The 1MDB fiasco may have put Malaysia on the world map, with the international media labelling it as the “world’s biggest financial scandal in history”, but I dare say that long before 1MDB Malaysia already had the country’s worst financial scandal in history – Maika Holdings Berhad.
Why so? Unlike 1MDB, which had use monies from the oil royalties that was supposed to distributed to the people of Terengganu, Maika had taken money from the sweat, blood and tears of Malaysian Indians and squandered it all.
Maika was the brainchild of the then MIC president Tun S Samy Vellu, which was supposed to be an investment vehicle to elevate the economic status of the Indian community particularly the poor. Maika Holdings Berhad was incorporated on 13 September 1982 and began operations on 31 January 1983. Over 66,000 people, mainly MIC supporters invested in this entrusting their life savings, mortgaging property, pawning jewellery and even taking loans with exorbitant rates on promises of returns of 10-20 times their initial investment.
Many people believed in the hope and promises made that it made Maika a very cash rich company. In fact, it had one of the largest cash reserves in the country at that time. The recession in 1985 sweeten the deal, allowing Maika to purchase property and acquire stakes in top tier blue chip companies (United Asian Bank, Malaysia Airlines System, MISC, TV3 and even EON) all at a bargain.
However, Maika could not deliver all the lavish promises it made at the start – giving out only 3-8% dividends in selected years. Losses began mounting (eg RM4.69 million in 1990) from questionable investments and management. Soon it had to sell stocks of blue chips shares to pay off its debts.
What made it worse was the Telekom scandal in 1990 where Maika was supposed to have taken up 10 million shares in Telekom Malaysia at RM5/share but ended up with only 1 million shares. The expose of this shady transaction detailed that the balance 9 million shares were instead taken up equally by three companies under the purview of Samy Vellu.
Investors continued to be kept in the dark, only to be told that the company losses had escalated. (Maika’s end-2008 accumulated losses were announced at RM106.7million). Finally, in 2010, G Team, established by Tan Sri G Gnanalingam and Tan Sri S Kunasingam offered to acquire the 125 million shares in Maika at RM106 million.
The sale to G Team was raised in Dewan Negara in 2013 with claims that it was ambiguous. MIC’s ex treasurer general Datuk Seri Jaspal Singh stated that G Team claim that Maika’s debts were RM190 million when it took over but CIMB Group Chief Executive Officer Datuk Seri Nazir Razak in a joint press conference with Gnanalingam announced that Maika’s liabilities were RM60 million. He also queried the G Team’s claim that OCA lost RM5 million between 2009-2010 but audited accounts revealed that the insurance company had actually registered profits of RM12 million and RM10 million.
Since the current government is very determined to right the many wrongs of BN, this mother of financial scandals must revisited. Long before the idea of 1MDB was even conceived, Maika had paved the way of how corrupt politicians and businessmen could fool the rakyat and in this case, poor Malaysian Indian population of over RM100 million (equivalent to at least RM1 billion today). Even Tun Mahathir in 2018 interview, admitted that Maika’s astronomical losses were due to bad management.
36 years later nothing has been solved. The wrongdoers are still walking free after causing so many poor Indians to lose money, property and savings.
This injustice is too big to be swept under the carpet.
“Fight Injustice Everywhere”
Dato’ Sri Sanjeevan Ramakrishnan