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KUALA LUMPUR : A Malaysian tycoon has claimed that former premier Mahathir Mohamad made him buy Malaysia Airlines to help bail out the country's central bank, a report said Thursday.
The Sun newspaper described his allegations as a "bombshell" and labelled as "startling" the revelations about a deal which was hailed at the time as the biggest privatisation ever.
Well-connected Tajudin Ramli purchased a controlling stake of 29 percent in Malaysia Airlines in 1994 from the central Bank Negara, paying eight ringgit per share when the market price was around half that.
Alleging a conspiracy, Tajudin last week lodged a suit against the government and a number of state-owned companies for 13.46 billion ringgit (3.69 billion dollars).
When contacted, Tujidin's lawyer Lim Kian Leong confirmed the suit had been filed with Kuala Lumpur's High Court but refused to comment.
"I have instructions not to discuss the contents of the suit because the matter is before the courts," he told AFP.
The Sun reported that Tajudin, in his 104-page claim, alleged Mahathir directed him to buy the ailing carrier to raise money after Bank Negara suffered massive foreign exchange losses, due partly to speculation in foreign currency markets.
The purchase was disguised as a commercial deal as "it was essential for the public and the international investment community to perceive the entire transaction as a normal commercial arms length deal (which clearly it was not)," the newspaper quoted his claim as saying.
Tajudin, who took out a 1.8 billion ringgit loan for the purchase, said he was reluctant to buy the under-performing Malaysia Airlines, but Mahathir had told him he was performing "national service", it said, citing his claim.
Tajudin was one of a number of Malay entrepreneurs hand-picked by Mahathir in business dealings as part of efforts to boost the wealth of the country's majority ethnic group or bumiputras, as they are known.
Tajudin took out a 1.8 billion ringgit loan to buy the airline but said he signed an "Overriding Agreement" in which he could eventually sell the carrier back to the government, which would indemnify him against any losses suffered.
The businessman also said he had been told to keep mum on the deal, and that he was not allowed to manage the airline according to normal commercial practices, but had to consult the government.
The government drew fire when it bought back the loss-making airline in 2000 in what was seen as a bailout after Tajudin's loans became non-performing and were taken over by then-national asset management agency Danaharta.
The government paid eight ringgit per share, more than twice its market value, in the purchase.
Deputy Prime Minister Najib Razak, who also served under Mahathir, denied the cabinet knew about the secret deal between Tajudin and the former leader.
"I didn't know. I wasn't aware," Najib was quoted as saying by the state Bernama news agency. "The buyback ... was discussed, but that first part, we didn't know."
Parliamentary opposition leader Lim Kit Siang Thursday called for a royal commission of inquiry into the matter.
"It is now incumbent on the present government to do something or the prime minister shall be seen as conniving and colluding with the continued covering up of this scandal," Lim told AFP.
Tajudin's reported claims have come amid a bitter row between Mahathir and his successor Prime Minister Abdullah Ahmad Badawi, both of whom are overseas, triggering speculation over the timing of the suit.
"Whether it is a coincidence or someone has orchestrated it, I think no one knows, but that is secondary compared to what is in the national and public interest," said Lim.
Analysts said the affair offered an insight into long-held beliefs about behind-the-scenes assistance given to bumiputra businessmen.
"People were suspicious of the bailouts," political analyst Khoo Kay Peng told AFP. "It has definitely confirmed the suspicions of people that a lot of these kinds of deals were happening."
Tajudin's move is a response to suits from the state owned-Telekom Malaysia and its subsidiary Celcom, which he used to head, to recover money owed for salary payments and an investment management agreement, according to reports. - AFP /ch/ct
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