In the interim, the controlling interest held by the chairman has been repurchased by the government at a steep premium. The market price of MAS shares was (and is) in the RM 3.80 range at the time of the repurchase, while the government paid RM 8.00 per share. The premium is considered a bailout by the public.

The chairman bought the shares from the Central Bank of Malaysia in 1994, making news in doing so, having taken local bank loans of RM1.8 billion to finance the purchase. At that time MAS shares were selling for around RM 5.85, and though he paid a premium, it was not considered an unusual transaction at the time, other than its size.

Six years later, the chairman has been refunded his money, but without interest, so it must be assumed that the overall transaction has not been a happy one. The debt does not seem to have been repaid to the banks, and they must be unhappy about that. The interest alone, even at the most favorable rates, would be a significant burden.

The transaction seems to have forestalled the restructuring of MAS, which is in keeping with the general policy of the administration to avoid any overt signs that the economy is in distress. Further efforts in this direction are to be expected. This is because the administration has no history of admitting its mistakes. On the contrary, it prefers to create three new crises rather than resolve an old one. This policy of avoiding any final accounting defers indefinitely the day Malaysia begins rebuilding its shaky economy.

It is the timing of the repurchase, more than its price, which attracts attention. The airline is losing massive amounts of money, and faces total collapse unless large sums of new capital are injected immediately. Where is this capital to come from if not from the public purse? Once experienced employees are separated it will be very difficult to replace them. Once the planes have been sold the expense of replacing them will be greater. Thus there is every appearance that the sale takes place under exigent time constraints.

Did the chairman plan the downsizing to put pressure on the administration to meet his price? It would appear so, adding yet another to the list of weird transactions involving the chairman and his wheeler-dealer approach to business affairs. Consider, just to tease the curiosity, that at one point it was MAS which owned 40 percent of Naluri (ne Malaysian Helicopter Services), eventually selling it to the chairman's interests.

The planned downsizing was not reported in the local press, though there were numerous reports of interest from foreign airlines involved in due diligence. As time began to run out, the government was pressed to act before the chairman made public his plans. This is a form of backroom pressure the administration understands. They caved in.

There is variety in the companies under the chairman's umbrella, and generally they have not done well. The shares of the Malaysian Helicopter company, now renamed Naluri, have dropped to the 80 sen (US$ 0.21) range, and the future is not bright. The original Roxy Electric Industries (renamed Technology Resources Industries), has similar troubles.

The picture in Malaysia since 1990 is one of buying shares with bank loans, then using those shares as collateral to make further loans with which to buy more shares. This style of business financing creates a house of cards, and is generally regarded as the basic cause of the 1997 crisis. In mature economies there are laws preventing this type of pyramidal activity by banks, and the operations of securities dealers are sharply separated from the banks. The amount of margin allowed is carefully regulated to prevent high leveraging, which can create panic selling conditions.

In Malaysia these laws are not yet deemed necessary, and the banks are deeply involved in share financing. The present policy of the government, executed through the central bank, pressures the banks to make questionable loans without collateral, and does this in the interest of making the economy appear vibrant, though at great risk to its long term viability. Both the banks and securites dealers are now involved in a merger/shrinkage operation in an attempt to rescue what may be salvageable, but there is no understanding of the need to restore fundamental banking prudence to the financial system.

While the KLCI index appears stable at the 650-700 level, the performance of individual stocks betrays the fact Malaysia is for sale at bargain basement prices. The government daily expresses paranoia against foreign purchases, yet the absence of foreign buyers results in a ghostly low volume in the market. The expressed fear of globalisation sounds strange in a quiet hall, which reveals a total indifference towards things Malaysian, regardless of price.

The irony is that the political system can neither provide sufficient support for profitable performance of major corporations, nor engender the country attractive to locals or foreigners for a future bet. Only the local funds, which trade without fee, give any semblance of substance to the trading floor. There is no commission income to support the infrastructure of the market, and securities dealers are losing both money and staff. There is some danger that the trading environment will worsen, and there will be no market for those still holding shares.

The message is repeated again and again, there must be transparency and accountability in both public and private corporate affairs. It falls on deaf ears. Everything is fine. The economy has recovered. GDP is 7.5 percent. And so on. If there is any realistic prospect for an honest appraisal of the situation, it is still beyond the vision of the most adventurous speculator.