'MIED not authorised to give out study loans'

Questions are being raised on whether MIC's education arm, Maju Institute of Educational Development (MIED), a limited company under the Companies Act 1965, can give loans and collect repayments.

This follows a revelation by former MIC Youth chief S A Vigneswaran today that MIED is not authorised to give out study loans but only scholarships under its Memorandum of Association (MOA).

Following this, he has taken MIC president S Samy Vellu to task and called on the veteran politician to explain the matter.

Providing Malaysiakini with a copy of the MOA, Vigneswaran said Article 3 stated that MIED would receive and administer funds for education, scientific and charitable purposes, all for public welfare and for no other purposes, and to this end:

'To foster, develop and improve education of all kinds and in such manner as may, from time to time be decided by the institute, including but without prejudice to the generality of this provision, the founding and maintaining of scholarships, provided that it does not contravene the provision of the education law in Malaysia'.

"There are no other provisions as regards to give any study loans. Any disbursement of money to the needy are only by way of scholarship or grants," said Vigneswaran in a press release.

"MIED is not authorised to give any study loans but only scholarships under its own MOA," he added.

RM100 million in study loans

Despite this, Vigneswaran, who is now the chair and legal consultant to the Malaysian Indian Youth Development Foundation (MIYDF), said MIED disbursed close to RM100 million in study loans to almost 10,000 students.

Over the years, MIED also charged six percent interest per annum six months after the student had graduated.

Vigneswaran said in 2008, an additional two percent interest was charged from the time the loan is disbursed and six percent upon completion of the course till the loan is settled.

"To give any loan, with interest, whether study loan or otherwise requires a money lending license without which it becomes illegal," he pointed out.

"To date, MIED does not have any money lending license. Therefore, all monies collected with interest is illegal," he said.

Vigneswaran, who is a lawyer, said all monies collected with interests are taxable, where failure to pay tax is another breach of the law and failing to declare the interest as an income is evading tax and illegal.

"MIED has and is violating its own MOA and the Malaysian law," he noted.

The former MIC Youth leader said the MIC president, the MIED board of trustees, its company secretary and auditors should take responsibility for these unacceptable acts and omissions where not a single members' meeting was held except for signatures collected during the party's Central Working Committee (CWC) since its inception in 1984.

"Prior to January 2009, MIED's board last met in 2003," he said.

Embroiled in a scandal

MIED is currently embroiled in a scandal with Samy Vellu describing its chief executive officer P Chithirakala Vasu as a 'thief' while she has accused the veteran politician of siphoning funds.

The matter is currently being probed by the police and the Malaysian Anti-Corruption Commission (MACC).

Chithirakala, who had been with MIED for 14 years, had lodged two police reports late last month disputing all claims of misdeeds involving some missing contract documents.

One was on RM2 million worth of donations which were collected to help the tsunami victims in 2004 under the Ministry of Works, when Samy was its minister. The money was subsequently transferred to the account of MIC's social welfare arm Yayasan Pemulihan Sosial (YPS).

The second report was on missing files and documents from her office at the MIC headquarters.

According to her, Samy Vellu had said that the cash was extras from the funds that were collected and intended for future use of the people of Sri Lanka (where an ongoing civil war has caused the loss of hundreds of lives).