By P. Gunasegaram
Government-linked companies or GLCs may blacklist US investment bank Goldman Sachs following reports that the latter obtained huge underwriting fees from the government’s strategic investment fund, 1Malaysia Development Bhd (1MDB).
Sources said this could include companies in the Khazanah Nasional Bhd stable as well as others.
GLCs, defined as companies in which the government has significant stakes and/or influence, account for over one third of market capitalisation of companies listed on Bursa Malaysia.
Some of them in the Khazanah stable include Axiata, CIMB Group, Tenaga Nasional Bhd and IHH Healthcare. Other companies in the Khazanah stable which are large but not listed include PLUS (Malaysia), Iskandar Investments Bhd and UEM Group, to mention a few.
They are also likely to include other GLC companies controlled by state investment funds such as Permodalan Nasional Bhd (PNB). These GLCs include the likes of Sime Darby and Malayan Banking (Maybank).
Sources told KiniBiz that the blacklisting is more likely to take an informal route rather than a formal one and may be an attempt by GLCs to distance themselves from the happenings at 1MDB, especially, the way in which it has raised loans.
1MDB, which is technically a GLC as it is wholly owned by the Ministry of Finance, seems to be completely exempt from the government’s GLC transformation programme initiated in 2004 to improve the performance of GLCs no matter which government body or agency they were owned by.
The transformation programme covers companies owned by Khazanah, PNB, the Employees Provident Fund (EPF), Lembaga Tabung Amanah Tentera (LTAT) and Lembaga Urusan Tabung Haji (LTH). The Putrajaya Committee on GLC High Performance was formed in January 2005 to monitor the transformation programme.
It is chaired by the Second Finance Minister, with participation from the heads of the government-linked investment companies, and representatives from the Ministry of Finance Inc. and the Prime Minister’s Office to work together to monitor developments and to recommend further measures of improvements.
The transformation blueprint set strict standards of behaviour and codes of conduct for GLCs, much of which seems to have been ignored by 1MDB.
1MDB has been embroiled in many controversies which have raised numerous questions. These include allegations of bond mispricing, high fees paid to Goldman Sachs, overpaying for assets, delays in accounts and serious questions over how funds have been raised amongst others.
As far back as May last year, Bloomberg reported that 1MDB had paid US$500 million in fees for three bonds in the past year. Recently DAP MP Tony Pua questioned differences in statements by Goldman Sachs and 1MDB over the fees for the loans totaling US$4.75 billion.
You must be logged in to post a comment.