The Employees Provident Fund has invested about half a billion ringgit worth of shares in tobacco, alcohol and gambling companies.

An opposition member of parliament today revealed that EPF bought RM501 million worth of shares in British American Tobacco (M) Bhd on Feb 28, RM38 million in Genting Bhd on April 20 and RM4.3 million in Guinness Anchor Bhd on Sept 11.

Mahfuz Omar (PAS - Pokok Sena) added that EPF's investment policy was inconsistent with the government's claim that Malaysia is an Islamic state.

"We know EPF has invested in these companies because they generate good returns, but how can the government then justify its claim that Malaysia is an Islamic state?" Mahfuz queried during the question-and-answer session today.

Deputy Finance Minister Chan Kong Choy said EPF invested in companies in the Kuala Lumpur Stock Exchange which have strong fundamentals, long-term potential for growth and good management.

He did not dispute Mahfuz's claim that the fund had invested in those companies.

"However, EPF is not going to invest in any companies involved in alcohol or gambling in the future," Chan clarified.

"EPF invested in cigarette companies due to their high-dividend potential and high profit margins," he added.

Syariah law advisers

Chan said EPF will withdraw its present investment in such companies when the share market improves.

He said the EPF board has also appointed consultants well-versed in syariah (Islamic) laws as advisers on the fund's investment portfolios.

EPF has received severe public criticism for investing in non-profitable companies resulting in the fund registering "unrealised losses" of about RM750 million last year.

The fund was also heavily criticised by opposition parties and unions when it bought over Timedot.com shares which were 75 percent under-subscribed.