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MACC is Investigating Telekom Malaysia (TM) for irregularities in P1 Deal

Last month, it was reported and confirmed that the Malaysian Anti-Corruption Commission (MACC) had visited the Telekom Malaysia (TM) office ” to seek certain information involving an on-going case.”

Today, The Malaysian Reserve reported that MACC is investigating whether there are irregularities in Telekom Malaysia Bhd’s (TM) 2014 acquisition of wireless services company Packet One Networks (M) Sdn Bhd (P1).

Under the deal, the government-linked company acquired a 57% stake in the wireless broadband service provider for RM350 million with a further RM210 million capital injection via newly issued redeemable bonds.

Presently, TM owns 72.9% of the wireless operator — the brand name of which had undergone numerous changes from P1, to “webe”, and now to “unifi”.

But the 2014 acquisition of the capital-intensive business has tailed TM’s profits, the Malaysian Reserve reports. The Internet Service Provider (ISP) posted its first quarterly loss in 10 years during the third quarter of last year (3Q18), with impairment provisions ballooning to RM934 million including for assets related P1.

Three sources confirmed with The Malaysian Reserve (TMR) that the visit by MACC officers to the telecommunications company on June 13 this year was related to P1 acquisition.

Telekom Malaysia has a long standing relationship with MACC.

In January 2017, two Telekom Malaysia employees were arrested by MACC for allegedly taking a bribe and stealing.

In June 2017, MACC arrested six Telekom Malaysia’s top officials (including 4 “Datuk”) over suspicion of graft and abuse of power. The six individuals were suspected to be involved in two cases which resulted in co-op members being cheated and losing money. These people are linked to fraud and abuse that had resulted in Koperasi Telekom Malaysia (Kotamas) losing up to RM23 million.

TM then took a Ikrar Bebas Rasuah (IBR) pledge with MACC on 23 November 2017.

A Telekom Malaysia (TM) technical officer and a company director were among nine people arrested by the MACC in January 2018 for allegedly collaborating in the theft and sale of transmission cables worth millions of ringgit from the telecommunications company.

Late January 2018, TM said it has established a special unit that specifically looks into upholding high level of integrity and good governance values in the Group’s daily operations; which cover its transactions with vendors and overall partners’ ecosystem. Prior to this, early in January 2018, a TM technician was arrested in connection with the cable theft.

In December 2018, a former Telekom Malaysia (TM) Bhd marketing and SME channel manager was sentenced to RM4.1million fine and one-year jail after being found guilty of 10 counts of making false claims of almost RM1million.

MACC Telekom Malaysia is an example

Ironically, MACC has chosen TM as an “example organisation primarily due to its efforts in considering ethics and anti-corruption when doing business,” while acknowledging that TM “was involved in the significant Lucent-Alcatel case of which corrupt practices were undertaken to obtain business,” in 2011.

Telekom Malaysia also has an “Anti-Corruption Guide” release in 2014 that can be downloaded here.

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