Mission impossible: How our Socso money got loaned to TRX

The question: “Where has the US$3 billion (RM12 billion) raised in 2012 for the purpose of investing in Tun Razak Exchange gone to?”

- Finance Minister Lim Guan Eng

The reply: “So far, the loan is government-guaranteed and we managed to get the returns as promised which is twice a year. They have also started to repay the principal payment. The coupon payment was twice a year, normally in April and November and the recent payment was paid on time. So, all this while they have honoured (payments), meaning there is no lapse in payment.”

- Social Security Organisation (Socso) CEO Mohammed Azman Aziz Mohammed in stating that TRX City Sdn Bhd honoured its repayment schedules for the RM800 million loan.

The scenario is frightening. Money from Socso (read, money from the workers of Malaysia) was loaned in 2012 to TRX has disappeared. Yes, someone in the 1 Malaysia Development Bhd (1MDB) took it – perhaps to buy a yacht or pay for their casino gigs. The money belongs to us – you and I, who part with deductions from our salaries every month for a scheme under the employees’ social security scheme.

It is easy to dismiss this loan transaction as “guaranteed by the government” and hence, there is nothing to fear. One must realise that if there is a default, it will once again be the taxpayers who will have to pay for it. The workers who pay taxes are getting the wrong end of the stick. It is a case of heads you win, tails we lose.

But why were the loans given in the first place? Socso is not a bank or a financial institution. Neither is it in the money lending business, or has a money lending licence. There are explicit provisions in the preamble to Socso’s statute book which reads: “An Act to provide social security in certain contingencies and to make provision for certain other matters in relation to it.”

Does the law allow Socso to go into such business or transaction? The answer is “no”. Did it breach the regulations governing the use of its funds? The answer is likely, “yes”.

Who pulled the trigger?

Having perused the Act in totality, there are no provisions for Socso to give any loans except for loans or scholarships to a dependent-child of an insured person. So how does the RM800 million fit into the scheme of this transaction?

There is one catch-all clause that may provide some clue as to the compelling reasons for Socso to provide loans. Section 71 of the Act outlines how its monies should be spent. Sub-section (ix) says it can be used for “purposes as may be authorized” by the minister in consultation with the minister of finance.

Therefore, is it safe to assume that the then human resources minister, Dr S Subramaniam (photo) and the then finance minister, Najib Razak had been consulted and gave their consent to the loan? But wasn’t there a whimper of objection from any quarter, because the money belonged to the workers? You and I could not have raised it because the transaction only appeared in public domain a few years later.

What were the (then) board of directors doing? Didn’t they approve the loan? Or will they pass the buck to the management by claiming “we were in the dark”? Shouldn’t a “board paper” have been prepared for discussion by the directors, especially when it involved a whopping RM800 million? (The loan attracted an interest rate of 4.041% per annum with a tenure of 10 years, which is paid on an amortised basis – much less than the interest from commercial banks.)

So, were there voices of objection or dissent, or was this case of the usual and unanimous shouts of “setuju” or the act of “angkat tangan” a’la local council decisions?

If this was the case, shouldn’t the entire board (of that time) be held responsible? Wasn’t it a breach of fiduciary duties as directors? Will they use “we were instructed” as an excuse? They can’t. Aren’t they are supposed to act independently as stakeholders of workers’ money?

Shouldn’t they have told the ministers that it could not be done? (There have been several CEOs and boards which had in the past put their feet down despite insistent requests from various quarters, the prime minister included.)

In any organisation, the statute book is the guiding light. If the necessities and provisions are not considered by those in authority, they might as well throw the rule book out of the window and allow jungle law to take effect.

The long tentacles of 1MDB have stretched far and wide for funds. Government agencies which are flushed with funds became soft targets for the vultures who wanted money from every nook and corner to cover their failures and shortcomings.

The public has a right to know the events and discussions leading to the loan. The human resources minister should direct Socso to make public the board papers (if any), the board minutes and the discussions that followed whereby the board agreed to release the money.

By the way, RM800 million is not someone’s weekend rojak money. Let us, the taxpayers decide if the directors of the board are fit to remain. Their dereliction of duties is something serious and must be looked at intensely and intensively.

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R NADESWARAN contributed because all his working life, Socso has a “once you get in, you can’t get out” policy. His and your money are part of the RM800 million loan. Comments: citizen.nades22@gmail.com -Mkini