An MCA member has urged the police to investigate possible criminal breach of trust by the MCA leadership in the party’s acquisition of its own investment arm’s 42.4 percent stake in Star Publications (M) Sdn Bhd.

A police report on the matter was lodged yesterday by Bukit Pasar MCA branch vice-chairperson Hui Huat at the Seremban police station.

In his report Hui said that the procedure through which the MCA acquired the shares from Huaren Holdings -- the party’s investment arm-- was against the party’s constitution.

wisma mca building He argued that the transaction was decided solely by the MCA presidential council, without the matter being discussed at an extraordinary general meeting (EGM) for input by party members.

Hui pointed out that the deal had yet to receive the endorsement of the party’s central committee, as pursuant to Article 45.9 of the party constitution.

“Because of these issues, the acquisition is abuse of power and not allowed under the MCA constitution. The share acquisition is void ab initio (treated as invalid from the outset) and is a breach of trust against MCA members,” he said in the report.

He added that the party’s decision to acquire assets from Huaren Holdings, that is wholly owned by the party, was unnecessary and therefore suspect.

EGM usually held for major acquisitions

He also said that in failing to hold an EGM to deliberate the move, the party’s leaders had also violated their fiduciary duty.

When contacted for further comments, Hui said that the party had faced a precedence where major acquisitions were subject to the scrutiny of the party general assembly.

NONE “During (former president) Ling Liong Sik’s ( right ) time, an EGM was held before the party acquired the Nanyang publishing group. But not this time,” he said.

When asked, Hui said he was considering lodging a similar complaint with the Registrar of Societies as it involved the party constitution.

On Nov 5, MCA confirmed that it was transferring 313,315,769 RM1 shares in Star Publications from Huaren Holdings to the party, at a value of about RM1.3 billion at the prevailing market price.

Not trying to evade tax

The party said that the transfer was made to reorganise MCA’s investment whereby Huaren Holdings will divest its passive investment in Star Publications to focus on investments in unquoted shares and other assets.

When contacted later today, MCA treasurer and Huaren Holdings chairperson Tan Chai Ho dismissed Hui's allegations of wrongdoing in the transfer of shares. 

"Everything was done according to law but we can't stop others from making allegations," said Tan when contacted. 

He also dismissed speculations by bloggers that the move was an attempt for Huaren Holdings to evade tax, as Star Publications is considered a party cash cow. 

"That (transaction) was done on the advice given of experts to restructure the business. We never discuss about this issue (tax exemption). Please refer to the statement released by MCA earlier."