MORFOGÉNESIS QUIMICA

Selatan (PLUS), Sistem Televisyen Malaysia Bhd (TV3), United Engineers, New Straits Times Press and the Faber Group. He was also chairman of the Fleet Group and Pitisan Sdn Bhd. Although in January 1991 Halim Saad relinquished his post as chief executive officer o f United Engineeers (M) Bhd (UEM), Projek Lebuhraya Utara Selatan (PLUS), New Straits Times Press (M) Bhd (NSTP) and the Faber Group, he remained as executive vice-chairman of those companies. The Star, 17:1:1991.

While the corporate rise of proxy capitalists is dependent on their positions as managers of UMNO's assets, the relationship is by no means one-sided and is complicated by the ownership of such assets. In order for the party to claim that 'it does not own any company and is not involved in business' it was necessary for proxy capitalists to hold the party's assets, mainly shares, in their own names. So from a strictly legal and corporate point of view, owner-directors such as Halim Saad are not merely agents or 'proxies' but appear able to exercise a degree of independent action in their management of the party's considerable investments. The enormity of the wealth concentrated in the hands of UMNO's principal proxies became apparent in during the restructuring of Renong.

In the early 1990's Halim Saad, Anuar Othman and, for a time, Mohd Razali, were all owner-directors of UMNO-linked companies, though Halim Saad was by far the most dominant in terms of share ownership.66 When Renong acquired Hatibudi Nominees the $454 million purchase involved no cash but instead the issue of new Renong shares to the vendors - mainly Halim who held 90 per cent of Hatibudi in his name and Fleet Holdings the 100 per cent owner of Fleet Group (Asiaweek, 18:5:1990). Hatibudi's net worth as at 31 March 1990 was $244.9 million (The Star, 1:5:1990). By March 1991 Halim was believed to control directly and indirectly a massive 73 per cent of Renong's shares (The Star, 25:3:1991). In a declaration required by the Companies Act, Halim advised the authorities that he held 15.07 per cent of Renong shares directly in his own name and a further 50.67 per cent indirectly through the shares registered under various nominees and Fleet Holdings in which he held an indirect 50 per cent stake (The Star, 3:4:1991). In addition, Halim together with his wife, Datin Norani Zolkiffli wholly owned a company called Hanuma Sdn Bhd. Hanuma Sdn Bhd bought the entire equity in Pacific Fleet Sdn Bhd and Hanurai Sdn Bhd, both of which also had significant stakes in

6 6 Halim Saad and Mohd Razali Abdul Rahman were both owner-directors of Hatibudi Snd Bhd. In July 1985 when Hatibudi's paid up capital was increased to $1 million, Halim Saad and Mohd Razali each held 499, 999 $1 shares in the company. Gomez: 1990:108. Anuar Othman was a director of Hatibudi Sdn Bhd, Hatibudi Nominees, United Engineers and Renong Bhd. In a form 29B notification of the change in interest o f a major shareholder Anuar Othman revealed that on 28 November 1990, under a sales and purchase agreement dated 26 April 1990 he acquired 12, 245 Renong shares registered under his own name. Anuar, who was also a director o f Fleet Group Sdn Bhd, also declared that he owned another 60, 000, 000 shares registered under Syarikat Nominee Bumiputra Sdn Bhd. He added that on 28 November 1990, 1, 990, 355, 177 million shares were purchased by Fleet Holdings in which he too declared a 50 per cent indirect interest. According to the KLSE Handbook o f Companies Anuar Othman's shareholdings direct and indirect in Renong amounted to 31.98 percent. See BT, 17:1:1991 and KLSE Annual Companies Handbook, V o l.X V ll Book I. p 700. The composition o f Halim Saad's dominant shareholding in Renong is described in the following footnote.

Renong.67 Already, by December 1990, Renong was one of Malaysia's largest publicly listed companies with assets totalling $1.26 billion, placing it second only to Sime Darby on the Kuala Lumpur Stock Exchange (NST, 8:12:1990). Control, direct and indirect, of 73 per cent of Renong meant therefore a massive concentration of wealth in the hands of its executive chairman, Halim Saad. A study by Malaysian Business (16:4:1992) to determine ownership by directors of publicly-listed companies revealed that Halim Saad and his wife Noraini Zolkifli were among the top ten owners of corporate stock in Malaysia, the remainder being Chinese. The combined corporate equity owned by Halim ($1.7 billion) and his wife ($717 million) amounted to over $2.4 billion more than that of any other group among the top ten owners of corporate stock.

The potential dilemma for UMNO in separating its ownership of such massive assets by the use of proxies was highlighted, perhaps inadvertently, by the Prime Minister Dr Mahathir who while claiming that 'Halim Saad was not a front man for UMNO, 'went on to point out that 'UMNO has been cheated many times in the past because people entrusted to look after UMNO's funds suddenly said there was no money at all.'68 In

67 When Renong took over the Fleet Group and Hatibudi Nominees in April 1990, Renong's largest shareholder was a company called Pacific Fleet which held 14 per cent of the company. Pacific Fleet's only two shareholders were Halim Saad and Anuar Othman. In January 1991 Halim Saad, as executive chairman of Renong informed the company that as of 28 November 1990 he had 220,410,909 Renong shares registered in his own name. On 12 March 1991 Halim disposed of 20 million shares, reducing his direct holding to 200,410,909 or 15.07 per cent. In addition to the shares held under his own name, Halim advised the company that he had an indirect interest in another 476,739,620 Renong shares or 50.67 per cent. Halim's indirect interest was comprised of 355,177,120 shares purchased by Fleet Holdings in which he had declared a 50 per cent interest, 60,000,000 shares registered under Syarikat Nominee Bumiputra Sdn Bhd, 30,312,000 shares registered under BCB Nominees Sdn Bhd and a further 31,250,000 shares registered under Rothputra Nominees Sdn Bhd. In November 1990, Renong announced that Hanuma Sdn Bhd became a substantial shareholder of the company with 121,563,000 million shares or 9.1 per cent. This arose from the purchase by Hanuma of the entire paid-up capital of Pacific Fleet Sdn Bhd and Hanurai Sdn Bhd. Pacific Fleet and Hanurai were private holding companies; Pacific Fleet holding 60 million shares in Renong and Hanurai 61,563 million. Hanuma was wholly owned by Halim and his wife, Datin Noraini Zolkiffli. Halim's wife is also a director of Renong. See BT, 28:11:1990, NST, 17:1:1991, The Star, 28:3:1991 and 3:4:1991 and KLSE, Annual Companies Handbook Vol XVII, Book 1 p 700.

68 NST, 19:7:1991 (’PM:UMNO not involved in business'). These comments were made by the Prime Minister, Dr Mahathir when he replied in Parliament to Opposition Leader, Lim Kit Siang who had earlier alleged that Halim Saad was a 'front man for UMNO'. Dr Mahathir said that, "I sleep well every night as I am not worried that UMNO's money will be lost because UMNO money is not involved. I admit that if UMNO money to the amount of $1 billion is involved, I will not be able to sleep well. UMNO has been cheated many times in the past because people entrusted to look after UMNO's funds suddenly said there was no money at all. As such, I am not trusting to the extent of allowing others to be fronting (for UMNO). ...Now I am aware that there are people who only want to take care of UMNO if they can own it".

other words to view UMNO's principal proxy capitalists as little more than corporate cyphers o f the party leadership underestimates the role they play. Indeed, of the three types of directors identified by Lim Mah Hui (1981:70) that is executive-professional directors, functional directors and owner-directors, the roles performed by 'proxies' such as Halim Saad com bine the two m ost im portant of those categories, executive- professional directors (who perform the day-to-day management functions), and that of the ow ner-directors (who both own and take an active interest in the operations or policies o f corporations).

UMNO's proxy capitalists wield considerable corporate power not only from their ownership, direct and indirect, of large amounts of shares but also from the multiple directorships they hold on the party's behalf. With regard to the latter, it is members of this small and select group who, to a large extent, determine the investment strategies of some of M alaysia's largest com panies on the Kuala Lum pur Stock Exchange. The potential to use or exploit such a concentration of corporate pow er is of course considerable, the possibilities of which were highlighted in 1990 when several UMNO- owned or related com panies were the subject of insider trading investigations. One investigation focussed on Renong's S 1.95 billion restructuring earlier that same year. The case involved trading in the shares of some of the most prom inent listed com panies w ithin the R enong group, notably U nited Engineers, K inta K ellas and Tim e E ngineering.69 Halim Saad was a director and/or held substantial shares in all three companies. O f particular interest to the authorities was why United Engineer's share price leapt to more than $12 on the last day of trading o f 1989 when it was $4.30 only nine months earlier (FEER, 18:7:1991). The Finance M inister, Datuk A nw ar Ibrahim , acknow ledged that M alaysia's Registrar o f Com panies and police had interrogated Renong personnel in connection with the Companys' restructuring but said they found insufficient evidence to pursue charges against any individual.70

69 According to the Far Eastern Economic Review, Malaysia's Registrar o f Companies asked all 53