24-6-2023 (KUALA LUMPUR) The long-standing rivalry between Malaysian Prime Minister Anwar Ibrahim and former prime minister Dr Mahathir Mohamad has intensified in recent weeks, with skirmishes breaking out on several fronts. The Malaysian Anti-Corruption Commission (MACC) has reopened investigations into controversial corporate transactions dating back more than two decades, which were flashpoints in the souring relationship between the two men against the backdrop of the 1997 Asian financial crisis.
One probe is believed to be a controversial RM2.3 billion (US$492 million) transaction that took place in November 1997 involving publicly listed entities Renong Bhd and United Engineers Malaysia Bhd (UEM), which were once at the heart of the business interests controlled by the then-ruling party United Malays National Organisation (UMNO). MACC officials have also confirmed that the agency is investigating a separate transaction that took place in May 1998, when national oil corporation Petroliam Nasional Bhd (Petronas) took over debt-laden shipping assets controlled by Dr Mahathir’s eldest son, Mirzan Mahathir. The deal had stoked heated criticisms that the then-Mahathir government was using public funds to bail out politically favoured entities.
Mr Anwar has come out with guns blazing, claiming during a convention of his political party, Parti Keadilan Rakyat, that Dr Mahathir had enriched his children with contract awards and financial bailouts while in power. Mr Anwar justified his claims by citing specific contracts, such as the Petronas takeover of Mr Mirzan’s Konsortium Perkapalan Bhd, according to court filings of his statement of defence against a RM150 million defamation suit filed by Dr Mahathir in early May.
The move to revisit the UEM-Renong deal and the Petronas takeover of Konsortium Perkapalan has stirred accusations of a political witch hunt by Mr Anwar. However, the prime minister has denied this. “I have never ordered for action to be taken against anyone in particular,” Mr Anwar was cited as saying in local media on Sunday (Jun 18), adding that his instructions to the country’s enforcement agencies was that all of them “should discharge their duties without fear or favour”.
Mr Anwar has made his campaign against corruption the cornerstone of his vision for the country. But some Malaysians, including former government officials and political operatives who know both men well, see recent developments strictly through a political prism. “All of this will reopen all the old wounds, and it shows that there are many issues that remain unresolved between the two men,” said a former senior government official who worked closely with both Dr Mahathir and Mr Anwar. The official, who spoke to CNA on condition of anonymity, noted that “perhaps, this has to be settled for the country to move on”.
The defamation suit initiated by the 97-year-old Dr Mahathir is expected to drag out in the courts for months, if not years, and many lawyers and political analysts wonder whether the legal dispute will find finality.
The probe into the UEM-Renong deal could lift the lid on several controversial and unresolved episodes surrounding UMNO’s previously sprawling corporate empire. UMNO, which is the oldest political party in Malaysia, was booted out of power in 2018 and is now a junior member in Mr Anwar’s unity government.
Senior government officials close to the situation told CNA that the MACC is indeed probing the still-murky behind-the-scenes corporate maneuvers that led to the controversial RM2.3 billion purchase of a 32.6% stake in Renong by UEM. After 26 years, it is still unclear how and why UEM paid above-market rate for shares in its troubled debt-laden parent company in the middle of a regional financial crisis.
At the time, the equities structures of UEM and Renong featured a complex web of cross-holdings, with businessman Halim Saad as the main controlling shareholder of both concerns. Renong and UEM had become the main recipients of government infrastructure contracts, including the North-South Highway toll road project, and both companies invested aggressively in a slew of sectors.
At its peak, the UMNO corporate empire under both Renong and UEM boasted 11 publicly listed entities in its stable, with interests in banking, real estate development, telecommunications, constructions and toll roads. But this rapid corporate expansion was built on the back of bank borrowings that were collateralised by shares of both companies.
The regional crisis that triggered weakness in the local currency quickly spread to the stock market, and politically linked stocks, such as Renong and UEM, were sold down by foreign investors. These developments led to the controversial Renong purchase by UEM. The transaction, which Mr Halim failed to explain satisfactorily to investors at the time and which was suspected to be a bailout for Renong’s shareholders, pushed the economy into a tailspin.
Mr Anwar, who was finance minister and deputy prime minister in 1997, was highly critical of the UEM-Renong deal, and his relations with his boss Dr Mahathir and UMNO treasurer Daim Zainuddin soured quickly. There was widespread speculation that the transaction became a flashpoint that eventually led to Mr Anwar’s sacking from the government and his subsequent imprisonment after being convicted for corruption and sexual misconduct.
While Mr Anwar’s imprisonment allowed Dr Mahathir to consolidate his political position, the UEM-Renong deal remained a magnet for controversy. The government forced Mr Halim to surrender control of the two companies in July 2001, but the mystery surrounding UEM’s purchase of the Renong block was never explained, and Dr Mahathir’s opponents in UMNO have long questioned the government’s seizure of the party’s corporate holdings.
The ongoing MACC probe is being widely viewed as politically motivated, given the long-standing rivalry between Mr Anwar and Dr Mahathir. However, what remains unclear is what the MACC’s renewed interest in the controversial transaction will achieve. The defamation suit initiated by Dr Mahathir against Mr Anwar is expected to drag on for months, if not years, and many lawyers and political analysts wonder whether the legal dispute will find finality.
