Saturday, 12 January 2013

EPF actively fighting for minority shareholders?

The Star published today a (for me rather remarkable) interview with the CEO of the EPF, Tan Sri Azlan Zainol. One snippet:

We are very particular about governance and are one of the major players in terms of activity at AGMs. We are quite vocal. If we don’t like certain things, we will vote against it."

The perception of the EPF, at least with me, is very different. I have actively followed the Malaysian share market for 18 years, read a huge amount of information, and the silence from the EPF in worrisome CG issues has been deafening. I can only recall one time that they were active, during the privatisation of Malaysian Oxygen Bhd (MOX) together with Aberdeen, but even there I suspect that Aberdeen was the fighter and EPF the follower.

Also, being vocal during AGM's is not really enough. Press is often not allowed and many people will have voted before on paper, without hearing what is said at the AGM's.

Am I wrong, or is EPF really active?

The influential CG Watch 2102 report seems to agree with my view point, please read my previous posting on this report. One item:

12. Are institutional investors actively voting against resolutions with which they disagree?
Malaysia: “marginally” (0.25).

[with 0.00 being the lowest and 1.00 the highest score]

The interview continues:

“I shall not name a company that had very poor governance. We walked away from that investment.”

Why does the CEO not name the company, in this instance or in any other case? In the whole interview with The Star, not one is mentioned.

EPF can be so much more vocal in all CG issues, why is it not displaying more transparency? It can simply issue press releases about certain important matters, for instance why it will vote against a certain resolution together with its reasoning, surely most newspapers would be happy to carry that information.

I would love to eat my words and admit that EPF has indeed changed its way and is now a shareholder activist. But I definitely need clear proof for that, together with concrete cases in which EPF was vocal and fought sight by side with the other minority shareholders. At this moment, I am not aware of any, except for the above mentioned MOX case.

Three, more recent, deals in which EPF was very much involved, did it put up a fight in any of these cases, and if so was it vocal about it?
  • Maybulk's related party acquisition of a part of POSH in 2008 and its other RPT in 2009 in which it didn't reveal details of the purchase; EPF did sell all of its shares and thus walked away from that investment, but much too late and at a great cost
  • MMC's RPT of the Senai airport
  • Possible insider trading with the privatisation of Proton, at the expense of the EPF

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