MIC president S Samy Vellu's outburst against his former deputy S Subramaniam and current vice-president S Sothinathan yesterday caught many by surprise.

Samy Vellu was thought to have a smooth relationship with Sothinathan, and as for Subramaniam, the party president was believed to have agreed to bury the hatchets for the sake of party's unity after the last general election.

samy vellu exclusive on tamil schools 080708 04 However, at a press conference yesterday Samy Vellu lashed out at Subramaniam and Sothinathan, both of whom are planning to contest for the deputy president's post in the party polls in September.

They will be challenging G Palanivel who looks very likely to have obtained the president's endorsement to defend his post, and eventually replace the party chief.

Samy Vellu had previously said that he would not endorse anyone for the deputy's post.

However now, he seems to have changed his mind and party insiders both Subramaniam and Sothinathan are to be blamed.

"The president would have kept quiet and allowed for a contest without endorsing anyone. However, he was caught by surprise with Sothinathan's sudden announcement to go for the post.

"Similarly he was frustrated by Subramaniam's failures to keep his end of the bargain when the two brokered a peace deal immediately after the March 2008 general elections," said a source close to the president.

He added that the president genuinely wanted a smooth handover so that he can retire with the knowledge that the party was in a good shape to regain its lost support in the last election.

"He also wanted to be sure that he settled the problems of Maika Holdings," added the source.

The Nesa injunction

The Maika Holdings issue seems to be the sore point in the fallout between Samy Vellu and Subramaniam.

At the press conference yesterday, Samy Vellu accused his former number two of holding up the sale of insurance company Oriental Capital Assurance Bhd, which he considered crucial in resolving the Maika Holding's crisis.

maika holdings berhad The troubled Maika Holdings had obtained the necessary approval from its shareholders at an annual general meeting in 2007 to sell the insurance company which was its sole cash cow.

The idea was to dispose the insurance company at RM129.8 million to engineering firm Salcon Bhd and use the proceeds to pay off more than 60,000 shareholders.

However, the well-laid plan was scuppered by an injunction obtained by Subramaniam-led Nesa Cooperative Bhd which prevented Maika Holdings from selling the company to Salcon.

Salcon has since withdrawn its bid after the injunction was not lifted by Nesa Cooperative.

It is learnt that one of the ‘conditions' imposed by Samy Vellu in ending hostilities with Subramaniam in the aftermath of the 2008 general election was for the latter to withdraw the injunction.

"Subramaniam agreed to that. However later on, he had asked Maika Holdings to look for a better buyer who can give a higher offer before he lifted the injunction.

"So a search for a new buyer was undertaken and discussions were held with one company. However, their offer came with conditions which would mean Maika would lose out," said the source.

"When the matter was brought to Subramaniam's knowledge, he then asked Maika Holdings to ask Salcon for a higher offer, which was done.

"Finally Salcon gave a two-week deadline earlier this year for the injunction to be withdrawn so that the sale could be concluded. Nesa Cooperative however did not do anything and Salcon pulled out," added the source.

Maika suffered additional losses

The source said that Subramaniam had then brought in an expert to look for new buyers but "by then it was too late".

subramaniam police report maika 010907 report "Maika has now lost its potential buyer and no new buyer has come forward. While Subramaniam ( right ) has been saying that Maika should repay all its shareholders, he should share some blame for the delay in sorting that out," said the source.

He also added that as a result of the delay caused by the injunction, Maika Holdings has suffered additional loss of almost RM3.5 million in operational costs as well as for hiring an independent evaluator to look into the insurance company.

"It is clear why the president is upset with Subramaniam. He (Samy Vellu) agreed to work with Subramaniam for the sake of the party's unity and for the community.

"But Subramaniam seemed to be interested in gunning for the top post in the party," said the source.

While Subramaniam was unavailable for comments, his close aides claimed that he had done everything within his ability to oversee the sale of Maika's insurance company to a higher bidder so that the shareholders would get a higher return.

They also said that Subramaniam will be answering Samy Vellu's accusations soon.

Samy had a plan for Sothi

As far as Sothinathan is concerned, sources close to Samy Vellu say that the party president was disappointed with the vice-president's announcement to challenge Palanivel for the deputy's post.

"Samy Vellu had spoken to Sothinathan on many occasions, telling him that the time was not right for him to make the jump.

ijok by election mic campaign 250407 sothinathan "Even recently he met Sothinathan ( right ) at his house in Jalan Ipoh and told him not to be impatient but Sothinathan was adamant about contesting.

"He told the president that he had sufficient support to mount a challenge," added the source.

It is learnt that Samy Vellu's plan for Sothinathan was tied to his own retirement plan.

The president wanted his incumbent deputy to take over in an acting capacity when he steps down early next year, and Sothinathan was to be groomed to be the acting deputy president.

"Samy Vellu had asked Palanivel twice to take over in acting capacity but on both occasions, Palanivel declined on the grounds that he felt the president still had a role to play.

"In the past six months, Palanivel has also been working on the ground and gaining very good grassroots support. He surely stands a very good chance in retaining his seat.

"Sothinathan, on the other hand, failed to realise that he lacks that sort of support. He has also failed to realise that it was the president's backing which kept him in a high position in the party.

"He had it easy to get to the top but he has taken some bad advice and squandered all this away," said the source.

Sothinathan was reported in Tamil dailies today as saying that he was not bothered by Samy Vellu's attacks and that he was resolute in contesting for the deputy's post.

"Let him say whatever he wants to say," was his response.

Related reports

Palanivel again? Samy raps Subra, Sothi

Hard and potentially dirty fight to be Samy's successor