Is there any provision in the corporatisation of Mimos Berhad, an ICT agency set up using taxpayers' money, that allows it to mobilise idle funds to invest in foreign exchange through a corporate fund manager?

Take this as an illustrative example of how much we walk the talk o­n corporate governance as Mimos hit the headlines for many wrong reasons in recent months.

Newspaper reports o­n March 13 said Mimos was allegedly paid RM50 million belonging to Tabung Haji's trust account, to which the former was not entitled. The news items also revealed that Mimos had materially placed capital investment not less than RM113 million in Metrowangsa Asset Management Sdn Bhd which is now placed under an interim receiver.

The multi-million ringgit investment by Mimos in areas non-related to its core functions would have been kept under wraps if not for a court case involving economist Ghazali Atan and Mohamed Abdul Wahab, another executive director, who managed Metrowangsa Asset Management.

The alleged offence took place in May 2001. It took over two years to unearth, and it may take even more time to reach a judgment. While the jury is still out, we will have to let the case take its legal course. But, there is o­ne pertinent issue about Mimos' corporate governance, jurisdiction and accountability that requires a tooth-comb scrutiny.

Published figures

According to the published figures derived from the charge papers, for the period July 1 through December 30, 2000, Lembaga Tabung Haji's capital investment managed by Metrowangsa totalled RM21 million, while Mimos' investment amounted to RM113,298,279.64.

Additionally, for the period January 1 through June 30, 2001, Lembaga Tabung Haji's capital investment in Metrowangsa amounted to RM176.52 million, while Mimos' was recorded at RM54.5 million. We do not know whether this is a pared down figure or an incremental investment.

Reading from the information highlighted in the case against the Metrowangsa duo, we are faced with jarring holes in the practice of corporate governance in Mimos. They warrant our questioning.

QUESTION 1: Based o­n the government's General Order and written jurisprudence for a corporatised body, what was the quantum of taxpayers' money that Mimos was legally allowed to move around without public scrutiny?

At the executive management level, according to informed experts, the CEO of Mimos, Tengku Dr Mohd Azzman Shariffadeen, is empowered to authorize transactions not exceeding RM50,000. Any amount beyond

this ceiling will need the approval of the board of directors. Going by the amounts Mimos placed in Metrowangsa from July 1, 2000 through June 30, 2001, which arithmetically added up to RM167.8 million, it implied that the decisions to invest through Metrowangsa could not have taken place without a proper passing of resolutions at the board level, and done in an above-board manner.

Board of directors

A check of the Mimos website revealed that its board of directors comprises the following people:

1) Chairman Dato' Dr Mohd Ariff Araff (Company Director of TNB Research Sdn Bhd.)

2) Dr Tengku Mohd Azzman Shariffadeen (President and CEO of MIMOS Berhad)

3) Dato' Leong Ah Hin (Secretary-General of the Ministry of Science, Technology and the Environment)

4) Tuan Haji Abdul Rahim Abdul Hamid (Deputy Executive Chairman of PricewaterhouseCoopers)

5) Larry Gan Nyap Liou @ Gan Nyap Liow (Management Consultant of Accenture Sdn. Bhd.)

6) Mohammad Abdullah (Chairman of Malaysian National Reinsurance Berhad)

7) Segarajah Ratnalingam a/l A. Segarajah (Deputy Secretary of the Treasury's Management Advisory Division)

8) Khatijah Begom Shah Mohamed (Managing Director of SAP Malaysia Sdn Bhd.)

9) Dato' Johar Murat @ Murad (Deputy Secretary-General (Operations) of the Ministry of Science, Technology and the Environment, serving as Alternate Director to Dato' Leong Ah Hin)

10) Mohd Azmi @ Mohd Izam Mohamed Yazid (Senior Accountant of Coordination, Privatisation and Public Enterprise Division of the Ministry of Finance, serving as Alternate Director to Segarajah Ratnalingam a/l A. Segarajah)

Whereas, the executive management team at Mimos is made up of these luminaries in the local ICT community:

1) Dr Tengku Mohd Azzman Shariffadeen (President and CEO)

2) Dr Mohamed Awang Lah (CEO of JARING)

3) Mohamad Rafee Yusoff (VP Business Ventures)

4) Wan Mohd Salleh (VP Operations)

5) Dr KJ John (VP Information Technology Policy Development)

6) Raja Noor Ainin Badariah (VP Product Development)

7) Razali bin Mahfar (VP Corporate Business Strategy / Research & Development)

8) Mohd Nasruddin bin Johari (GM CRM Centre)

The chairman of the board, Dr Mohd Ariff Araff, should clarify who among his team of people were effectively serving at the board when the decision to mobilize Mimos' fund, read as taxpayers' money held in trust, to place capital investment with a corporate fund manager was taken. The chief executive Tengku Dr Mohd Azzman Shariffadeen, who also sits in the board, must clarify who among his management team were involved in executing the board's decision to invest in Metrowangsa to the extent that the fund's performance went awry under their nose.

Must be accounted

Here, we are talking about men and women of good reputation, so they should step forward and tell the public what was their business objective by authorising the said capital investment vis- B -vis the corporate jurisdiction under which Mimos was set up. Taxpayers' money burnt in a speculative capital market must be accounted for, every single sen and ringgit of it.

QUESTION 2: How long and how much has Mimos invested with Metrowangsa? Upon its pullout from the investment, which is now linked to the alleged remission of RM50 million belonging to Tabung Haji's account and to which Mimos is not entitled, was there a net gain/net loss position for Mimos' account books? If there was a net gain, has all the monies been fully recovered? If it was a net loss, how big was the damage?

Thus far, the board and the executive management of Mimos have yet to come forward to enlighten the public o­n the intrigue of the company's investment through Metrowangsa. Neither have they denied

newspaper reports about the issue, which are archived as follows:

April 11, 2002: The Sun reported o­n its front page that two senior Mimos officials were subject to a domestic inquiry following a disastrous RM20 million investment in Metrowangsa Asset Management Sdn Bhd. The report said Mimos invested in Metrowangsa in 1999, and issued a notice of immediate withdrawal of the investment in March 2002 when it was told the investment has gone bad.

April 12, 2002: Mimos issued a press statement, which was carried o­n its website, and acknowledged that some excess operational funds had been placed with Metrowangsa. Mimos said it was putting efforts to withdraw and recover those investments. However, Mimos did not specify the amount involved, or provide details of the exact nature of the operational funds that were invested.

June 10, 2002: The Star In-Tech quoted an article that appeared in the o­nline edition of Malaysian Business (May 29), which used unnamed sources who claimed that as much as RM14mil from a government grant "placed under the stewardship of Mimos to jumpstart ICT projects and bridge the digital divide" was invested with Metrowangsa in 2000.

Though the 30-year-old magazine did not name the government grant, it is known that Mimos administers o­nly o­ne fund that fits the description given, namely the Demonstrator Application Grant Scheme (DAGS) which comes under the purview of the Ministry of Science, Technology and Environment (MOSTE).

QUESTION 3: Will the Minister of Finance and the Minister of Science, Technology and Environment stand up and provide a good answer to the investment debacle since their ministries are represented at the board level of Mimos?

Silent o­n issue

Notably, these ministries have been silent o­n the issue at hand revolving around the governance of Mimos. It must be emphasised that the crux Mimos' investment woes was the 'excess funds', i.e. funds that were not immediately needed for operational use. Could that have tempted the board of directors to authorise the investment of these 'excess funds' into Metrowangsa?

Meanwhile, the government has announced that Mimos will be streamlined into three components, where the Technology R&D division will be placed under MOSTE, the policy-development division under the Ministry of Energy, Telecommunications and Multimedia (MECM) and all revenue-generating business units reporting to the Ministry of Finance.

QUESTION 4: When will this decision be exercised? House-cleaning at Mimos is long overdue. All seem to agree, including the Government. But the speed of cleaning-up is regrettably tardy. People are watching, and the last thing we want is for the knowledged taxpayers to say that it's all simply about rearranging the furniture o­n the Titanic.

Hence remains the main question: Shall we just give those Mimos directors and management team a gentle slap o­n their wrists for having served our country well?

I wish I could walk away without a blink.

JFF OOI is the founder of USJ.com.my, a grassroots-managed community portal, and a blogger http://jeffooi.blogspot.com

He holds an MBA from RMIT University, specialising in international management. He is currently an e-business consultant for vertical industries, an Open Source advocate, and a columnist in Malaysian Business.