Malaysian Maverick: Mahathir Mohamad in Turbulent Times Barry Wain (grave mercy .TXT) 📖

the system by which various people held the shares in trust for UMNO. He said the departing Tengku Razaleigh:

...told us that there was no money left with UMNO, not a single cent. So after that I had to go around tracing the shares, which were held by different people. You see, in those days they gave shares for people to hold on because they didn't have any system of trustees, or anything like that. And when these people died, their children claimed that their father's money didn't belong to UMNO. So I had a tough time gathering information on who had the money. And twice I had to do that.[27]

Dr. Mahathir said the assets were recovered on both occasions by tracking and approaching individuals believed to be holding party-owned shares and persuading them to return the scrip. "Eventually, I collected practically all the money that belonged to UMNO," he said.[28] According to Daim, Tengku Razaleigh and others, the missing shares were in Utusan Melayu Press, which Tunku Abdul Rahman had taken over for the party in 1961. Most of the shares, though not all, were recovered, they confirmed.

Daim affirmed that UMNO was completely broke when he took over management control of the Fleet group in 1982. In fact, he said the group was actually RM500 million in debt as a result of a poor business and investment strategy.[29] His statement was surprising, since an independent study later by Terence Gomez found that Fleet under Tengku Razaleigh had proceeded cautiously and made few major purchases, and there was little evidence of debt.[30] UMNO borrowed heavily for its new headquarters, but that was through Khidmat Bersatu Sdn. Bhd., a company set up to handle the building project, and the first of two major bank loans was obtained only in 1983.[31] It was public information that Fleet Group, with holdings in 23 companies, showed a profit of RM15.7 million in 1982. Daim said the problem was in Fleet Holdings, whose financial results were not published because it was an exempt private company. Although it had paid-up capital of only RM1 million, he said, Fleet Holdings had borrowed hundreds of millions of ringgit from banks only too eager to lend to UMNO. Daim contended it was almost impossible to make a profit: With so little capital, the company had to borrow heavily to acquire assets and use all its earnings to service debt and repay loans.[32]

Tengku Razaleigh scoffed at Daim's claim. Fleet had borrowed from a bank only once for investment, to purchase the Straits Times shares from Singapore, and had repaid the loan within two years from the profit on floating 49 per cent of the shares, he said. "What is that RM500 million needed for?" said Tengku Razaleigh. "Fleet Holdings was making money," he said, and held shares in only two companies, New Straits Times Press and Bian Chiang Bank.[33]

Confidential UMNO financial accounts, professionally audited and obtained by the author in the course of his research, cast grave doubts on the version propagated by Dr. Mahathir and Daim.[34] The accounts, which did not include Fleet's operations, confirmed that Daim inherited a party in sound financial condition when he became treasurer in 1984. The top secret UMNO Political Fund — which both Dr. Mahathir and Daim specifically said was empty[35] — at 31 December 1983, actually had assets of RM88.6 million and no liabilities, including RM39.8 million on fixed deposit and RM6.8 million cash in the bank. Investments in nine publicly listed and three unquoted companies, Fleet Holdings among them, totalled RM5.9 million. That figure seriously understated their worth since the investments were declared at cost. For example, the stakes in the public companies, purchased for a collective RM4.5 million, had a current market value of RM28.5 million. The UMNO Political Fund contributed RM25 million towards the construction of the new party headquarters in 1983, in the form of an interest-free loan. After receiving dividends, interest and donations, the fund finished the year RM3.5 million in the black, according to the accounts certified as "true and fair" by a local auditing firm.

Regardless of the controversy, Fleet under Daim abandoned Tengku Razaleigh's passive approach to investing. With instructions from Dr. Mahathir to shake up the group by tightening management and financial control and getting the companies "really moving",[36] Daim sought to turn a profit in a hurry. "My role was to build up the Political Fund, as well as make sure the business activities generated income," he said.[37] Fleet adopted an aggressive growth strategy that saw it quickly add companies in diverse and unrelated fields. Fleet snapped up stakes in TV3, the country's first private television station, the hotel and real-estate group, Faber Merlin Malaysia Bhd., and food retailer Cold Storage (Malaysia) Bhd., all publicly listed, and Commercial International Merchant Bankers Bhd. By the mid-1980s, the number of companies had almost doubled, extending the Fleet group's reach into construction, plantations and management services as well as print and electronic media, telecommunications, banking, insurance, retailing, property and hotels.[38]

Typically, holdings were acquired "by a torrent of rights issues and share swaps and rarely involved cash outlays by companies associated with UMNO".[39] At the same time, many of the companies acquired during Tengku Razaleigh's tenure were spun off in a series of share swaps to the subsidiary New Straits Times Press. Inter-group sales created a convoluted web of highly-leveraged concerns. In the case of the acquisitions, Fleet's holdings in listed and unlisted companies were often pledged as collateral, and assets were shuffled among different listed companies held by the entire group. Although Daim denied it,[40] critics contended that in many cases the stakes purchased by Fleet were either overvalued or the shares offered were undervalued, allowing some individuals associated with UMNO to make large profits.[41]

Apart from what has been called Daim's "paper entrepreneurism", defined as the relentless pursuit of restructuring opportunities in search of a quick profit at the expense of actual production, there were other distinctive features of Fleet's acquisitions. Many of them were connected