AXIOLOGÍA Y EDUCACIÓN: ¿CREENCIAS O VALORES?

late 1950's early 1960's and since has had a long association with the Sime Darby and Dunlop groups in Malaysia.

While executive-professional directors are often associated with the same company or corporate group for a considerable period of time, the appointment and tenure of executive/trustee directors on the other hand are subject to shifting allegiances within the political elite, a factor well illustrated by the changes that took place in the management of MMC during the 1980's.8 Sometimes however the contrasts drawn between professional and trustee directors in terms of their day-to-day management of companies are less clear because trustee directors of state-owned but publicly-listed companies, such as MMC, are also responsible to shareholders for the efficient management and profitability of such companies. Prominent examples of executive/trustee directors in the eighties and the multiple directorships they held are shown in Table 4.1.

As indicated earlier, the appointment of executive/trustee directors to company boards generally reflects their membership of peak trustee agencies on the one hand and a close association with the political leadership on the other. It is as a result o f those characteristics that executive/trustee directors are closely involved in the allocation or shifting of often huge assets between state-owned companies, or moving such assets to UMNO-linked companies or to Bumiputra business groups in the private sector. The allocation in October 1991 of a large $800 million gas distribution project by PETRONAS to MMC and a private Bumiputra group, Shapadu (rather than the UMNO- linked United Engineers), was an example of the considerable influence wielded by trustee-directors who, through interlocking directorships9 and in concert with the political

8 Shortly after the incorporation of MMC in 1977 the then Finance Minister, Tengku Razaleigh, appointed Abdul Rahim Aki, a close friend since their student days as executive chairman of MMC. As Razaleigh's political fortunes declined in the early eighties, Abdul Rahim Aki, who was also the driving force behind the Maminco scandal, was replaced by Mohd Desa Pachi who was appointed chairman in 1982. Desa Pachi was a director of Fleet Holdings, UMNO's first major investment holding company, and was also a close friend and one-time business associate of Daim Zainuddin who became Minister of Finance in 1984. However the early 1980's were a disastrous period for MMC with the collapse in tin prices and as the corporations involvement in the Maminco scandal became public. Thus in January 1985 Desa Pachi was in tum replaced as chairman of MMC by Tan Sri Nasruddin bin Mohamed who, as a former Secretary General of the Ministry of Trade and Industry, had worked closely with the Prime Minister, Dr Mahathir when the latter was the Minister of Trade and Industry from 1978 to 1981. Real power however apparently lay with Ibrahim Menudin who was appointed at about the same time as Nasruddin but to the post of Group Chief Executive. Ibrahim Menudin had come to the notice of the political leadership as a tough and effective state manager in Sabah under Harris Salleh. Source: Interview, Senior Manager of MMC 8 January 1992. 9 An example of interlocking directorships that may have been pertinent in facilitating the allocation of

the $800 million gas distribution project from PETRONAS to MMC were those concurrently held at the time by Tan Sri Basir Ismail who was a director of PNB, the principal shareholder of MMC and also the chairman of PETRONAS.

Table 4.1: Executive/Trustee Directors Interlocking and Multiple Directorships

Name S a laiutory authonucs nd govemmerv geneses Privatized/ curpiraiized government aulhonues bjN ic 1 companies State a ( substantial shareholder) hiblic U ompames a significant orcign or Tuncsc xjuiiy) MNO C m panics p P i ompames ubtic and nvate related the 1980s former "inancc Ministe >aim Zainuddtn Tun IsmaiJ bin Mohd Ail

lank Negara. C1C. 1 C . M IDF. PNB-f kSN Sime Darby Bhd* Tractors Bbdf Consolidated Plantations B bdf Tan Sri Basir

bin Ismail ohorc SEDC Bank Bumiputra PNB-f Petronas C1C. Southeast Asia Bank Ltd Bank Negara Kumpulan Fima. Malaysian Airports Corporation United Plantations B bdf *oxy Electric industries Technology Resources Cold Storage (M’sia) B b d f) C y c le » ! Carnage Ud C y c k » d Carnage Bimang-f Tan Sri Nasruddm bin Mohamcd Ministry Trade C IC . F K . HICOM. PNB* MMC-f Stme Darby B bdf Island and Peninsula B bdf Lam Soon Huai Development B b d Austral Enterprises Bbdf Sungei W ty Bbd Amalgamated Steel Mill Bbd H oof Leoof Industries Bbd Federal Flour M ilk Bbd Mafusfaita B e a n e Company M sn Bbd Mount Pleasure Holdings Bbd-f Mohd. Desa bm Pactu PNB-f. ASN. Penan ba M M O Flee« Group Flee« HoidinfS Fleet Realty Fleet M a n a g e n « Fleet Nominees Fleet Development Fleet Coosmictioo Fleet Trading m d Manirfacturing Pitiuit. CIMB. Daza SytL M alun Daan U m ud Project Bhd Sime Darby Bank of Commerce Bbd NSTP. Si stem T elcvuyen (M) Bhd. Ibrahim M cnudu MMC-f Ber}until Tin Drodgmg Bbdf First Malaysia. Property Trust Tone Engineering Bhd Kramat Tut Dredging BbcF Tronoh Mines M 'sia Bhdf Zain Azarian bin

Zainal M M C Harmons Malaysian Plantations Bhd United Malayan Banking Corporauon Dato' Ahmad

Sarp bin Abdul Hamid M inistry Trade and EPU. M ARA, M IDA. PETRONAS PN B. C IC . F1C ♦ Interlocking Directorships Pnvair Companies

Yung Pui Co. Lid Kegiatan Makmur Sdn Bhd*- Fima M eu l Box* AFC Holdings (M aa) Sdn Bbd BCF Holdings Sdn Bbd Warisan Desa Sdn Bbd Ibraoo Uda Sdn Bbd Uda Scapark Sdn Bbd Maruichi Malaysia Steel Tube Bhd •

leadership, determine the distribution of enormous state resources.10 Another example was the separation in the mid-1980's of a number of publicly-listed tin companies from state-owned MMC and their transfer, via a web of common directors and minority

shareholdings, to an UMNO-controlled company called Halim tan.* 11

There has been a rapid increase in the number of Malay executive directors since the mid-1970's to oversee and manage the huge investments made by trust agencies to extend Malay ownership over the commanding heights of the economy. By the late 1980's Malay executive directors, whether of the professional or trustee type, and the corporate knowledge and experience they had acquired, represented an important new element in the strengthening and development of a Bumiputra Commercial and Industrial Community.

Functional Directors

Functional directors are former state managers and senior bureaucrats who have played an important role in the expansion of Malay ownership of the economy.12 They are termed functional directors because their transition to the private sector is the result of the advisory and brokerage functions they can provide to companies. In the private sector they may or may not be owner-directors. As the NEP gathered momentum, and various forms of state licensing and regulation became more pervasive, companies eagerly sought the services of such individuals.

10 A British company, British Gas, had apparently hoped to participate in the $800 million gas distribution project through its partnership with United Engineers. United Engineers was part of Renong, the main holding company for the ruling party, UMNO. However the political leadership decided to award the gas project to MMC in order to assist that corporation's efforts to diversify its activities and so expand Bumiputra ownership through other avenues besides UMNO-controlled United Engineers. (United Engineers had already won lucrative government contracts, most notably the North-South Highway project.) Included in the MMC consortium was a private Bumiputra company, Shapadu Corporation, whose growth was also promoted by the award of the project to MMC. Sources: Interview Senior Manager of MMC 8 January 1992 and FEER, 17:10:1991. 11 A detailed account is given in chapter 5 of how through common directorships and interlocking

ownership the transfer of tin companies from MMC to UMNO-controlled Halim tan was effected. 12 Lim M.H., (1981:69) also used the term functional directors in his work. Writing in the mid-1970's,

when few state managers had yet emerged or made significant contact with the corporate world, Lim's definition of functional directors was more akin to what we have described as figurehead capitalists. Lim's functional directors were therefore former civil servants (and some politicians) who generally performed a more symbolic role, that is fulfilling the need for Bumiputra representation on company boards. In short while they might offer companies some advantage through their state or political connections, Lim’s functional directors did not have the combination of state and business connections/experience we have ascribed to the term.

Many functional directors have been, or remain, centrally and powerfully located in key regulatory agencies or state corporations. In those roles state managers were brought into close contact with the business world where they established personal relationships with corporate heads and gained experience and expertise in various sectors of business. By the late eighties some functional directors such as Tan Sri Radin Soemano, Mohamed Ramli Kushairi13 and Raja Badrol Ahmad14 were mainly identified with private sector interests, while others such as Tan Sri Nasruddin and Tan Sri Dr Rashdan bin Baba, 15 simultaneously held positions in private companies as well as state-owned companies, or as managers of corporatised state bodies. The ways in which state officials become functional directors and the roles they perform in the private sector can be illustrated by the examples of Nasruddin and Radin Soenamo.

As Secretary General of the Ministry of Trade and Industry (MTI), Nasruddin worked closely with the present Prime Minister, Dr Mahathir, when the latter was Minister o f Trade and Industry from 1978 to 1981. As Secretary General of MTI, Nasruddin was also a member of such key regulatory agencies as the CIC, the FIC, the Petroleum Advisory Council and the Council for Malaysian Invisibles Trade. After his

13 After obtaining an economics degree in the United Kingdom, Dato Mohamed Ramli Kushairi worked with Bank Negara in the 1960's and later joined the Tariff Advisory Board under the Ministry of Trade and Industry. In the early 1970’s he was managing director of the state-owned FIMA group of companies and was Executive Secretary of the Federation of Malaysian Manufacturers. Ramli Kushairi's background in economic policy arms of government and his-first hand experience of business through FIMA, made him a much sought after director in the private sector. In the 1980's and early 1990's Ramli Kushiari was Chairman of South Malaysia Industries Bhd, Deputy Executive Chairman of Kesang Corporation Bhd, and director of South Pacific Textile Industries Bhd, DMIB Bhd, MCB Holdings Bhd and Gadek (M'sia) Bhd. See KLSE, Vol XI 1:1986; Vol XV.1989 & Vol X V I1 Bks 1 and 11, 1991 and also New Malaysian Who's Who, 1989/1990:719.

14 Raja Badrol is an economist who worked in various positions in the civil service until the early 1970's when he was appointed Executive Director of state-owned Pemas Securities Sdn Bhd. After he left Pemas in 1972 he was appointed Executive Director of Malayan Banking Bhd, a position he held until 1988. Through Pemas Securities and Malayan Banking, Raja Badrol acquired experience and contacts in corporate and financial circles which meant he was able to move easily from the public to the private sector. During the 1980's he was a director of Island and Peninsular Development Bhd, Malaysian Industrial Finance Bhd and Malaysian Nation Re-insumance Bhd. In the early 1990’s he was also appointed as a director of Loy Hean Heong's MBf Finance group. See KLSE, Vols X I1, XV and X V I1.

15 Tan Sri Dr Rashdan bin Baba first trained as an agronomist and has a Phd from Leeds University. In 1969 he was appointed Vice-Chancellor of Universiti Kebangsaan and from 1972-82 was Vice- Chancellor of Universiti Pertanian. Shortly after the takeover of the Guthrie Corporation by PNB in 1980 he was appointed chairman of the company. Later he left Guthries to become Executive Chairman of Telekom Malaysia Bhd which was corporatized in 1987 and became Syarikat Telekom Malaysia Bhd. While chairman of Guthrie Ropel and as head of Syarikat Telekom, Rashdan was also chairman of Wing Tiek Holdings Bhd and a director of Malaysian General Investment Corporation Bhd and The Temerloh Rubber Estates Bhd. See KLSE, Vols X1L1986 & XV1L1991.

retirement in 1984 Nasruddin was chosen to head the Heavy Industries Corporation of Malaysia (HICOM), the main instrument to implement Prime Minister Mahathir's heavy industrialisation program. He was also appointed a director of PNB, the government's principal trust agency charged with increasing Bumiputra ownership in the corporate sector.

From 1984 to 1991, Nasruddin provided one of the principal interlocks in management between PNB and its investments in the mining, plantation and property sectors. He was chairman of MMC in which PNB had a 51 per cent stake (KLSE, 1991:748); a director of Sime Darby in which ASN and MMC were the two principal shareholders; a director of the property and plantation group, Island and Peninsular Bhd, of which PNB was the ultimate holding company; chairman of Austral Enterprises Bhd, of which Island and Peninsular was the largest shareholder; and a director of Lam Soon Huat Bhd in which PNB was also a major shareholder.16

As an important link between some of the state's principal investments in the corporate sector, Nasruddin was highly sought as a director by foreign, Chinese and Malay companies. In the property sector, Nasruddin was a director of Amalgamated Properties and Industries Bhd and Uniphoenix Corporation Bhd (Tan Sri Ibrahim Mohamed)17 and Mount Pleasure Holdings (Low Yow Chuan). In the industrial sector he was chairman of Malaysia ACIA Bhd, 18 Matsushita Electric Company (M'sia) Bhd and Sungei Way Holdings Bhd (Cheah Fook Ling); and a director of Amalgamated Steel Mills Bhd (Wiliam Cheng), Federal Flour Mills Bhd (Robert Kuok), and Hong Leong Industries Bhd (Quek Leng Chan).19

As the boundary between the state and business became increasingly blurred, the value to private enterprise of individuals such as Nasruddin, whose extensive corporate ties embraced both, increased. At the same time however, the number and variety of

16 ASN and MMC were substantial shareholders of Sime Darby holding 17.6 per cent and 10.1 per cent