Thursday, April 14, 2016

Is Socso in jeopardy of becoming the next 1MDB?

Opposition lawmakers are concerned that recent amendments made to the Employees' Social Security Act may be too risky

S Neishasa

KUALA LUMPUR: Two DAP members of parliament (MP) today reiterated their nagging concern over recent amendments made to the Employees' Social Security Act 1969.

Both Ipoh Barat MP M Kulasegaran and Klang MP Charles Santiago voiced out their unease over two of the twelve amendments made to the Act in the last Parliament sitting.

The first amendment that they were not all too pleased about was the introduction of Section 74A to the Act which now allows the Social Security Organisation (Socso), with the approval of the Human Resource Minister and the Minister of Finance, “to establish or take over any company” and to carry out, administer, conduct and manage any project, joint venture, privatisation programme, scheme, enterprise or any other matter which has been planned or undertaken by Socso.

“First of all the minister's (Human Resources Richard Riot) reply in parliament was most unsatisfactory as he did not elaborate and explain in detail as to why these amendments are necessary.

“His argument in reply was MPs took six hours to debate therefore there is nothing much to explain and he read out his reply in 29 minutes without giving us any opportunity to intervene.

“In the process he has opened up more cans of worms because it is becoming blur, unclear and our concern for workers are why is there a necessity for Socso to be involved in taking over companies, managing companies, setting up companies and all this more or less points to a new business direction," said Kulasegaran when contacted.

He said that it must not be forgotten that Socso was set up for workers and workers' issues must be of utmost importance.

Unfortunately, it looks like there are other plans by those managing Socso of entering into the new risky business ventures, he added.

"I say it is a no-no because almost invariably all government linked companies (GLC) in this country are either not doing well or on the verge of bankruptcy," said Kulasegaran.

He argued that it is unwise for the government to be involved in business as it diverts from the priority of ensuring the people's well-being.

Kulasegaran further said that he and other MPs he spoke to about the matter did not rule out the possibility that Socso would be used in the future to takeover problematic companies.

"No question about it (taking over problematic companies), this is one of the things that we MPs spoke about. We suspect these are all legalising attempted take-overs and all that.

"My worry is this will be another, if not properly supervised and controlled, potential 1MDB in the future. You must not forget the total assets of Socso is much bigger than all these amounts - (RM) billions," said Kulasegaran.

Socso's 2014 annual report states that the value of its current assets was RM11 billion and its non-current assets stood at RM11 billion.

The Ipoh Barat MP was also highly critical of another amendment to the Act which seeks to remove the representative from Bank Negara Malaysia (BNM) as a member of Socso's Investment Panel.

Kulasegaran said the move by BNM to pull out was "totally illogical, unreasonable and unfair" to the workers.

According to Human Resources Minister Richard Riot at the Parliament, BNM had requested not to sit on the panel due to conflict of interest.

"What conflict of interest can there be? Now the eagle eye of the BNM is shut and it is left to ordinary government servants to run and manage huge pension funds, which are worth billions. This is very risky," said Kulasegaran.

Blanket scope

Similarly, fellow party member Santiago also raised concerns over the "blanket scope" afforded to Socso by including Section 74A to the Employees' Social Security Act.

"Socso has a lot of money available to them, they get something like RM1.5 billion per month from all the contributors which is quite substantial and then they have something like RM20 over billion in assets. So, I think this is an opportunity they feel they can use to diversify the operations.

"Now, I can understand if Socso want to invest in hospitals in order to provide rehabilitation services or medical services for its contributors, that's very understandable and that is in line with pursuing the interest of Socso's mandate to cover employees hurt in the line of duty.

"But now you have given them a very blanket scope meaning they can take over, start businesses, go into joint ventures in any kind of economic activities in the country as long as you have the support and permission of the Minister of Finance as well as the Minister of Human Resources. This raises a lot of questions because Malaysia does not have a good record when it comes to governance and spending government money," said Santiago when contacted.

He added that in the last few years, as a result of 1MDB and other controversies, the institutions of government have come under severe criticism and attack by Malaysians and also the larger international community.

"So, I think the fear is that this money (Socso's) would be used to support ventures like 1MDB and ventures that potentially go outside of the interest of workers and bailout companies and so on and so forth because there is so much of money sitting there," he said.

Like Kulasegaran, Santiago also said that Riot did not respond to any of these issues that were raised by them in Parliament.

"Either he (Riot) is not convinced himself or he is doing the bidding of the Minister of Finance, who is also PM. This really raises a lot of questions about the way they might use the money in the future," said Santiago.

He also opined that BNM, the Malaysian Anti-Corruption Commission (MACC) and Transparency International be considered as part of the panel to ensure that there is financial integrity involved.

"The PKFZ scandal went on even with Ministry of Finance people sitting there. They were of no use because they didn't stop any kind of financial manipulations or cheating.

"That's why I think the government should consider bringing in Transparency International, BNM, MACC to sit on some of these panels because people don't really trust the gov that much," said Santiago.

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