Fri, Jul 07, 2006 page10

• Ex-tycoon points finger at Mahathir

  `BOMBSHELL' Tajudin Ramli claims that he was forced to buy a controlling stake in Malaysia Airlines by the former Malaysian prime minister as a `national service'

  • AP
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  In a startling claim likely to shake up Malaysian politics, an ex-tycoon has accused former prime minister Mahathir Mohamad of forcing him in 1994 to buy a controlling stake in the state-owned national airline to bail out the government.

  Tajudin Ramli filed a court document on June 29, saying his purchase of the 32 percent stake in Malaysian Airline System Bhd for 1.8 billion ringgit, then worth US$750 million, was not a normal commercial deal as was made out at the time but a forced "national service."

  The details of the court document were published yesterday in the Sun newspaper, which said the allegations were a "bombshell."

  Tajudin could not be reached for comment, and officials at the law firm representing him refused to speak on the matter.

  If true, Tajudin's allegations would point to shady financial practices and lack of transparency in the government in the 1990s when many private entrepreneurs with close links to top politicians were obliged to carry out business on behalf of the state and received favors.

  The mudslinging could also tarnish Mahathir's reputation at a time when the ex-prime minister has been severely critical of Prime Minister Abdullah Ahmad Badawi, who succeeded him in October 2003.

  Both Abdullah and Mahathir are abroad on vacation and their spokespeople were unavailable for comment.

  "Tajudin's revelations involve fundamental governance questions and public interest issues which demand immediate and satisfactory response from the present administration," opposition leader Lim Kit Siang said.

  The Sun said Tajudin's court document was in support of a lawsuit that he filed against the government and other individuals, seeking 13 billion ringgit in compensation, alleging a conspiracy by the government to take over his companies.

  Tajudin claims he was directed by Mahathir and his then-finance minister Daim Zainuddin to buy the MAS shares from the airline's main owner, the central bank, for 8 ringgit per share even though its market price was 3.50 ringgit a share.

  Tajudin said Mahathir and Daim told him he was buying the shares as a national service to save the central bank, the Bank Negara, which at the time was hit by multibillion ringgit foreign exchange losses.

  Tajudin was hailed then as a national hero. But in his court document, Tajudin says he was a reluctant hero. He says he did not want to buy the stake as he was worried about financial losses, but agreed to do it because it was a directive from the government.

  He also claims that Mahathir and Daim assured him verbally he would be protected from financial losses and liabilities. But he was told by the two leaders not to reveal this arrangement.

  "Due to the sensitive nature [of the deal] Tajudin did not seek any written confirmation from Mahathir or Daim, " the Sun said. "Tajudin had never known [Mahathir] ... to renege on any agreement before."

  Tajudin took out a personal bank loan to fund the purchase of the stake and pledged his companies, Naluri and Technology Resources Industries Bhd (TRI), as collateral.

  After the 1997 Asian financial crisis, his debt-ridden companies were taken over by the state debt restructuring agency Danaharta. Also, TRI-owned Celcom, a mobile phone operator, was forced to merge with the state-owned phone company, Telekom Malaysia.

  In 2000, the government repurchased Tajudin's Malaysia Airlines stake for 8 ringgit, even though the market price was around 3.6 ringgit, causing a public outrcry that the government was bailing out a crony.

  But Tajudin says he was a victim rather than a beneficiary because Danaharta not only took over his companies but also sued him in May this year to recover 589 million ringgit that it claims he still owes to the government.

  Tajudin said he filed the 13 billion ringgit lawsuit and revealed the secret deal with Mahathir because of Danaharta's actions.
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