In 1987, Dr M protected Daim despite increasing UMNO’s debts

She opened the letter by saying: “As I have not succeeded in seeing you (Dr Mahathir) even though I have tried several times since November 1986. Now, I am forced to communicate by letter about FLEET HOLDINGS SND BHD.

“Several years ago, I was appointed with YB Dato’ Rais Yatim in the UMNO Assets Committee. We were appointed to investigate and list out all UMNO Assets. Several questions were forwarded to you, which, to date, have not received any reply,” Marina said in the letter’s opening.”

In 1983, Marina said, YBM Tengku Razaleigh Hamzah (Treasurer of UMNO) handed over control of Fleet Holdings Sdn Bhd to YB Encik Daim Zainuddin. That year, the value of the properties and shares in Fleet Holdings totalled more than $500 million, with debts of $56 million only.

“But today (14th April 1987), the debts of Fleet Holdings and its subsidiaries exceed $448 million. We are told today that it cannot service its interest of $3 million a month. It is most likely that those enormous debts cannot be repaid. We UMNO members take a severe view that foreign interests will eventually control these companies,” the late Hajjah Marina wrote a letter to Dr Mahathir Mohamad, then the Prime Minister and UMNO president.

“As you are well aware, Straits Times Press (M) Bhd has been listed on the Stock Exchange of Kuala Lumpur and Singapore, and in 1974, its name was changed to New Straits Times Press (M) Bhd. Fleet Holdings paid $32 million to control 80 per cent of Straits Times Press (M) Bhd with borrowings from Bank Bumiputra. After that, Fleet Holdings sold 25 per cent of its shares to pay part of the debt.

“Other than Fleet Communications, all the subsidiaries of Fleet Holdings showed profits. New Straits Times Bhd showed profits of RM43 million from a paid-up capital of $21 million in 1983. When Encik Daim and his friends took over in early 1983, they changed their business interests. They closed and sold several companies while buying othersthe , including those connected with YB Daim himself.”

Marina listed the companies and explained the financial problems and overhanging debts since Daim took control of the companies through his proxies. The following are the details of her letter.

1. FABER MERLIN

We have doubts about purchasing Faber Merlin shares at such a high price. To facilitate this purchase, part of the NST shares was withdrawn from Bank Bumiputra and charged again to Malayan Banking and Overseas Union Bank. A portion more of the NST shares was charged to Malayan Banking to get a loan of $90 million.

The Faber Merlin shares were purchased through the broker firms Rashid Hussain in Kuala Lumpur, Thong and Oh in Penang and Kay Hin Securities in Singapore in the name of Citivest Sdn Bhd. We have been informed that the shares purchased by Fleet Holdings Sdn Bhd were personally owned by YB Daim and his friends. YB Daim and his friends personally informed that the sale price to Fleet Holdings Sdn Bhd was $3.00 per share. The result is that YB Daim and his friends made profits of no less than $50 million.

Details of the sale of these shares can be obtained from the above-stated firms. The credibility of one of the above brokers became questionable when one of the partners of Kay Hin Securities, Mr Peh, had his passport confiscated by the Singapore Government.

2. TAMAN BUKIT MALURI

After Fleet Holdings controlled Faber Merlin, YB Daim and his friends directed Faber Merlin to buy land belonging to Bukit Maluri Sdn Bhd at $86 million. Before that, Daim had bought this land from Syarikat Permodalan Kebangsaan (SPK) at $16 million. This meant that YB Daim and his friends made profits of not less than $70 million.

3. DAZA SDN BHD

Another loss to us resulted from YB Daim and his friends’ negotiations with Straits Times Singapore to purchase 25 percent of New Straits Times. He bought these shares not for Fleet but for himself and his friends through his company, DAZA Sdn Bhd, with a loan of $58 million from the Union Bank of Switzerland. After that, YB Daim directed Faber Merlin to buy the shares at $136 million.

Therefore, YB Daim and his friends made profits of $80 million. Unfortunately, Faber Merlin could only afford to pay $34 million as a deposit. As YB fixed the price, Daim and his friends were too high and unreasonable, and Faber Merlin failed to get sufficient funds to pay the balance. As a result, Faber Merlin was given 5 per cent of the shares, and the 20 per cent balance remained in Daza Sdn Bhd it was evident that the sale of only 5 per cent of the New Straits Times Press shares to Faber Merlin was not enough to repay the loan of $57 million from the Union Bank of Switzerland given to Daza Sdn Bhd. To overcome the problems of Daza Sdn Bhd and YB Daim and his friends, Fleet Holdings was forced to buy Daza Sdn Bhd for $1 million. At first glance, it was cheap, but in fact, with the purchase, Fleet Holdings was forced to bear the debts of Daza Sdn Bhd, totalling $120 million.

4. UNITED ESTATES PROJECTS BHD

YB Daim and his friends succeeded in selling the United Estates Project Berhad to Sime Darby. Before Sime Darby YB took over this company, his friends directed Faber Merlin to buy Subang View Hotel for $56 million, which was paid by the exchange of $36 million Faber Merlin shares valued at $1.60 each. The cost of the construction of the Hotel was only $26 million. This meant Daim and his friends made profits of not less than $30 million.

Fleet Holdings’ income was from the dividends of its subsidiaries. Other than New Straits Times, all subsidiaries suffered losses, affecting their income. Fleet Holdings failed to repay the loans from Malayan Banking, Overseas Union Bank and Bank Bumiputra. Daza Sdn Bhd also failed to pay the interest and principal loan from the Union Bank of Switzerland (UBS). As a result, Overseas Union Bank and Malayan Banking Berhad are the institutions that control the shares of New Straits Times (M) Bhd and its subsidiaries, including TV3.

Marina questioned in her letter what the result of YB Daim’s and his friends’ actions are to the fate of the UMNO company, Fleet Holdings?

She provided the answer. “It is estimated that Daim and his friends made clean profits of more than $200 million from these manipulations and transactions. Unfortunately, Fleet Holdings and Faber Merlin are facing heavy losses. There is no other way for Fleet Holdings to reduce its debts except to sell a portion of its NST shares. Now the shares of Fleet Holdings in NST is only 50.3 per cent from the 55 per cent it had before.”

5. TV3

Recently (1987), as Dr Mahathir announced, New Straits Times has been directed to buy shares of Malaysian Television Sistem Berhad, which is held by Utusan, Fleet Group and Syed Kechik Holdings at $77 million. Not enough with this purchase, the New Straits Times has been directed to buy shares of Bank of Commerce and American Malayan Insurance owned by Fleet Holdings. New Straits Times has borrowed from local banks to facilitate the purchase of the shares. Throughout its existence, the New Straits Times has never borrowed. As a result of this borrowing and reduced profits for the last three years, we are concerned that the New Straits Times will face the same fate as Fleet Holdings.

I have enclosed a list of Fleet Holdings Group debts with this letter.

The banks holding the shares of New Straits Times charged as security for the loans listed above can immediately take control of the New Straits Times Malaysia Berhad Group, and UMNO will lose its hold on the above companies.

6. DAAN AND DANI

We should also like to state that Daan and Dani (companies owned by YB Daim) also own 2.5 million shares in TV3. Should this occur when TV3 is supposed to be owned by UMNO through Fleet Holdings and not by individuals?

By right YAB Dato Seri Dr Mahathir should take immediate and firm action before it becomes worse. Unfortunately, you have tried to conceal this matter by saying it is a “secret”. Once more, if YAB Dato’ Seri Mahathir does not take immediate and firm action to rectify the matter, it is most likely that foreign powers will own Fleet Holdings Sdn Bhd and its subsidiaries. This is in conflict with UMNO’s policies.

“In all humility, we request immediate, positive and meaningful action be taken so that certain personalities in UMNO will not make the image of UMNO and the interest of the Malay race merchandise,” pleaded Marina as she concluded the letter.