EPF’s “Buy High, Sell Low” of its MAHB shares: Who is profiting from the RM500m in losses?

RECENTLY, a controversial move by the Employees Provident Fund (EPF) has sparked widespread debate.

In 2023, the EPF sold off a large portion of its shares in Malaysia Airports Holdings Bhd (MAHB) at a lower price. However, they have since repurchased them, months later, at a strikingly premium price.

These series of transactions are estimated to result in a loss between RM500 mil to RM900 mil. Ultimately, the ones bearing the brunt of this significant loss are the millions of Malaysian workers whose retirement savings are held by the EPF.

We need to stand firm and question whether the EPF was negligent or carrying out power abuse. But more importantly, we must also ask: who was it exactly that benefited from this RM500 mil loss?

The EPF’s explanation in response to public concerns have been thoroughly unconvincing. They claimed that the decision to invest in this manner was to boost annual returns to pay dividends, while also emphasising that an internal “Chinese Wall” policy prevents insider trading.

In short, the department that was responsible for the buying and selling of these stocks were unaware of the plans by the strategic investment department.

Their explanation fails to carry the weight of public concerns. On the contrary, it only raises more questions. If the EPF’s goal was to avoid insider trading, why was there no clearer policy in place, such as setting a minimum holding requirement for strategic assets (like MAHB)?

Such a measure would not only prevent significant losses but also protect the interests of EPF members.

What is even more perplexing is that the EPF had steadily increased its stake in MAHB over the years. Since 2018, its holdings rose from 10% to 15.27% in 2023. In fact, since 2010, the EPF’s stake had never dropped below 10%.

However, at the end of 2023, they suddenly sold off most of their shares at a lower price, reducing their stake to just 5.79%.

The thought process behind this decision needs to be scrutinised. Was the EPF facing severe financial pressure and were forced to sell assets? If so, why was there no prior planning for the flow of funds? Or is there more to the story?

What’s more concerning is that the dividend announced by the EPF in 2022 had dropped to 5.35%, significantly lower than the 6.10% in 2021.

With declining returns, this move has further raised doubts about the EPF’s financial management, and whether anyone personally benefited from the transactions.

This is not a matter isolated to a specific group of people. We must emphasise again that attention has been drawn to this. Not only are ordinary citizens questioning this move, professional institutions and board members have likewise raised concerns.

The independent directors of MAHB explicitly opposed the related restructuring proposal, arguing that it lacked rationale.

The independent consultant, Hong Leong Investment Bank, bluntly stated that the EPF’s repurchase of shares at RM11 each severely undervalued MAHB’s true worth.

If even professionals believe this move was unreasonable, then the problem is far beyond a simple mistake. Did anyone profit from this transaction? Who allowed the hard-earned money of the public to suffer such significant losses?

This “buy high, sell low” move by the EPF not only exposes management flaws but may also involve abuse of power or improper benefit transfers.

The government must conduct a thorough investigation, disclose all relevant decision-making processes, and explain to the public who benefited from the at least RM500 mil loss.

If anyone is found guilty of negligence or personal gain, they must be held accountable. – Jan 17, 2025

 

Datuk Ir Lawrence Low is the MCA vice president.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

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