Years later, Daim Zainuddin, Dr. M's longtime friend and confidante, was surprisingly frank in discussing and criticizing the Maminco affair. First as an adviser and later as Finance Minister, Daim had been given the onerous task by Mahathir of trying to sort out the financial mess left in the failed scheme's wake.
Quoted by Malaysian authors Cheong Mei Sui and Adibah Amin in "Daim: The Man Behind the Enigma," Daim said:
"Little did I realize that it was not the end of our tin problem. When I became Finance Minister, I had to handle the loss of millions of ringgit in the Maminco tin fiasco. The lesson to be learnt is that a producer must never also be a purchaser. It would not work. Never try to corner the market. The role of the producer is to produce. Let others market."
The remark, though certainly true, is typical of Daim. He often cynically casts aspersions on others' foolish investment misadventures, while glossing over his own colossal flops. For while Dr. M and Daim were mopping up after the Carrian and tin fiascoes, Daim was barreling into yet another market mishap, which came to be known as the Makuwasa affair and was directly linked to the Maminco failure.
Mounting economic and political uncertainty had been taking its toll on Dr. M's administration in 1985-86. UMNO opponents were plotting to oust him and his cronies. And the lengthening array of scandals was fueling the opposition's efforts to drum up public outrage against Mahathir and Daim.
Daim's patented answer whenever such troubles are afoot is to artificially boost the market, hoping that a rally on the Kuala Lumpur Stock Exchange will lull the public back into complacency and forgiveness. Sound familiar? That's precisely why Dr. M brought Daim back from retirement to replace his sacked deputy and political rival, Anwar Ibrahim, as Finance Minister.
... which only makes more of a mess
Malaysian fund managers and executives from a number of government-owned institutions, including the Employee Provident Fund (EPF), were summoned by Daim in mid-1985 and told that Dr. M had decided to pump prime the market through a secret RM150 million "common fund." Appointed to administer the fund were three Mahathir-Daim cronies, Thong Yaw Hong, former secretary-general of the Treasury; Basir Ismail, the newly appointed chairman of the just-rescued Bank Bumiputra; and Chan Chin Cheung, acting general manger of Bank Simpanan.
The market-manipulating strategy proved an utter failure. Any hope of success was fatally bludgeoned after the November 1985 collapse of Singapore-based Pan-Electric Industries, which sent the
The market crash also proved fatal to another Daim operation running in parallel to the common-fund scheme. That was Makuwasa Securities Sdn. Bhd., a two-ringgit company set up in mid-1984 to acquire 70 percent of the EPF's allotment of newly issued public shares. Effectively, Makuwasa was dipping into the retirement savings of all Malaysians to make quick profits. Makuwasa acquired those shares from the EPF at par value, which was considerably lower than the prevailing market price and normally would have guaranteed instant profits from the sale of these shares into a buoyant market environment. But these were not normal times.
Makuwasa, too, was financially trounced by the plummeting market. In September of 1986, Dr. M publicly admitted that Makuwasa was created to recoup the government's losses from the Maminco debacle and to repay its loans to Bank Bumiputra.
Past becomes prologue
As noted in the prologue to this new freeMalaysia series on Mahathir's impetuous schemes and their aftermath, this account of the Maminco and Makuwasa scandals is only the first of many during Dr. M's reign. The only thing that has spared
These days, we hard-pressed Malaysians might not perceive the crisis as a blessing. Someday, however, we might – especially if Mahathir is forced to delay his megalomaniacal agenda long enough so that it disappears with the fading away of his regime. For if he recovers from this crisis, so will his scheming be revived. If that's the case, freeMalaysia shudders to think of what he then will concoct for the country in the remaining years of his administration.
Saturday, April 23, 2005 3:13:55 PM
Siri akhir Percaturan Ekonomi Di Zaman Tun Dr Mahathir.