“Those who drink the water
should never forget those
who dug the well.”
Dear Tan Sri Nazir,
First and foremost, I hope it is not too late for me to congratulate you on being bestowed the title “Tan Sri” and for publishing your memoirs, ‘What’s in a Name’.
When reading the book, I realised that my name had been mentioned several times. As much as I am honoured to be referred to as a Malaysian corporate figure of those days, I wish to express my utmost disappointment with some parts of the book which constitute major misrepresentations and errors. As the proverb goes:
“The first person to speak always seems right until someone comes and asks the right questions.”
There is also a maxim attributed to Nazi propagandist Joseph Goebbels which reads:
“If you tell a lie big enough and keep repeating it often enough, people will eventually come to believe it.”
I am determined not to let this happen.
Umno assets
I wish to set the record straight before everyone starts forgetting. According to your book –
“Halim claimed that he was (only) paid RM165m to give up his business empire. If true, the payment was probably apt; however grand his appearance, Halim was created by and for the Umno-linked companies system. At the end of the day, he was a well-paid employee of the system.”
What you had said was also relayed by Dr Mahathir Mohamad to Rashid Manaf in April 2010, that:
“He had been informed by Tan Sri Nor (Nor Mohamed Yakcop) that Khazanah had taken over assets that belonged to Umno, not Tan Sri Halim. Because of this, there was never any reason to pay Tan Sri Halim (in) the first place.”
This idea was also mentioned by Abdul Azim Zabidi, an Umno Treasurer, in his Statutory Declaration dated Sep 5, 2012:
“Semasa saya menjadi Bendahari Umno saya pernah berbincang dengan Tan Sri Nor Mohamed Yakcop yang pada masa itu adalah Menteri Kewangan II yang telah memberitahu saya bahawa Renong Berhad dan UEM Berhad bukan dimiliki oleh Tan Sri Halim Bin Saad tetapi adalah kepunyaan Umno.”
(“When I was Umno treasurer I had a discussion with Tan Sri Nor Mohamed Yakcop, the then Finance Minister II, who told me that Renong Berhad and UEM Berhad were not owned by Tan Sri Halim Bin Saad but by Umno.”)
This, however, is not true.
All my assets were acquired using my own funds and borrowings. The purchase of these assets was never funded by Umno.
In 1989 and 1990, I bought UEM shares from the Official Assignee, who administered the assets of Umno when the party was declared unlawful in 1988, using my own resources, for RM178 million. I also bought the Fleet Group for RM50 million.
This was confirmed in a book titled “Daim Zainuddin: Malaysia’s Revolutionary and Troubleshooter,” authored by Michael Backman. Thereafter, Daim Zainuddin also confirmed that all assets of these entities no longer belonged to Umno:
“Daim confirms that after the 1990 sale, no longer was there any commercial link between Umno and Renong/UEM. He says that persistent rumours otherwise were a constant millstone on Halim’s neck.”
This was also confirmed by Anwar Ibrahim in Parliament during a parliamentary sitting on Nov 24, 1997 where he said:
“Saya ingin menjelaskan bahawa saya Timbalan Presiden Umno, yang saya tahu UEM-Renong tidak ada hubung kait dengan Umno.”
(“I wish to clarify that as deputy president of Umno, what I know is that UEM-Renong has no connections with Umno.”)
What Daim forgot to mention was that I paid the Official Assignee RM50 million in cash and assumed RM554 million in debts when I took over 100% of Fleet Holdings Sdn Bhd. In addition, the group had close to RM300 million guarantees. Moreover, Fleet Holdings only had a paid-up capital of RM1,000,002.
What started as a sale and purchase ended up as a rescue deal. That rescue cost me RM508 million. I wrote to the President of Umno about it, but I was never paid.
I also contributed RM60 million in profit to the Official Assignee when I rescued 60% of Seri Pacific Corporation Sdn Bhd (now Seri Pacific Hotel Kuala Lumpur) and delivered it to the Official Assignee at zero cost.
If what I said above is not true, please prove otherwise. I have all the documents with me and they are available for your inspection.
Put Option / General Offer
I wish to make specific reference to the chapter in your book titled ‘Jay Le Taxi,’ at page 135, regarding my put option for the UEM shares, where you said:
“That ‘put’ option to make him buy shares was exercisable between March 2000 and February 2001, but no one seriously believed that Halim would be able to honour it.”
I believe this is an insinuation that I was not capable of completing the put option.
Here, I wish to clarify that the payment terms of the put option were as follows: –
- RM100 million on Feb 14, 2001;
- RM100 million on July 14, 2001;
- RM100 million on Dec 14, 2001; and
- The balance together with accruing interest on April 14, 2002.
The first payment was duly made.
On July 12, 2001, before the deadline for payment of the second tranche, I was called by the then prime minister, Mahathir, and Nor Yakcop to stop the put option/general offer. This was confirmed by my lawyer then, Rashid Manaf who was in a meeting with Nor Yakcop when he told me in no uncertain terms not to proceed with the proposed put option/general offer.
At all material times, I had financial support from Credit Suisse to complete the put option/general offer but was told not to proceed.
When I objected to Nor Yakcop’s demand, he called the then chairman of the Securities Commission, Ali Kadir, and instructed him to summon all UEM board members, giving them strict instructions not to allow me to proceed with the put option/general offer.
You may check this with UEM’s directors or its company secretary, some of whom are still around.
Given the actions and high-handed behaviour of Nor Yakcop at that time, my lawyer Rashid Manaf advised me not to go against the wishes of the people in power. He also advised me to accept the terms given to me by Nor Yakcop.
If I had no money, why did they go to the extent of stopping the put option/ general offer? All they needed to do was wait a few days and call a default on July 14, 2001. This was a blatant act of depriving me of my rights to my assets.
As for me wanting to acquire the Renong shares owned by Time Engineering, you wrote:
“Halim had until July that year to raise the RM873 million he needed to buy back the Renong shares. Clearly, he didn’t have the money and was giving false hope to the creditors.”
For your information, this was part of my proposed general offer. Had I proceeded with the general offer, this issue would have become academic.
Furthermore, my decision not to proceed with the put option/general offer has always been misinterpreted as a bailout by the government. At no point in time did the Renong group (which was under my control) under any circumstances require any bailout by the government.
The North-South Highway (with its accompanying fibre optic network) that became one of the most valuable assets of UEM was, Alhamdulillah, built by me, and completed 15 months ahead of its seven year contract, to the highest standards.
This was achieved despite various challenges through years of effort, sweat, planning and sacrifice. It was not something I acquired through corporate dealing.
Proprietorship takes on a deeper meaning when something profound and beneficial is built from scratch. So, it rankles a little deeper, when after being deprived of consideration which was agreed upon at the point of sale, insouciant comments are made by those who should know better.
Renong/UEM Bailout
You have also suggested that the fall of Renong was inevitable, and the government had to save Renong from me via a takeover by Khazanah. That again, is not true.
As repeated several times in the past, the Renong group’s debt was no risk to the market or to the banking system.
If you check the records, the bonds issued by Plus, UEM and Renong in 1999 were A-rated and were adequately secured by the group’s internal assets and Projek Lebuhraya Utara-Selatan Berhad’s (Plus) cash-flows. Here is what the Rating Agency of Malaysia (RAM) said about the bonds:
“RAM has assigned a structured rating of Aᵌ(s) to the proposed RM16 billion nominal amount of PLUS Bonds and RM2.193 billion nominal amount of Redeemable Convertible Bonds (RCBs).
“The Aᵌ(s) rating which is a strong investment grade rating reflects the resilience of PLUS’ cash flow generating capabilities”.
Time
I now wish to comment on the issue of Time Engineering and TimeDotCom.
The Time group debt was a stand-alone debt and not part of the Plus/Plus SPV Bonds. Thus, any failure would not have affected the group.
A few days after signing it, I was told to abort a sale to Singtel of Time Engineering and 20% of TimeDotCom for RM1.67 billion, which indicates that the total value of TimeDotCom was RM8.34 billion. Further, the 15% shareholding in Time Engineering was being offered for RM0.649 billion.
In the end, I had to accept an offer from Khazanah for RM3.4 billion less. From what I saw, neither Khazanah, Renong, UEM or Time was interested in the offer. Khazanah already had Telekom Malaysia in its stable.
We did not like the offer because Khazanah lacked the relevant expertise and a partnership would not enhance the share price.
Had they been sold to Singtel, I could have reduced the group debt significantly and further unlocked more potential for TimeDotCom as Singtel could have brought value to TimeDotCom in terms of expertise and skills to grow the business.
As a banker and the CEO of CIMB and as advisor to the group, you were aware of Bank Negara’s plan put forward by its Corporate Debt Restructuring Committee (CDRC).
Ironically, you had hosted the signing ceremony in 1999 for the Renong restructuring scheme and even gave a speech on CIMB’s behalf at the ceremony.
In your speech, you quoted the CDRC statement that there was no bailout. Your book clearly contradicts your own words in 1999.
The objective of the restructuring was to ensure that all UEM and Renong creditors would be paid in full and solely out of the Renong group’s assets, to avoid a distress sale of the Group’s assets, and to ensure that Renong and UEM remain financially viable over growing concerns that are well positioned to take advantage of and benefit from the anticipated recovery in the nation’s economy. Do feel free to check this fact in Bank Negara’s CDRC statement.
My question is, why would you call it a rescue when there wasn’t a default or bailout? What is the need to rescue an already restructured group?
Why not rush in to rescue an unrestructured group, say for example the Lion Group, which had a debt of USD2.7 billion (then equivalent to RM10.1billion)?
In 2002, Bloomberg ran a story which read:
“In 1999, he defaulted. 3 years later, Lion is the last big obstacle to Prime Minister, Tun Dr Mahathir Mohamad’s goal of resolving Malaysia’s more than RM8 billion of overdue corporate debt.
“More than 3 years later, creditors and Lion haven’t inked a debt repayment plan.”
As of December 2005, that restructuring had not been completed. I believe that even as of 2018, nothing had been done. Why were you so eager instead to control a fully restructured group?
Putra
Here again, Putra’s was a stand-alone debt and not part of the Plus/Plus SPV Bonds. Thus, any failure would not have affected the group. Project costs then stood at RM7.5 billion.
You were the advisor and liquidator of Putra and Renong. This is what you said in the Renong Statement on April 26, 2002.
“The step to be taken or proposed to be taken by Renong in respect of the appointment of liquidators.
The takeover process of Putra via the liquidation route is a process mutually agreed by Renong, Putra and the Government. The takeover process is in accordance with the terms of the CA (Concession Agreement).
This is sadly untrue because that is not what the concession agreement says. The concession agreement says this:
“Default during operations period
In the case of default after the commencement of operation of the Railway the Government shall procure a Qualifying Substitute to purchase the right, title and interest of the Company under this Agreement and all assets of the Company relating to the Railway or itself purchase all assets of the Company relating to the Railway for a purchase price equal to the Project Cost.”
If you had followed this agreement, there would have been a refund of RM1.5 billion to Renong. Your action shortchanged Renong by RM1.5 billion.
The most reliable report would be the RAM Report dated May 2001. According to the RAM Report, the valuation of the group’s assets as at May 2001 stood at RM20.08 billion (made up of equity value in Plus Bhd of RM12.212 billion plus Renong/UEM listed shares and unlisted shares of RM7.874 billion, plus Renong’s share of Johor Land worth RM2.880 billion) versus liabilities of Plus SPV Bonds of RM8.37 billion (1999 value) or RM10.1 billion in 2001.
The Group assets would be RM23.926 billion if you add back the loss from rejecting the Singtel deal.
I invite you to inspect these records if you have any doubts.
With regard to your own corporate exercise in 1997, you and some senior staff of the group executed an Employee Share Option Scheme (ESOS). Unfortunately, it went underwater during the Asian Financial Crisis when it went short of margin calls.
As you are aware, I rescued it at a cost to me of more than RM52 million. A bank commissioned a book in 2003 entitled “Of People and Principle” and the writer, Zuraida Omar (deceased) wrote this:
“The senior management of the Commerce Group in particular, actually had reason to be depressed. When CAHB completed its capital raising exercise in June 1997, they were given rights for the shares, which were subscribed to with financing from another bank. For those who had taken up the rights, this privilege became a huge financial burden when the crisis broke out, as they had to service interest payments that came to thousands of ringgit per month. If help was not found to alleviate this burden, the Commerce Group Berhad would have a financially bankrupt management team. Fortunately, a ‘white knight’ came to the rescue and purchased the rights.”
As I am the “white knight” in question, I wish to remind you of the Chinese proverb which goes, “chi shui bu wang jue jin ren,” which translates to, “Those who drink the water should never forget those who dug the well.”
I wish you well.
Halim Saad is a former chairman of Renong Bhd and an FMT reader.
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