There had been news reports that some irregularities had taken place with regard to the awarding of the contracts, especially those which involved landscaping and security.
Last week the saga took an unexpected turn after MIC vice-president and MIED director Datuk S. Sothinathan lodged two police reports over missing files belonging to MIED.
The reports, lodged at the Dang Wangi police station and the Sentul district police headquarters, alleged that files pertaining to the AIMST contracts were missing from the party headquarters in Jalan Rahmat, off Jalan Ipoh, here. — Bernama, 3 February 2009
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MIC and MIED in turmoil over AIMST tenders
This is really a tale of two sides. On one side there’s The Star's version of the issue, and on the other side the Malaysiakini version.
Let’s look at them both. The Star first:
1. The report says that a three-member panel has been formed to investigate “alleged misappropriation” in the award of contracts by MIC’s education arm, the Maju Institute for Education Development (MIED) concerning the party’s Asian Institute of Medicine, Science and Technology (AIMST).
2. MIED board of directors appointed former MIC treasurer-general Tan Sri K.S. Nijhar to head the panel with MIC deputy president Datuk G. Palanivel and party disciplinary committee chairman Tan Sri G. Vadiveloo as members. It seems that Samy Vellu had instructed during the meeting for the panel to be formed.
3. Samy Vellu was concerned as three contracts seemed to be have been given out at inflated values. The sources said the panel would also investigate two contracts given to companies linked to a senior MIC leader.
4. Nijhar said:
“I am just looking through all the documents and have not gone into the details of the contracts."
“The panel will meet once I have sorted out the documents. The panel is not out to get anyone in particular, but to ensure everything is in order,” he said.
It was learnt that the panel had obtained all files on the alleged misappropriation from the MIED office.
5. The report then mentioned Tan Sri Mahalingam’s name (he was the MIC treasurer until replaced recently by SK Devamany) – “Mahalingam, when contacted, said there was nothing to hide and he would answer queries from the panel”. So, is Mahalingam the “senior MIC leader”? Your guess is as good as mine.
Let’s shift to Malaysiakini’s report:
1. MIC has been rocked by a scandal involving its education arm, Maju Institute for Education Development (MIED), over alleged irregularities in the awarding of contracts for maintenance of the party-run AIMST University. [OK, similar with The Star report]
2. Sources said the trouble started when MIED was instructed to revoke two contracts given out based on an ‘open tender’ system. Instead, its managers were told to reassign these to persons close to MIC president S Samy Vellu. [Big difference here. Samy's name is implicated]
3. The two contracts were respectively for grass-cutting services and to operate a canteen at the university. Sources said the sum quoted by the new parties – one of whom is based in Ipoh – was considerably higher than that in the bids already accepted.
4. The contracts were among five awarded by MIED for various services last year. [We get the figure of 5 contracts. The Star reported 3+2, so is it the same contracts?]
5. Heads are expected to roll – in fact, the summary dismissal of party treasurer M Mahalingam two weeks ago is said to be one outcome, although Samy Vellu had attributed it to “routine change”. On December 23, Mahalingam also had to relinquish his post as chairperson of MIED Capital Sdn Bhd, the company that runs the AIMST University located in Semeling, Kedah. [I bet this was not publicised anywhere. So, Malaysiakini links Mahalingam in this case]
6. Insiders said the situation over the contracts has pitted Mahalingam and MIED chief operating officer P Chitthirakala Vasu against Samy Vellu. It is learnt that both were unhappy with the manner in which they were forced to re-issue the contracts, and had repeatedly raised the matter with Samy Vellu. [Unlike The Star's version, this paragraph indicates that it is not Mahalingam who is the alleged "senior leader" in The Star, but its Samy himself!]
7. Chitthirakala is said to be under pressure to submit her resignation as well, but has refused to do so. She has told close friends that she will fight Samy Vellu “until the truth is known”. [she has now gone "on leave" and the Deputy CEO has taken over the running of MIED. I have a copy of her coffee table book on Samy Vellu]
8. “This is an explosive matter. The president is worried that this matter will be used against him in the party polls later this year and has decided to act against the duo,” said a source.
9. Sources said Samy Vellu has questioned the huge debt amassed in running the university, and that he has blamed the MIED top management for this.
10. Samy Vellu has since set up a three-member panel to investigate the alleged irregularities in awarding three of the five contracts, which he claimed had been given out at an inflated value. Details of the three contracts are not known. Set up following a meeting of the MIED board of directors last Friday, the panel is headed by former party treasurer KS Nijhar (right). The other two members are deputy president G Palanivel and party disciplinary committee chairperson G Vadiveloo. All three of them are considered to be Samy Vellu’s loyalists. Athough Nijhar and Palanivel had a fallout with Samy Vellu recently, insiders said that they are back in his good books. [Similar with The Star report]
11. The panel is also expected to look into why the cost of constructing the university had increased [extra duty of the panel].
12. The sources also said that Mahalingam, who had attended the meeting, had asked the panel to investigate the two contracts given to companies linked to Samy Vellu. [The Star did not mention that Mahalingam was at the meeting]
13. It seems Mahalingam has said:
“He has said that he has nothing to hide and that he had only followed the president’s instructions,” said an aide. “Mahalingam has also urged Samy Vellu to hand over the matter to the newly-established Malaysian Anti-Corruption Commission, but the president wants the matter to be probed internally.”
14. Sources, however, see the sole purpose of the panel was the removal of Chitthirakala – “The panel is in place so that Samy Vellu is not implicated in the (alleged) financial irregularities of MIED. It is not just a witch hunt against the top people in MIED, but also to clear Samy Vellu of wrongdoing,” said a source.
So, reading both reports gives us more information to digest. What we can agree is that there’s a 3-member panel who will investigate 3 (or 5) contracts. 3 contracts alleged to be given out at inflated values, and the other two instructed to be given to companies linked to senior MIC leader (Samy Vellu?). The target of the panel is to investigate whose fault it is. For me, if anyone can instruct MIED to do this and that, the investigation becomes easier. We are looking at the top people in MIED, MIED Capital, and MIC. 3 companies, 3 names.
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A pandemonium in the shape of a meeting
About 1,100 Maika Holdings’ shareholders today came to the company’s annual general meeting hoping to hear some good news about their investments. Instead the meeting ended with more questions and uncertainties over the future of the MIC’s troubled investment arm.
The main agenda for the meeting today was to obtain the shareholders’ approval for the sale of the company’s golden goose, insurance company Oriental Capital Assurance Bhd, for RM129.8 million.
By now, just entering the third minute into the meeting, a shouting match started where almost everyone had something to say. One even questioned if Abdul Rashid should remain Maika chairperson if he could not communicate in the language of the shareholders.
In the midst of this, one shareholder claimed that there were many non-members in the hall and demanded Abdul Rashid, who chaired the meeting in English, to remove them. According to the shareholder, these non-members and security personnel were intimidating the shareholders.
Others defended the security personnel and claimed that everyone in the hall was a member.
It was strange indeed that there were many ‘young and stern looking’ shareholders in the crowd. Their job, on most occasions, was to silence shareholders asking questions on financial matters.
Up to this stage, the chairperson had not said a word and was instead watching the ensuing commotion like an observer.
By the first half hour, Abdul Rashid totally lost control of the floor. Just about everyone in the floor had something to say – and no real attempt was made to discuss the items in the agenda.
It was at this stage that former MIC deputy president S Subramaniam walked up to the microphone to say something. While he was about to talk, someone drowned his words by speaking into another microphone.
Subramaniam’s supporters got angry and started heckling the culprit. Similarly, the former deputy minister too was heckled by others.
Only the authoritative voice of Wilayah Persekutuan MIC leader M Saravanan helped to bring the chaotic situation under control and the meeting continued with the chairperson reading out Maika’s financial report for last year.
Asked on his performance as CEO, Vel Paari said, “If you ask me, I have done well for the company. But if I was really allowed to do my work, instead of spending more time at the commercial crime and the anti-corruption office, I think I would have done better. No regrets. “My conscience is very clear. I came to do a job. We got back our money. At least everybody is getting RM1.00 minimum,” he said.
Meanwhile, several shareholders expressed outrage at today's proceedings, which were marred with several outbursts and scuffles. Several shareholders were escorted out by security personnel after speaking from the floor. Some were cut off mid-way, including Subramaniam.
"It is just a farce. The board of directors did not explain what has gone wrong with Maika. They did not explain why in the last 24 years, Maika has been operating at a loss," said DAP legislator M Kulasegaran. "They were only ten policemen around and they did nothing when microphones were pulled away from shareholders after they raised certain matters," he said.
Another shareholder, Kumarasen, an accountant, said that shareholders who oppose the sale were not allowed to speak at length of their disgruntlement. "It looks like the shareholders have been ripped off. At the end of the day, the last remaining finance license will go into the hands of people who have no idea what they are getting into," he said.
"This is the remaining asset for the Indians. This is no racist undertone. But this should be a lesson that corporate governance is needed in a listed company. There was complete ruckus inside. In the name of security, you have people bashing other people up," he added.
A shareholder from Perak, who did not wished to be named said he did not expect to get much returns from the disposal. "Five of my family members invested into Maika. For all of us, it is a big loss. Even if we were to get our money back, it would still be a loss because of inflation. The money could have been put to better use in this 24 years," he added.
Maika was established in 1982 to increase the equity of Indian Malaysians. The company raised RM106 million in 1984 from 66,000 investors. Maika has only paid its shareholders cash dividends on seven occasions to date, the last being in 1995. It will not be paying dividends this year.
Several shareholders were escorted out by security personnel after speaking from the floor. Some were cut off mid-way, including Subramaniam. – Malaysiakini, 30 August 2007
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So, if you want to know how Samy and son siphoned out millions and left the Indians so much poorer, take a look at these documents. Then try and figure out how RM36 million became RM40 million and then ended up as RM500 million. I really have no idea!
