'MIED has every right to award study loans'

MIC vice-president S Veerasingam has defended the Maju Institute of Educational Development (MIED) over study loans it has given to students.

Provision of financial assistance by way of loans is well in line with the objectives of MIED, which receives and administers funds for education, said Veerasingam.

MIED is the leading provider of study loans to students from the Indian Malaysian community, who have been able to pursue their courses because of this aid.

Veerasingam said the confusion over the study loans was caused by former MIC Youth chief SA Vigneswaran (right) , who had “misread the relevant clause” which states that MIED can ‘foster, develop and improve education of all kinds and in such manner may be decided upon by MIED including...scholarship’.

Vigneswaran, who is now the chairperson and legal consultant to the Malaysian Indian Youth Development Foundation had claimed that MIED is not allowed to give loans and collect repayments as it does not have the authority to do so, based on its Memorandum of Association.

He said it also has no money-lending licence, but that it has given out close to RM100 million in study loans to almost 10,000 students.

Veerasingam countered this, saying that Vigneswaran's view “is completely misconceived”.

“By way of a demonstration, Section 24 of the Companies Act 1965, referred to in his article, has no application to this case," said Veerasingam.

"On the contrary section 44(6) of the Income Tax Act 1967 completely exempts MIED from payment of income tax."

Veerasingam, a member of the MIED board of directors, said the panel has the power to utilise funds in such a manner that it considers most beneficial for the objects of MIED. This includes investing the money.

Purpose of loans

Veerasingam said it is important for financial assistance to be always available to as many needy students as possible in the Indian community.

"The best way to ensure this continuity is to have students repay the loans when they have an opportunity to be gainfully employed, so that another batch of needy students can benefit from the MIED study loans," he said.

"What Vigneswaran suggests may ultimately cripple MIED, like slaying the goose that lays the golden egg. I am convinced right-minded citizens will not subscribe to his views particularly as MIED is authorised to provide study loans which can benefit a far greater number of needy Indians than scholarships.”

Vigneswaran had also claimed that prior to its January meeting, the board last met on 2003.

MIED is currently embroiled in a scandal with MIC president S Samy Vellu.

Its chief executive officer P Chithirakala Vasu has accused the veteran politician of siphoning funds, which he has denied.