A flashback to the 80s Maminco scandal
I read with interest ‘Tis the season of forgetfulness over financial scandals’ which triggered my interest in a scandal that occurred in the 1980s.
Previously, the tin industry was Malaysia’s heaven-sent treasure trove. At one point, it employed more than forty thousand workers. However, when the tin price was halved in 1985, mines closed down and many lost their jobs.
Back in 1981, Maminco Sdn Bhd was set up as a RM2 company to to spike tin prices on the London exchange with loans from BBM.
Conversely, the tin price collapsed in 1981, and the country’s exchequer lost huge amounts of money. Eventually, the company had debts of RM1.5 billion.
Lim Kit Siang noted : “It is clear that the $2 company, Maminco, is really mysterious for more reasons than one, and not just it being the mysterious tin-buyer in the London and Penang markets in 1981, leading to at least $660 million losses, but also with regard to its parentage, operation and management, as well as motivation. Maminco is incorporated under the Companies Act 1965 on 26th June 1981, but since its incorporation document, it has never submitted any annual returns or accounts for the past five years.”
The US intervened by releasing its stockpile of tin so the tin price collapsed.
Terrence Netto observed: When the Maminco Affair began to leak into the public sphere, Hussein Onn, who had retired as PM in the middle of 1981, was already in a state of advanced disenchantment with the way things were going under Mahathir Mohamad.
A new development emerged.
Rather than acknowledge the losses in the tin speculation, the government set up another dummy company called Makuwasa Sdn Bhd, creating new shares supposedly reserved for ethnic Malays which were allocated to the Employees Provident Fund, the country’s retirement fund for private and public workers. The plan was to sell these cheaply acquired shares, supposedly reserved for poor bumis, at market price for a profit to cover Maminco’s losses.
A Bar Council statement notes that during the Umno general assembly on Sept 18, 1986, Mahathir was forced to admit that Makuwasa was created to recoup the government’s losses from the Maminco debacle and to repay loans to Bank Bumiputra.
Thus this is a tale of immeasurable loss to our nation’s repute and standing regionally and internationally, this scandal from the 1980s and many other scandals before/after paved the way for many obstacles to our country's development.
It is commendable to be reminded of this debacle and also others in their post. However, where do we go from here?