The Employees Provident Fund (EPF), Malaysia’s statutory pension fund, is under parliamentary scrutiny for alleged losses amounting to RM700 million. These losses reportedly stem from the sale of 163 million shares in Malaysia Airports Holdings Berhad (MAHB) at prices between RM6.80 and RM7.70 per share, followed by a repurchase at RM11 per share during a subsequent privatization initiative.
Background of the MAHB Share Transactions
In December 2022, EPF held a 15.6% stake in MAHB. By December 2023, this was reduced to 5.8% through sales executed at prices ranging from RM6.80 to RM7.70 per share. Critics argue that this divestment led to significant losses, as EPF later repurchased the same volume of shares at RM11 each during a privatization exercise. This sequence of transactions has raised questions about the fund’s investment strategies and decision-making processes.
Parliamentary Inquiry and EPF’s Defense
On February 17, a parliamentary panel summoned EPF’s Chief Executive, Ahmad Zulqarnain Onn, to explain the rationale behind these transactions. The panel also questioned the involvement of Khazanah Nasional, the country’s sovereign wealth fund and EPF’s partner in the MAHB privatization.
Finance Minister II, Amir Hamzah Azizan, who served as EPF’s CEO during the period of the share sales, defended the actions in Parliament on February 20. He emphasized the existence of “Chinese walls” within EPF, separating trading and strategic investment teams to prevent insider trading, in compliance with the Capital Markets and Services Act (CMSA). Amir Hamzah stated that the share divestment resulted in gains of RM102 million, countering claims of losses.
The Concept of Chinese Walls in Financial Institutions
A “Chinese wall” refers to an ethical barrier within financial institutions designed to prevent the exchange of material, non-public information between departments, thereby avoiding conflicts of interest and insider trading. In EPF’s case, this structure purportedly ensured that trading decisions were made independently of strategic investment considerations.
Criticisms and Calls for Investigation
Despite EPF’s defense, several critics have voiced concerns. Datuk Seri Dr. Wee Ka Siong, President of the Malaysian Chinese Association and former Transport Minister, questioned the timing and financial logic of selling shares at a lower price and repurchasing them at a higher rate within a short span. He suggested that such actions could adversely affect EPF contributors.
Similarly, Umno veteran and former Finance Minister Tengku Razaleigh Hamzah called for authorities, including anti-corruption agencies, to investigate potential external influences on EPF’s decisions. He expressed suspicion of possible manipulation in the transactions.
The Privatization Deal and Its Controversies
The privatization of MAHB involved a consortium led by Khazanah Nasional and EPF, alongside Global Infrastructure Partners (GIP) and the Abu Dhabi Investment Authority (ADIA). The consortium offered RM11 per share, valuing MAHB at approximately RM18.4 billion. This move aimed to delist the state-controlled airport operator and introduce new investors.
However, the inclusion of BlackRock’s GIP sparked controversy due to BlackRock’s alleged business ties with Israel, leading to public outcry in Malaysia’s predominantly Malay-Muslim population. In response to the backlash, GIP clarified that BlackRock would not participate in the MAHB privatization.
Timeline of Key Events
| Date | Event |
|---|---|
| December 2022 | EPF holds a 15.6% stake in MAHB. |
| December 2023 | EPF reduces its stake to 5.8% by selling shares at RM6.80 to RM7.70 each. |
| May 2024 | Consortium announces RM11 per share offer to privatize MAHB. |
| December 2024 | EPF repurchases 163 million MAHB shares at RM11 each as part of the privatization deal. |
| February 17, 2025 | Parliamentary panel summons EPF executives to explain the share transactions. |
| February 20, 2025 | Finance Minister II defends EPF’s actions in Parliament, citing gains of RM102 million. |
Implications for EPF Contributors
The controversy has significant implications for EPF’s 16 million members, whose retirement savings are managed by the fund. The alleged losses and the decision-making process behind the share transactions have led to calls for greater transparency and accountability within EPF. Ensuring prudent investment strategies is crucial to maintaining public trust and securing the financial futures of its contributors.
Frequently Asked Questions (FAQs)
Q1: What is the main controversy surrounding EPF’s dealings with MAHB shares?
A1: The controversy centers on EPF’s sale of 163 million MAHB shares at RM6.80 to RM7.70 per share, followed by a repurchase of the same amount at RM11 per share during a privatization exercise, leading to alleged losses of up to RM700 million.
Q2: What are “Chinese walls,” and how do they relate to this situation?
A2: “Chinese walls” are ethical barriers within financial institutions that prevent the exchange of non-public information between departments to avoid conflicts of interest and insider trading. EPF claims that such structures were in place during the MAHB share transactions to ensure independent decision-making.
Q3: Who are the key players in the MAHB privatization deal?
A3: The privatization involved a consortium led by Khazanah Nasional and EPF, with participation from Global Infrastructure Partners (GIP) and the Abu Dhabi Investment Authority (ADIA).
Q4: Why did BlackRock’s involvement in the deal cause controversy?
A4: BlackRock’s alleged business ties with Israel led to public outcry in Malaysia’s predominantly Malay-Muslim population, resulting in GIP clarifying that BlackRock would not participate in the MAHB privatization.
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Kishan is a knowledgeable writer specializing in agriculture and the latest government job recruitments, delivering clear and insightful content to inform and empower readers.
