Exhuming Maika’s can of worms


(The Malay Mail) – The MIC’s failed investment arm Maika Holdings has emerged once again as a hot-button issue in the lead up to the party elections.

The Malay Mail’s editor Frankie D’Cruz asked S. Vell Paari, the chief executive officer of Maika from 1999 till mid 2010, to explain intense matters that party treasurer Datuk Jaspal Singh raised last week in the Dewan Negara.

FD: How fatal has Maika’s failure been to the MIC?

VP: I have always admitted that Maika’s failure was a contributing factor that weakened the support of the Indian community for the MIC and Barisan Nasional. This was despite Maika paying out RM41 million in dividends.

And even though we returned the original RM100 million investments by shareholders, it was nothing to be proud of because the inflationary effects since the early 1980s — when Maika was set up — caused them losses on their outlay.

FD: Were you part of the G Team Resources management team that took control of Maika?

VP: No, I was not. After I resigned in mid-2010, G Team took control of Maika and I was never involved.

I suspect Datuk Jaspal keeps saying “G Team and Maika management” to implicate me as being responsible in effecting the sale of insurance company Oriental Capital to the Tune Group. I feel there’s a hidden political agenda.

FD: Explain the sale of Oriental Capital, Maika’s prized asset?

VP: Being an insurance company, Oriental Capital Berhad is governed by the Banking and Financial Institutions Act. Only on obtaining Bank Negara’s approval can the potential buyer open negotiation with a financial institution.

Bank Negara has a say on the price. If you recall the case of People’s Insurance where although the board had agreed to sell at a certain price, Bank Negara intervened to say the purchase price was too high and told them to reduce it.

Hence, Bank Negara would and should have played the role to ensure the Oriental Capital transaction was above board.

FD: What was the make-up of shareholders during the negotiations?

VP: I think G Team via Maika could have controlled about 70 to 75 per cent of Oriental Capital while the rest comprised small shareholders, including the Indian government through its state-owned insurance company.

You wouldn’t expect shareholders of such status to keep quiet and be short-changed. Also entities behind G Team are astute in business and it is not conceivable they would have sold an asset worth RM1.2 billion for RM153 million.

FD: Explain how Oriental Capital’s value as Jaspal said in the Upper House got “halved after 25 years and increased 18 times its value within two years”?

VP: In the central working committee meeting this month, in the presence of Jaspal, I briefed members on the confusion over how in less than a year since Tune Group bought Oriental Capital (renamed Tune Insurance) for RM153 million, it was listed on Bursa Malaysia for a market capitalisation of about RM1.2 billion.

Oriental Capital’s profit ranged between RM10 million to RM25 million over four years. Based on the earnings, I feel it was valued at RM153 million and sold to Tune Group.

Tune Group then injected all it’s in-house insurance business that had been outsourced to its fully-owned subsidiary Tune Insurance.

Hence, the profit increased to above RM80 million. So when it was listed, the valuation must have been done on the increased profit of above RM80 million. That explains a market capitalisation of about RM1.2 billion.

FD: Wasn’t there a pledge by G Team to channel any profit from sale of its assets back to the Indian community through donations?

VP: Yes, I think there was a press statement by G Team to that effect.

FD: Has any profit been channelled to the Indian community from the sale of assets?

VP: I don’t know, you have to ask G Team.

FD: Jaspal described the fate of Maika as a prime example of greed and mismanagement and has asked the Malaysian Anti-Corruption Commission to investigate the sale of Oriental Capital. Fair?

VP: That is defamatory and his statement is motivated by the collateral agenda in relation to the presidential elections.

FD: Would you regard the Maika issue being raised now as a sign of desperation by your opponents in the fight for MIC leadership?

VP: Clearly, it looks like an issue that has been raised with the party’s presidential elections looming. I want to stay away from character assassinations and focus on the polls. I will address defamation via the legal framework and let these accusers provide evidence of any wrongdoings in court.

FD: Do you think there was real concern by Jaspal over Maika’s failure to increase the wealth of the Indian community?

VP: Jaspal was never concerned about Maika’s failure because he had never raised the issue until now. His sudden interest appears to be related to the presidential elections.