KUALA LUMPUR - United Engineers’ (UEM) purchase of a 33 per cent stake in its debt-laden parent Renong for RM2.3 billion in November 1997 at the height of the Asian financial crisis remains mired in secrecy some 26 years on.
In four days, Renong’s value, already sliding before the deal, was halved as investors dumped shares in both firms – a stunning turn of fortunes for UEM, one of the nation’s biggest infrastructure firms which built the North-South Expressway and Second Link to Singapore.
It was also a time of great political upheaval. Datuk Seri Anwar Ibrahim – whose star was rising in the ruling Umno – was finance minister in 1997, having replaced Tun Daim Zainuddin in 1991. But in a power struggle with then Premier Mahathir Mohamad, Mr Anwar was sacked in September 1998 and later jailed.
Mr Daim was reinstated at the Treasury, only to suddenly resign in June 2001 and be replaced by Tun Dr Mahathir amid talk of disagreements between the two.
Dr Mahathir then appointed Tan Sri Nor Mohamed Yakcop as special economic adviser, to oversee a swathe of corporate restructuring deals in the aftermath of the Asian financial crisis.
After the uproar over the UEM-Renong deal – which appeared to breach stock exchange reporting rules – the Securities Commission compelled Tan Sri Halim Saad, then the controlling shareholder of Renong, to buy back the stake from UEM. Payments were to be made between February 2001 and April 2002.
But in July 2001, the government decided that sovereign wealth fund Khazanah Nasional would take over the entire Renong group for RM4 billion. Renong included the likes of Plus – the owner of the North-South Expressway – and Commerce Asset Holdings (now CIMB), as well as RM12 billion in debt.
The prevailing view was that this was a government bailout.
But Mr Halim – who grew his empire when Mr Daim was finance minister from 1984 to 1991 – unsuccessfully sued the government, Khazanah and Mr Nor Mohamed in 2013 for RM1.8 billion.
He insisted he was cheated of his Renong stake, and claimed he had been induced by Mr Nor Mohamed, as an agent of the government, to take up the deal to exit from Renong.
Malaysia’s anti-graft body is currently investigating this 26-year-old deal. To this day, it remains unclear when UEM bought the Renong shares, or from whom.
Mr Halim had claimed it was from the open market, but trading volume recorded suggests this was not the case. The prevailing view is that the shares were held in proxy for Umno, whose treasurer at the time was Mr Daim.
