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AWSJ: Nanyang Takeover Sparks Political Backlash
By Cris Prystay
18/6/2001 5:57 pm Mon
The Asian Wall Street Journal
Newspaper Takeover Sparks Political Backlash in Malaysia
By CRIS PRYSTAY
Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- A controversy surrounding the takeover of
two influential Chinese-language newspapers has pitched three key
politicians into a battle that could threaten the leadership of a
party in Malaysia's ruling coalition.
Huaren Management Sdn. Bhd., the business arm of the Malaysian Chinese
Association, or MCA, which is part of Prime Minister Mahathir
Mohamad's governing coalition, bought a 72.3% stake in Nanyang Press
Holdings Bhd. from a unit of Hong Leong Group on May 30. The deal
sparked an outcry from ethnic-Chinese groups, who fear a loss of press
freedom. Nanyang Press publishes Nanyang Siang Pau and China Press,
two dailies with a combined circulation of 390,000.
The takeover has prompted a political backlash from a range of Chinese
ethnic guilds and business groups, which have threatened to withdraw
political support in the next election unless the deal is reversed. It
has also pitted MCA president Ling Liong Sik, who engineered the deal,
against his deputy president and leadership rival Lim Ah Lek, who
contends the deal will erode the party's support.
The debate has become a proxy battle for the leadership of the MCA at
a time when the Chinese vote is increasingly critical to the survival
of Dr. Mahathir's ruling coalition. The Chinese electorate played a
key role in returning that coalition to office in the 1999 elections,
when a large block of Malay voters, disillusioned by the sacking,
trial and conviction of former Deputy Prime Minister Anwar Ibrahim on
corruption and s###my charges, defected to the opposition. But Dr.
Mahathir alienated many Chinese last August when he likened a powerful
Chinese lobby group to communists.
The MCA's takeover of Nanyang would increase government control over
the relatively fractious Chinese press, which delivers more critical
political coverage, and in recent months has given wide play to a
range of educational and language issues that have deepened the
Chinese community's discontent with Dr. Mahathir's government.
Nanyang's papers have devoted plenty of space to the succession battle
between Datuk Ling and Datuk Lim, which political analysts believe
added impetus both to the MCA president's drive to gain control of the
media company and his popular deputy's resistance to the deal.
At a joint news conference Thursday, Datuk Ling and Datuk Lim said
they remain united as party leaders despite their differences over the
takeover, but both sides exchanged a series of salvos last week that
belied the image of solidarity.
Datuk Ling, who is also transport minister, said on Wednesday that
Huaren Holdings trustees who disagree with the Nanyang takeover should
resign. The deal's main opponents, Datuk Lim and party vice president
Chua Jiu Meng, who is also the health minister, are two of only four
Datuk Lim and Datuk Chua raised the ante Friday, claiming the deal
violated a provision of the party's constitution requiring general
assembly approval for any bank loan involving a mortgage or charge on
party assets. To finance the takeover, Huaren pledged its entire stake
in an English-language newspaper as collateral for a 230 million
ringgit ($60.6 million) loan -- 100% of the purchase price. The shares
pledged as collateral comprise about 90% of the party's total assets,
Datuk Chua said. "It's against the constitution and unlawful," he
Datuk Ling later denied the deal violated the party's constitution.
Last month, 245 ethnic-Chinese nongovernmental organizations formed
the National Assembly of Chinese Organizations Against the MCA
Takeover of Nanyang Press. Over the past two weeks the group has held
a series of boisterous meetings across the country to protest the
Datuk Lim and Datuk Chua deny that their opposition to the deal is
politically motivated. Datuk Ling, meanwhile, maintains that the
takeover was purely a business deal -- a stand that Datuk Lim hotly
contends. Leveraging Huaren's entire stake in the larger,
more-profitable Star Publications to buy Nanyang Press Holdings makes
little investment sense, he said.
Datuk Ling appeared to capitulate last week, offering to sell all or
part of Huaren's Nanyang stake to any bidder offering a higher price
than the 5.50 ringgit a share that Huaren paid. On Friday, he called a
June 24 party meeting to allow members to vote on whether the MCA
should keep its stake.
A consortium of Chinese business leaders led by tycoon Lim Guan Teik,
the president of the Associated Chinese Chambers of Commerce and
Industry, issued a brief statement Friday saying it would bid for the
entire Nanyang stake held by Huaren.