MALAYSIAN tycoon Robert Kuok said he built Malaysia’s first national shipping line, the Malaysian International Shipping Corporation (MISC), out of a sense of patriotism, but later relegated himself to be a minority shareholder at the repeated request of former prime minister Tun Abdul Razak Hussein.
In an extract of Kuok’s autobiography, Robert Kuok, A Memoir” published on the South China Morning Post today, the man dubbed the “Sugar King” tells of how he was driven to launch the country’s national shipping line after he learnt that the largest British shipping conglomerate Blue Funnel Group was coming to set up in post-independent Malaysia.
“My interest was partly patriotism – a desire to help Malaysia to launch its own independent shipping line and not be tied to the apron strings of the ex-colonial government of Britain through Blue Funnel,” he said.
The MISC quickly grew successful under the management of his company, Kuok Brothers and his Hong Kong partner, International Maritime Carriers chairman Frank WK Tsao.
Kuok said MISC had a paid-up capital of RM10 million, with the Kuok Brothers leading the show with 20%, and Tsao, 15% of their share. MCA and several Chinese organisations held 20% to 30% of shares.
Then a year into their operations, Kuok said he received a call from then-prime minister Abdul Razak Hussein, who wanted Kuok to give up a percentage of the company’s shares for Malay ownership.
“Within a year of our launching MISC, Tun Razak, who by then was prime minister, sent for me,” said Kuok in his book.
“Razak said, ‘I want you to make a fresh issue of 20% of new shares. I’m under pressure because there is not a high enough Malay percentage of shareholding.’
“I said, ‘Tun, are you quite serious about this request?’ He answered, ‘Yes, Robert.’ So I replied that I would do it.
“I went back and, with a little bit of arm-twisting, persuaded the board to pass a resolution waiving the rights of existing shareholders to a rights issue (MISC was not yet a public company).
“Razak allocated all the new shares to government agencies. So, I was diluted to 20 upon 120 – the enlarged base – and Frank became 15 upon 120,” Kuok said.
A year or two later, Kuok said Razak went to him again to squeeze for more share issuance, saying he was “under a lot of pressure at cabinet meetings”.
Kuok said Razak told him: “You know, Robert, it’s just the price of your success. MISC is doing well, people are getting envious.”
Razak then told him to issue another 20%, to give 5% each to the four port cities in Malaysia.
“This entailed enlarging the capital base to 140 from the original 100, making the Malaysian Government the largest single shareholder and relegating Kuok Brothers to second position. And he again wanted the shares issued at par – the original issue price,” Kuok said.
Kuok said he agreed to issue the shares at par, but asked Razak to “promise” that it would be the last time.
“He smiled and very gently signified his agreement, without saying the words,” Kuok wrote.
Kuok, now 94 and the 54th richest man in the world, admitted that despite his interest in setting up MISC back then, he “knew nothing about shipping” and could not even submit a decent memo for the application, leading him to look for a partner.
“I had become interested in shipping from about 1964, due to our large-scale buying of sugar for our refinery, wheat for our flourmill and our international commodities-trading activities,” he wrote.
It was then he decided to contact Tsao – a shipping man he met through a Malay civil servant friend – and proposed a partnership which Tsao agreed to.
When his friend Dr Ismail Abdul Rahman, Malaysia’s second deputy prime minister, resigned from the government due to cancer in 1968 around the time MISC was formed, Kuok invited him to be the first chairman of the company.
Kuok took over when Dr Ismail returned to the cabinet after the May 13, 1969 riots.
He wrote of how MISC’s first two ships came from the Japanese as “blood debt ships” or “goodwill ships” to compensate for the Japanese massacre of innocent Chinese in Malaya. The demand for compensation had come from MCA, and was supported by former prime minister Tunku Abdul Rahman.
“MISC started with these two cargo ships and paid for them on a monthly bare-boat, hire-charter basis. Tsao’s ship architects and engineers in Hong Kong supervised the design and construction in Japan.
“Tunku Abdul Rahman made some very cogent suggestions about the design of the flag for this new national flag carrier.”
For the MISC’s success, Kuok paid credit to Tsao, the MISC deputy chairman, who recommended capable managers like Eddie Shih, a Shanghainese who ran the show with Tony Goh, a Singaporean shipping expert; who in turn brought in MISC’s managing director Leslie Eu, a Burmese Chinese.
Kuok also said before MISC went public in 1987, he made a radical move to sell 15% of the company’s shares to deserving directors, staff and ship captains who had contributed to the shipping line’s success.
“Quite a number of people benefited from this move. I have always believed in some degree of socialism when you have made money. You know very well that you alone didn’t make it; it was a joint effort.”
He said his move was “inspired” by the legendary Mongolian warrior Genghis Khan, who usually turned over the spoils of war to his generals and soldiers.
“He was not selfish, and that is why he became the greatest general the world has ever seen,” wrote Kuok.
Robert Kuok, A Memoir is available at Bookazine in Hong Kong and at major bookshops in Singapore. It will be released in Malaysia on December 1 and in Indonesia on January 1.