馬來西亞錫業崩潰的來龍去脈

馬來西亞是一個自然資源非常豐富的國家，二十世紀八十年代前講到錫業，我們引以為榮。

沒有想到從1981起，因為在所謂國家精英管理者，失靈的商業行動中，會導致錫業如此迅速而悲慘的崩潰。

從這份亞洲華爾街日報在1986年9月22日專題報道中：[馬來西亞計劃控制錫業的意圖，導致錫業的災難], 我們可以多少知道錫業崩潰的演變。

不過，若有人因此轉載受到版權利益的損害，請通知，我當即刪除。

Malaysia Plan to Control Tin Led to Disaster

Kuala Lumpur went along with a trader’s Audacious Scheme to Corner Market

By Raphael Pura  Special to The Asian Wall Street Journal

KUALA LUMPUR – For five years the Malaysian Government has denied persistent speculation that it was behind an audacious but ill-fated attempt to corner the world tin market in late 1981 and early 1982.

The attempt backed by Prime Minister Mahathir Mohamad and financed secretly by huge loan of state-owned Bank Bumiputra Bhd – involved enormous tin purchases on the London Metal Exchange that briefly drove prices to record levels. The plan backfired in February 1982, leaving a legacy of problems that continues to haunt the world tin industry and Malaysia.

“The consequences had been an incalculable disaster for the tin industry.” A British metal-trading executive says.

Tin industry officials and metal traders charge that Malaysia’s failed plan helped created a tin surplus that has undermine prices and led to production cut and mine closures around the world. The affair contributes to the collapse on the International Tin’s Council’s buffer-stock operation, which last year ran out of money in a vain effort to prop up sliding prices.

Buying Spree Fallout

Fallout from the tin buying spree has hit Malaysia hard, too. Malaysian sources familiar with the episode say the government may has lost more than M$500 million (USD 190 million) in the affair, Malaysia state-owned banks stand to lose millions more if they – and other lenders can’t recoup large loans they made to ITC to finance its buffer-stock operations. Thousands of Malaysian miners have been laid off and hundreds of mines closed.

So when Mahathir last week publicly admitted that the government was behind the huge tin purchases, some industry officials in Southeast Asia and London were stunned. “it‘s a breathtaking admission.” A Singapore analyst says.

“Malaysia doesn’t emerge with a high degree of credit to its reputation from all this.”  A London-based tin executive says. “They are so adamant at the time that they weren’t doing it when most people thought they were. They lied”

Dr. Mahathir – speaking last week to the annual general assembly of the political party he heads, the United Malays National Organization – vigorously defended Malaysia’s intervention in the tin market. He contended that only “massive cheating in the London Metal Exchange” deprived the government of profits from its trading. He didn’t say how much was lost.

Dr. Mahathir alluded to revisions in LME rules in February 1982 that eased pressure on short-sellers threatened by Malaysia’s attempt to corner the market.  “If not for the cheating by the LME in changing the rules to protect its members, the government would have not lost and the question of the government’s involvement in maintaining the tin price would not have been raised at all” Dr. Mahathir said.

Dr. Mahathir also disclosed that a mysterious state-backed company called Makuwasa Securities Sdn. Bhd. was created to try to recoup the tin-trading losses. Makuwasa stood to make large profits from the sale of blocks of shares allocated to it at preferential prices in 1984 and 1985 through Malaysia’s Employees Provident Fund, or national pension plan, at the government’s direction.

Dr. Mahathir defended both secret government operations and said no government official had profited from the affair. “What was done by the government was aimed at saving the tin industry.” He said,

Malaysian political analyst suggest Dr. Mahathir chose to make his disclosures because the opposition Democratic Action party had served notice that it intends to question the government about its role in the tin affair when Parliament convenes in October.

There’s been little public reaction in Malaysia to Dr. Mahathir disclosures. Fresh from a solid national election victory last month, the prime minister – whose administration has weathered a year of economic setbacks and business and political scandals – pugnaciously challenged political opponents to prove that the tin affair involved corruption by government leaders or officials.

Privately, some metal traders, tin-industry executives, bankers and diplomats take issue with Dr. Mahathir’s sketchy description of the episode and his conclusions.

Reconstructed from interviews with these sources, Malaysia’s foray into the tin market emerges as a complex tale of a daring and probably ill-advised plan that went disastrously awry.

Among other things, the story shows the extraordinary influence a fast-talking foreign tin trader came to wield with the Malaysian government. It shows that high-ranking Malaysian officials directed the country’s largest bank to make huge loans to a state-backed dummy company capitalized at M$2 to finance tin purchases, And it indicates that after incurring losses that many exceed M$500 million, officials appear to have covered the bad loans using allocations of secret funds.

A Savvy Trader

Many industry sources trace the origins of the affair to 1980 and to a tin trader named David Zaidner. An Egyptian, who acquaintances say traveled on a Swiss passport, Mr. Zaidner earned a reputation in the 1970s as a savvy trader but a bit of maverick.

After breaking into metal trading with Philip Brothers, Mr. Zaidner jointed Amalgamated Metals Corp. In the early 1970s and worked from Amalgamated office in Zug-Switzerland. In 1975, Mr. Zaidner was tainted by scandal after suspicious Amalgamated executives raided his Zug office. The executives found evidence that Mr. Zaidner may have bribed an Indonesian official, who then worked as the ITC’s buffer-stock manager and his Bolivian assistant. They also found evidence of other irregularities intended to gain an edge in the tin market.

The 1975 episode coast Mr. Zaidner his job with Amalgamated, but was never publicized to save embarrassment to the ITC. After a couple of quiet years, Mr. Zaidner re-surfaced in 1978 with another big commodity broker, Swiss-based Marc Rich & Co. Before long, Mr. Zaidner was again trading tin. A tin-industry executive who knew him at the time calls Mr. Zaidner a brilliant trader, but says “He was obsessed with the idea of cornering the market.

In 1980s, according to industry sources, Mr. Zaidner began to take steps toward that goal. In that year, Mr. Zaidner turned up in Jakarta and approached Indonesia senior officials of Indonesia’s state tin company as well as the country’s minister of mines and energy, Subroto. He proposed that Marc Rich handle Indonesia’s tin-trading operation.

Indonesia officials, aware of Mr. Zaidner’s role in the 1975 ITC scandal coldly rebuffed the Marc Rich plan.

Mr Zaidner had better luck in Malaysia, the world’s biggest tin producer, where he began to make the same pitch with Malaysia. Mining Corp Bhd. MMC as the company is known was controlled by state-owned investment concerns and worked together with the government in implementing tin policies.

Mr Zaidner already knew important officials at MMC through his tin-trading activities. One was Noordin Ismail, an accountant and a leading trader at MMC. Another was Baharuddin Maarof, a mining engineer who was then group executive director of the Malaysia company. Through these contacts, Mr. Zaidner became acquainted with MMC’s then group chief executive, Abdul Rahim Aki.

Mr. Abdul Rahim was politically well-connected and was a closed friend of then Finance Minister Razaleigh Hamzah, but industry executives didn’t count him a tin expert.A acquaintance says, “ he knew as much about tin as could be contained on one-half of a 10-cent postage stamp.

Industry sources say Mr. Zaidner lobbed hard to get MMC to appoint Marc Rich as its tin-trading agent. There were objections from some MMC advisors who knew of Mr Zaidner’s reputation. The warnings were ignored. MMC executives “didn’t want to know”, an industry executives recalls.

In December 1980, MMC named Marc Rich its trading agent. A move that a tin executives says stunned the industry.

The MMC-Marc Rich linkup coincided with the last months of former Malaysian Premier Hussein Onn’s government and the transition of power to his deputy, Dr. Mahathir. Dr. Mahathir succeeded Tun Hussein in July 1981, but was effectively running the government for several months prior to that date, with Tun Hussein ill health.

Dropping Prices

It isn’t clear with the proposal that Malaysia begin secret large-scale tin purchases to support dropping prices was first made or who broached it. In his speech last week, Dr. Mahathir said the Malaysian cabinet approved the tin-buying plan in 1980.

But industry sources familiar with the affair are skeptical: they believe Mr. Zaidner was the vital force behind the plan and suggest that the plan didn’t take concrete shape until well into 1981.

Whatever the case, industry sources here say Mr. Zaidner’s views found a receptive audience with the MMC executives, Tunku Razaleigh and ultimately Dr. Mahathir. By the middle of 1981 important Malaysian tin officials and ranking civil servants were locked in meetings to hammer out details of the plan

A source recalls a large meeting attended by MMC executives and Mr. Zaidner at the Kuala Lumpur Hilton Hotel in July that year. About the same time, according to another source senior bureaucrats,including then Finance Ministry Secretary-General Thong Yaw Hong, central bank executives and primary industry ministry aids gather to discuss how to implement the plan.

The idea of using Malaysia’s substantial clout as a tin producer to manipulate the market and prop up prices had considerable appeal for the incoming Mahathir government. Dr. Mahathir brought with him the strong conviction that commodity producing countries such as Malaysia always came out losers when trading their goods in international markets, which he viewed as controlled by the industrialized powers.

Political analyst and industry executives suggest that in the tin-buying plan. Dr. Mahathir saw an opportunity for Malaysia to flex its muscle in the market place.

Malaysia had an opportunity to test its strategy almost immediately. Malaysia wanted to influence tin-consuming member countries of the International Tin Agreement to support producers’ demands for an increase in the International Tin Council’s price-support range. The council is the administrative arm of the agreement and ran a buffer-stock operation intended to keep demand and supply of tin in balance and prices stable.

In July 1981, consumer members of the ITC rejected producer demands for increased prices, and the Malaysian government began its secret tin-buying operation.

By then, Malaysia and foreign sources say, Kuala Lumpur had set the state to intervene in markets in London and Penang. In late June, MMC executives had incorporated a Malaysian company called Maminco Sdn. Bhd. Company records show the new concern was formed to “undertake commodity and mineral trading” and had an authorized capital of M$200 million. However, Maminco’s paid-up capital was just M$2 with Mr Abdul Rahim and MMC accountant Faisal Siraj holding one share each and serving as directors.

Initially, the new company share offices with MMC and was to have been a subsidiary trading concern. But it was soon separated with MMC and became a secret government vehicle to carry out Malaysia’s tin-buying plan. Mr. Zaidner’s friend and MMC executive, Mr. Noordin became general manager of the company.

To finance the tin-buying the government turned to the country’s biggest bank, state-owned Bank Bumiputra. According to Malaysian sources familiar with the affair, the Finance Ministry directed the bank to extend credit to Maminco through its offshore branches to pay for tin purchases.

Large Deposits

Some industry sources believe funds channeled to Maminco through Bank Bumiputra came from large deposits made with the bank by the national oil company, Petronas, also at the directive of Finance Ministry.

Large Malaysian tin purchases on the London Metal Exchange – mainly for three months forward delivery – began in July and continued through most of November. The heavy buying pushed three months future prices up more than 30% to a peak of more than 8,600 pounds (US$12,710) a metric ton on the exchange.

Industry sources say Maminco traded through Mr. Zaidner and Marc Rich, who used the LME metal-trading firm of Mac-Laine Watson, a unit of Drexel Burnham Lambert Inc., and one or two others to place orders. Maminco also brought physical tin on the Penang market, they say.

Throughout the period, the government denied it was behind the purchases, although tin industry professionals strongly suspected it was. The press attributed the sharp price rise to a mystery buyer.

Through November, Malaysia’s tin-buying gambit appeared to be working. Although actual physical demand for the metal remained slack., with industrialized countries headed for recession, the Malaysian induced-price rise helped producers obtained a 6.9% increase in the ITC price-support range in October.

In addition, the price-support operation was relatively cheap for Malaysia to sustain. Buyers of three-month forward contract only had to pay a 10% deposit. 

Angry Protests

Problems began to loom in November. Ironically, rising prices had begun to encourage increased production. The U.S. , with a 200,000-ton strategic stockpile of the metal, also announced it intended to begin selling some of its hoard, a move that drew angry protests from Malaysia.

Many LME traders, betting that the so-called mystery buyer wouldn’t be able to sustain its operation, began to sell tin short three months forward, expecting prices to collapse.

The developments prompted an important switch in tactics by Mr. Zaidner and his Malaysian clients, one that effectively changed the Malaysian plan from a price-support operation to an attempt to corner the tin market. In late November, Malaysia switched from buying three-month futures to spot purchases for physical tin for cash.

The tactic, provided Malaysia could sustain its spot buying, set up short sellers for a squeeze. It means that traders holding contracts to sell tin three months later in February might find no physical tin available to meet their obligations. They would have to buy tin from the mystery buyer at a higher price than that at which they contracted to sell, or default on their contracts.

The Malaysian move sent spot prices soaring and set off a global scramble by short sellers to get tin into LME warehouses by late February 1982. It isn’t clear whether the squeeze and attempted market corner were part of Mr. Zaidner’s or Malaysia's original strategy. Whatever the case, the bold step increased the stakes in the tin-buying plan dramatically.

Maminco’s spot buying required much larger financing than its previous paper trading. Bankers say that during the period, Bank Bumiputra extended huge loans to the dummy company to sustain purchases and finance interest payments – then hovering at about 20% - plus storage and insurance on Malaysia’s ballooning tin hoard.

At the operation’s peak, according to those familiar with it, credit to support the Malaysia tin-buying plan reached M$1.5 billion.

By early 1982, Malaysia’s commitment to tin-buying operation had grown to the point that it made the buyer dangerously vulnerable.

The plan temporarily had raised government revenues and helped local miners. But Malaysia had amassed an estimated 40,000 to 50,000 tons of tin and faced the expensive task of holding it off the market to ensure prices remained high and that the accumulated stocks purchases at fairly high prices maintained their value.

“You need very deep pockets to keep it up, They had jacked up the price to a level where it was enormously attractive to produce tin.” A London-based meta trader says.

Prices Kept Rising

“They wanted to sell some tin to the shorts at a great premium and hang up on to the rest.” A Western commodities analyst says. “They could use the maneuver to try to pay for the whole operation and still hold 20,000 to 30,000 tons.”

But because spot prices continued to rise into February that year, fresh supplies of tin continued to appear from U.S. stock-pile and elsewhere and had to be absorbed. “Production went up, and obscure suppliers came out of the woodwork to cash in.” a tin-trader says. Meanwhile, recession deepened, and end users of tin began cutting physical stocks.

As the tin market braced for an expected squeeze on short sellers at the end of February, the LME made the controversial rule change that Dr. Mahathir last week blamed for the collapse of the Malaysian tin-buying plan.

After examining the books of exchange’s trade-members, LME official ruled that traders who failed to meet sales contracts on the appointed day could pay a fine of 120 pounds per ton per day in lieu of supplying physical tin.

That move meant that short sellers, by paying a fine, could avoid having to purchase tin controlled by mystery buyer at steep premiums to meet their obligations. Malaysia complained bitterly at the time, but couldn’t identify itself as the mystery buyer. Last week Dr. Mahathir charged that the step amounted to cheating by the LME to save its own members.

A metal trader argues, however, the LME was justified in parrying what he termed a “blatant attempt to corner the market.”

Tin-industry analysts generally agree that LME move helped undermine the Malaysian plan. But most believe other increasingly negative factors in the market probably ensured it would fail anyway. Already tensions between Malaysian officials and Marc Rich were growing as the commodity’s broker’s senior executives grew worried about Mr Zaidner and his plan.

According to a well-placed tin executive, Marc Rich had been trading in tandem with its Malaysian clients and, as was his habit, Mr Zaidner also had been in the market for his own account. The executive says that in late week of February, a Marc Rich executive, Pincus Green, traveled to Zug to look at Mr. Zaidner’s books and was “shocked by the exposure to the Malaysian deal.”

Mr Green stopped Mr Zaidner’s operation immediately. By February 26, Marc Rich had begun to dump its tin, and the LME spot prices collapsed, falling by 1,700 pounds a ton in a week. The squeeze was over, the corner attempt had failed and Mr. Zaidner was dismissed.

Mr.Zaidner’s current whereabouts and job couldn’t be ascertained, although metal traders say they’ve heard reports that he may be working in property development in Switzerland or for a tin concern in Brazil. Maminco officials fared badly. Mr. Abdul Rahim was first demoted,then resigned from the company in early 1985. Mr. Noordin also left the company.  

Malaysian began to feel the adverse fallout from the affair almost immediately. The collapse of the market left the government, through Maminco, with thousands of tons of expensively acquired tin it could liquidate only at a loss. It also left Maminco owing huge debts to Bank Bumiputra that couldn’t be repaid.

Sliding prices forces the ITC’s buffer-stock manager to begin heavy intervention in the market to defend an artificially high floor price set while Malaysia was propping up the market. This meant sopping up bulging stocks created, too, by pull of higher prices during the affair.

Malaysia and other members of the International Tin Agreement were forced repeatedly to kick in additional funds to support the buffer-stock operation. When those funds ran out last year, the tin market fell apart, with prices sinking to record lows, In Malaysia, hundreds of mines have closed.  

Embarrassing Failure

The government greeted the embarrassing failure of the tin-buying plan with a studied public silence that endured until Dr. Mahathir’s disclosures last week.

Privately, however, Dr. Mahathir and other senior officials involved in approving and implementing the plan wrestled with the dilemma of trying to recoup the large losses without acknowledging publicly what had occurred.

Several sources estimate the affair cost Malaysia as much as M$500 million to M$600 million. “The money is gone.” A Malaysian source says.

The government’s dilemma was made sticker because the large losses – if not compensated – would show up as bad debts owed Bank Bumiputra by Maminco for lending done at the government’s request.

The pinch was all the more painful because potential tin losses roughly coincided with disclosures that Bank Bumiputra  faced separated losses about M$2.4 billion on loans it made in Hong Kong. “The government had to make money available to Maminco to settle its debts to Bank Bumi.” A banker says.

According to sources familiar with the arrangements – Malaysian officials – including then Finance Ministry Secretary-general Thong Yaw Hong and the deputy central bank governor, Lin See Yan – came up with a couple of novel and highly sensitive plans to cover the losses secretly.

One acknowledged by Dr. Mahathir last week, involved the creation of Makuwasa Securities in mid 1984. Makuwasa was ostensibly private, but was held nominated shareholders on behalf of the government.

As Mahathir explained its Makuwasa, through the government-run national pension plan was allocated new issues of shares in public companies normally embarked for bumiputra, or indigenous Malaysians at preferential prices. Makuwasa was then freed to sell the shares at a profit on the Kuala Lumpur Stock Exchange to repay tin losses.

Securities-industry executives say Tan Sri Thong and Datuk Lin helped plot Makuwasa’s investment plan. It isn’t clear however, whether the company ever realized significant profit on its shares transactions, and Makuwasa officials have refused to discuss its activities.  

The sources say a second plan involved the use of secret allocation from Malaysia’s national budget to repay Maminco’s loans from Bank Bumiputra. These sources believe the government allocated the funds through a “secret service vote” in the annual budget.

The uses of allocations under this item – which are normally used for security and intelligence related activities the government wishes to shield from public view – are known to only a few high-ranking officials and can be spent at the discretion of the Finance Ministry.

The sources believe that through these means, the government had largely settled Miminco’s debts to Bank Bumiputra, by the end of 1984. Effectively transferring the tin-trading losses to the company’s budget deficit, where they would be difficult to detect.

Saturday, Dr. Mahathir declined to tell Malaysian reporters how much the government had invested and lost in the tin affair. He added, however, that the question would be addressed in Parliament next month.

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