Controversial Merger between ECM Libra Capital Bhd and government-linked Avenue Capital Resources Bhd,
Around late 2005, he was involved in controversial merger between ECM Libra Capital Bhd and government-linked Avenue Capital Resources Bhd, which resulted in the creation of ECM Libra Avenue Berhad.
On December 27 last year, the three founding members of ECM Libra -- Lim Kian Onn, Kalimullah Masheerul Hassan and David Chua -- announced that they were each selling 1% of their shareholding in the company to Khairy Jamaluddin. The deal was transacted at 71 sen per share, or a total of RM9.2 million.
A public audit committee chaired by parliamentarian Shahrir Abdul Samad was later set up to investigate allegation of wrongdoing done during the merger. The committee on August 10 concluded that the merger was done according to procedure.
On August 11, Shahrir Abdul Samad said "In principle, this can be a conflict of interest. In this case, maybe, it is a question of approval from the minister because it was probably not referred to the Cabinet."
Khairy Jamaluddin Sells Entire Stake In ECM Libra Avenue Berhad
On August 12 2006, Khairy Jamaluddin sold his entire holding of the company at 65 sen per share.
Umno Youth deputy head Khairy Jamaluddin has sold his entire stake of 10.2 million shares representing 1.23 per cent of ECM Libra Avenue Berhad, an investment and stockbroking-based company
Why Khairy Sold his ECM Libra Avenue Berhad Share ?
Khairy claimed that his intentions to sell the shares are to focus on politics and to protect the shareholder interest from being jeorpadized by his personal controversy.
Source : http://www.utusan.com.my/utusan/content.asp?y=2006&dt=0814&pub=Utusan_Malaysia&sec=Muka_Hadapan&pg=mh_01.htm
" Sounds like a noble act but it’s always questionable whether his intention is to protect the company or his father-in-law, or just to save his own political future?"
(extracted from http://jeelife.com/2006/08/14/khairy-jamaluddin-sold-his-ecm-libra-stakes-questions-answered/)
Sounds like a noble act but it’s always questionable whether his intention is to protect the company or his father-in-law, or just to save his own political future?
Who bought Khairy Jamaluddin ECM Libra Avenue Berhad Share ?
ECM Libra Avenue Berhad chairman Datuk Kalimullah Hassan Masheerul Hassan has also reduced his stake in the company to 40 million shares or 4.8 per cent in the company and is now no longer deemed a substantial shareholder, The Edge business weekly reported.
Kalimullah, one of the founders of the company, also made the decision to sell yesterday and disposed of 16.26 million shares, also at 65 sen a share.
The 26,467,220 shares belonging to Khairy and Kalimullah were bought by Hikkaya Jaya Sdn Bhd, a subsidiary of AmcorpGroup Bhd, for RM17.2 million in total.
AmcorpGroup now holds about 61,534,284 shares or 7.41 per cent of ECM Libra Avenue Berhad through various subsidiaries
Related to Khairy Sell of ECM Libra Avenue Berhad Shares
Another founder of ECM Libra Avenue, chief operating officer David Chua, sold his entire stake of 56.26 million shares to a foreign fund management company on Thursday at 57 sen per share.
However, co-chief executive officer Lim Kian Onn, also a founder of the company, will stay on as a substantial shareholder.
How Khairy Jamaluddin funded his ECM Libra Avenue Berhad shares ?
This is what was reported by The Star on August 6, quoting a Bernama story:
"Asked to comment on claims he had become a millionaire overnight as he could afford to buy ECM Libra Berhad shares, Khairy said: “I borrowed the money.” – Bernama"
Why Khairy was given the shares at such a cheap price ?
The question of why Khairy was given the shares at such a cheap price -- considering it has risen about 50% since the deal was announced -- did not get answered for months. Minority shareholders, and the media, are reported to have demanded answers to several key questions related to the RM9.2 milliion transaction.
( 1 ) What was Khairy's contribution to ECM Libra, an outfit he joined in mid-2004, that he deserved an equity stake?
"Khairy Jamaluddin is Director, Investment Banking of ECM Libra Capital. Prior to joining, he was Deputy Principal Private Secretary to the Prime Minister and Director of the Policy and Communications Division at the Office of the Prime Minister. As a senior aide to the Prime Minister, he was responsible for policy formulation and execution, especially in the areas of economic and security policies. He headed a team that drew up the Prime Minister's overall policy and communications strategy, and coordinated the campaign for the 2004 General Elections. He has also worked as a journalist and fund manager in London. He has degrees from the universities of Oxford and London."
Source : http://www.ecmlibra.com/people/cv_khairy.asp
( 2 ) Now that Khairy is a shareholder, how will the Son-in-Law avoid a 'conflict of interest' situation should ECM Libra pitch for jobs from government-linked companies (GLCs)?
Another mega question is that how could ECM-Libra take-over Avenue Capital Resources, a GLC owned by the Ministry of Finance (MoF), which has a far larger asset base than the acquirer?
Leave that to the PAC.
Meanwhile, let's deal with the lesser devil in our face:
How was the Son-in-Law's RM9.2 million funded in the first place?What the Father-in-Law (Abdullah Badawi say )
Quoted from Abullah Badawi Interview , 7 August 2006 (The Star)
11. Q: Some believe that you still have the clean image. Others say that people around you are very influential on you. For example, your son-in-law Khairy Jamaluddin.
A: Khairy once worked with me. All officers have their roles. They give their reports and views but it is my decision whether to accept or reject their views and decision. When stories came up about an influential 28-year-old in the Government, he resigned and did not want to work with me anymore. But he has to make a living like the others. He bought a small amount of shares and became a partner in ECM Libra and he took his own loans. But there is no proof that he hijacked and took over a government project.
MalaysiaKini, Aug 5 2006
I will here simply refer readers to the statement by Khairy Jamaluddin, reported on Malaysiakini.com on 7 August 2006, that his purchase of RM 9.2 million worth of ECM Libra Bhd stock was financed by the company; and to Section 67 of the Companies Act Malaysia 1965 which states that no company shall provide any financial assistance for the purpose of or in connection with a purchase by any person of any shares in the company
Aug 7, 2006 Malaysiakini
Who are the people who financed him?
If these parties truly had financed him, surely there must be some form of collateral to back the RM9.2 million loan, says a reader.
Who are these people who financed him? If these parties truly had financed him, surely there must be some form of collateral to back this loan and such collateral must be greater than or equal to the sum loaned to Khairy. Nobody gives out money for nothing even if you are the son-in-law of the prime minister.
Section 131 of the Companies Act, it is illegal for a company to make a loan to anyone (especially a director) to buy its own shares. In this case, ECM Libra is also a financial institution (a so-called investment bank) which means it is also under the purview of the Bafia (Banking and Financial Institutions Act). The Bafia has a few more restrictions than the Companies Act.
Since Khairy has made a public confession, the attorney-general and Bank Negara should investigate if there is any breach of either the Companies Act, the Bafia, or both.
Aug 7, 2006 Malaysiakini
Section 67(2)(c)of the Companies Act provides a clear exemption to the prohibition to companies providing financial assistance to employees of the company to purchase the company's own shares.
Other Question raised by
- As a public company, has it been voluntarily disclosed to the industry regulator that ECM Libra operates, or operated, a senior management loan scheme, or that Khairy's purchase of ECM shares was made under that scheme?
- If indeed there had been such a scheme, were the investing public notified of the terms, conditions and other elements of this scheme, so as to determine how the operation of this scheme affects the public listed company.
- Given that the directors who sold the shares to the Son-in-Law, Khairy Jamaluddin, are the party that has majority control. As such, were adequate disclosures made for the protection of the interests of minority shareholders?
- In addition to the above matters, it would also be interesting to find out how, from what source, and when, did Bursa Malaysia determine that the purchase of 12.99 million ECM Libra Bhd shares by Khairy Jamaluddin was via a senior management loan scheme.
"Khairy berkata, tindakannya itu diharap akan ‘memutihkan lagi apa yang telah sedia putih’ dan berharap masyarakat yang berminat dengan berita-berita seumpama itu akan berusaha mendapatkan gambaran sebenar di masa hadapan sebelum mempercayai sesuatu perkara. "
Source : Utusan Malaysia
Finally What Pak Lah Say : -
"That is his right, not mine, i don't have any comment, he only inform me" he said
‘‘Itu hak dia, syer dia punya, bukan saya punya, saya tidak ada apa-apa komen, dia pun hanya beritahu sahaja,” katanya.
Source : Utusan Malaysia
Others Source : http://thestar.com.my/news/story.asp?file=/2006/8/7/nation/20060807230710&sec=nation