updated version

MCA leaders Lim Ah Lek and Chua Jui Meng today said that the party's takeover of two Chinese newspapers recently was "unlawful, unconstitutional and therefore null and void".

Speaking at a joint press conference in Sungai Besi, near Kuala Lumpur, party deputy president Lim and vice-president Chua said that the deal contravened the party's constitution as the approval of the central committee (CC) to raise a loan to buy Nanyang Press Holdings had not been obtained.

"The transaction is unlawful. The use of party assets to obtain the loan is unconstitutional as it violates Article 150 of party constitution therefore making the deal null and void," said Chua.

Article 150 of the MCA constitution states that the party should not charge or mortgage its assets to raise loans for a new purchase unless the CC's consent had been obtained.

Last month, MCA acquired Nanyang Press Holdings, publisher of Chinese dailies Nanyang Siang Pau and the China Press , through its investment arm Huaren Holdings from two Hume companies owned by tycoon Quek Leng Chan.

The RM230 million deal was signed on May 31 with a 100 percent bank loan using Huaren's 68 million shares in Star Publications and 40 million newly acquired shares in Nanyang Press as collateral.

Lim and Chua are among the four trustees of Huaren Holdings besides party president Dr Ling Liong Sik and secretary-general Dr Ting Chew Peh.

Lim and Chua were also among the eight CC members who voted against the Nanyang takeover at the committee's meeting on May 30. The dissenters included party youth chief Ong Tee Keat and vice-president Chan Kong Choy.

But the deal, backed by 32 other CC members, was finalised on May 31, creating a split within the party which has widened as both camps mobilise support from rank-and-file members across the country.

Rubber stamp

Chua said today they had recently found out that approval had already been obtained by Huaren from the Securities Commission (SC) for the Nanyang acquisition on May 25 and the agreement had already been signed with Hume two days before. This was not disclosed at the May 30 CC meeting, he added.

"We were there just for window dressing and a ceremonial purposes only. We were asked to act as rubber stamp. Two pieces of paper were given to each member on the table and both of them were blank," he said.

"This (transaction) is wrong because only the CC can decide on it. The MCA presidential council must recommend it to the CC first and then the CC will make decision. Only after this can the party proceed with a major business exercise involving RM230million.

"The Nanyang deal was carried out in great haste and failed to abide by the constitution. Nobody in the party, however high a position he holds, can violate the constitution," said Chua.

He said he raised the point of proper procedures at the CC meeting but was ignored by the members at large. When asked whether the same point was raised at a Huaren trustees' meeting yesterday, Chua said, "I am not going to talk about yesterday's meeting. What answer was there?"

He also said the Nanyang venture was highly risky as the collateral for the loan was worth over RM800 million and amounted to 90 percent of MCA's entire assets.

When asked if they will take legal action, Chua replied that "such a thought has not crossed our minds". He also declined to comment on what the next move will be of those within the party who oppose the deal, saying, "Never mind, one thing at a time."

Strategic stake

He reiterated that the trustees and the CC members who are opposed to the deal would neither follow nor accept the decision of the majority in the CC if it is "wrong under the law".

Chinese organisations in the country have also objected strongly to the deal claiming that the editorial independence of Nanyang and China Press would be compromised if they were bought over by a political party.

Last week, Chinese lobby groups launched a boycott campaign against the dailies. The move is believed to have substantially affected the sales of the two papers.

Following this, MCA chief Ling announced on June 7 that the party is willing to "divest a strategic stake" in Nanyang Press to those who were interested, but said this offer from MCA was only valid for 10 days.

Meanwhile, a consortium led by the Malaysian Associated Chinese Chamber of Commerce and Industry announced today that it will submit a proposal to MCA next week to buy over the latter's stake in Nanyang Press.