The 'non-existent' company in which the Malaysia Airline System Employees Union had invested RM1 million had failed to return the full sum by Feb 7 as agreed earlier by the parties.

According to Trade Union Affairs Department director-general Mohd Zubir Mohd Basri, this agreement was made at a meeting between the union representatives and Concentric Sdn Bhd - which is not an entity registered with the Registrar of Companies - in his presence on Jan 29.

The Malay Mail had said on Monday that the union received a payment of RM200,000 and had been promised the return of the remaining sum.

"I am not aware if the union had agreed to another repayment scheme as they have not informed us of such a development. At the meeting, the company had agreed to pay the lump sum by Feb 7," Zubir said, adding that it was the union's duty to keep him informed of any new development.

He said the department is investigating the matter and if there is a case to prosecute the union officials involved in the deal, he would refer the matter to the attorney-general for further action.

Investment 'illegal'

The controversial investment was made without the Human Resources Ministry's approval. According to section 49 of the Trade Unions Act 1959, all union investments must obtain prior approval from the ministry.

A person who is convicted for breaching the Act could be punished with a maximum of two years' jail or a fine not exceeding RM2,000, or both.

The investment was also made despite the union's executive council's objections on August 2002 to invest in Concentric.

The issue of the missing money came about after a report in the Malay Mail , which quoted the union's external auditors Ahmad Abdullah and Goh as stating that that RM1 million from the union's total fixed deposits of RM1,353,249.98 as of March 2003, could not be accounted for.

Subsequently a police report was lodged by some union officials, claiming that several union leaders had used the money to invest in Concentric. The police are investigating the matter.

The tabloid also reported that the union's secretary-general Abdul Malek Ariff had earlier told the council that Concentric had been appointed by Danaharta - the country's asset management company formed to rescue heavily indebted firms - to convert a building into a service apartment.

By investing in the company, the union would have made a handsome return. However, it is unclear what happened to the deal.

Maybank's role?

Abdul Malek when contacted refused to comment, saying he feared it might jeopardise police investigation.

He said he was not aware that Maybank was mentioned in the minutes of the union's executive committee meeting in 2002. The Malay Mail report , which mentioned the issue, however said the bank's purported role in project was not made clear.

The police when contacted said they are investigating the scandal but it was too early to comment.