Tajudin Ramli back in the spotlight over MAS' RM8bil losses

Wong Choon Mei, Malaysia Chronicle

WITH VIDEO Fallen tycoon Tajudin Ramli – a former poster boy for the government’s New Economic Policy - is back in the news, this time with the political opposition demanding that Prime Minister Najib Razak takes action against him for a whopping RM8 billion in losses suffered by national carrier Malaysian Airlines in the 1990s.

Tajudin is the former chairman of MAS and the founder of Celcom, the first mobile phone firm in Malaysia. Once regarded as a business wizard, Tajudin was among a coterie of young Malay entrepreneurs nurtured by former finance minister Daim Zainuddin and given special opportunities to spearhead the Malays’ advance into the corporate world.

The Daim connection

But even being one of the famed Daim’s Boys could not save Tajudin from the economic fallout of the 1997 Asian financial crisis. He did manage to get national debt restructuring firm Danaharta to help him win more time from creditors at flagship TRI and Celcom.

But his mountain of debt was so huge, Tajudin could not avoid creating a political stink at MAS that led to the eventual ouster of his benefactor. Tajudin was executive chairman of MAS from 1994 to 2001.

"PM Najib must take this case seriously or he will lose even more public confidence in Malaysia and amongst overseas investors," PAS vice president Salahuddin Ayub told Malaysia Chronicle.

"He must put his foot down if he is committed to fighting corruption because we are not talking about months but years. Why was no action taken? Was Tajuddin acting alone or is he being protected by someone?"

MAS, under new managers, had lodged a police report against Tajudin in 2002 for allegedly causing the national carrier to suffer losses in excess of RM8 billion. According Salahuddin, one of the single biggest losses was caused by the relocation of cargo operation in Amsterdam and Frankfurt to a single hub in Hahn, Germany. As part of the relocation, MAS entered into a disadvantageous aircraft lease contract with a company controlled by Tajudin’s family.

NEP's poster boy

Indeed, Tajudin’s connections are powerful extending right to former prime minister Mahathir Mohamad himself. In 1994, Tajudin convinced the government to let him buy Bank Negara’s controlling stake in MAS, paying RM1.79 billion ringgit in cash raised from a huge loan backed by his own shareholdings.

Mahathir had then defended the decision to give Tajudin the MAS deal, saying it was in line with the aspirations of the NEP to increase the wealth held by the Malays in the country.

But Tajudin’s debt finally caught up with him, exacerbated by the sharp recession that followed the Asian crisis. In late 2000, when Daim was again the Finance Minister, the government agreed to buy back the MAS shares from Tajudin paying him the same price it had sold to him six years ago.

That triggered a massive public outcry as the market value of the shares were by then less than half of the 1994 valuation. The fiasco piled pressure on the Mahathir-Daim partnership, resulting in Daim quitting the Cabinet once again, although their personal friendship remained intact.

The NEP was launched in 1971 by Najib’s father Abdul Razak Hussein. It is an instrument that uses affirmation action to eradicate poverty and to distribute wealth. It does not state any special preference for the Malay community although many of them, especially in the rural areas, fell naturally into the needy category specified by the policy.

Pundits, including top civil servants who helped draft the NEP, say it has been abused through the decades, especially during the Mahathir era, where a lot of covers under the guise of Malay rights and advancement were built to hide high-level corruption.

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