AS the clock struck nine at the London Stock Exchange on the early morning of Sept 7, 1981, a clandestine plan years in the making unfolded.
Less than four hours later, a Malaysian government-linked investment company had pulled off a historic takeover of one of the biggest British-owned plantation groups, catching its former majority investors napping.
In swift, furtive trading supported by purchases through friendly parties and proxies, Guthrie Corporation Ltd was acquired by Permodalan Nasional Berhad (PNB) which increased its stake in Guthrie from 25% to more than 50%, comfortably securing majority control.
The British investors were caught by surprise when they found themselves no longer in control of some 800sq km of agricultural land in Malaysia – hitherto a valuable and consistent source of revenue. Mark Gent, the Guthrie Corporation chairman, learnt of this acquisition in a news broadcast over the radio.
More than 10,000km away in Kuala Lumpur, the triumphant news was received by the architects of the “dawn raid”, which later became known as the Guthrie Dawn Raid.
Colonial hangover
Despite 24 years of independence, Malaysia in 1981 was developing at a slow pace as its main economic backbone, the plantation and commodities sector, was primarily controlled by the British. In the 1970s, over 60% of Malaysian corporate assets were still owned by foreigners, with the British controlling two-thirds of that stake.
While the British were ready to allow Malaysia independence in 1957, British investors were reluctant to let go of their major sources of income, and in particular the goose that laid the golden egg – Guthrie, Britain’s principal rubber and oil palm conglomerate in Malaysia.
The majority of Guthrie’s profits from the plantations in Malaysia were channelled back to its owners overseas, with little revenue left here. To some in Malaysia, this represented a continued form of colonial economic exploitation. Malaysia attempted negotiations to reclaim the plantations, but consistently hit roadblocks with resistant British owners.
Things changed when Tun Dr Mahathir Mohamad stepped in as Prime Minister. He was keen to restructure the country’s post-colonial economy and to seek wider autonomy in the nation’s financial affairs. A remaining sore point were the British-owned plantation companies.
Dr Mahathir, who later became known for his constant criticism of imperialism and its many iterations, was ready to ruffle some feathers.
“At the time of independence, 60% of the wealth in Malaysia was under the control of the former colonial masters. They had all the big estates, and also the big dredging [companies]. So we thought we should get some of the wealth back, but when we offered to buy they were not willing to sell. Since they were very reluctant to sell the whole company, we had to do it quietly,” Dr Mahathir tells Sunday Star.
Dr Mahathir was reluctant to go down the road of forced nationalisation as this would deter foreign investment which was much needed at the time. Unable to convince the British to relinquish control of Guthrie through direct negotiation channels, the new administration decided that the time had come to try more creative avenues.
The plan
First, a core team had to be assembled.
The primary strategist was then-PNB chairman Tun Ismail Mohd Ali. Ismail was a well respected figure who had been a Bank Negara governor; he also happened to be Dr Mahathir’s brother-in-law.
The key operator was Tan Sri Khalid Ibrahim, who was PNB chief investment officer and who would later become well known as a Selangor mentri besar.
Also kept in the loop was Raja Tun Mohar Raja Badiozaman, who was former Treasury secretary-general and the Prime Minister’s economic advisor at the time. The other two notable figures were British: financier Sir Evelyn de Rothschild and his deputy, Jock Green-Armytage, who played an advisory role to Ismail.
Although Malaysia by the early 1980s was not considered a rich nation, the country had nevertheless amassed substantial capital.
“The Employees Provident Fund (EPF) for example had huge savings which most people don’t know about. Even at that stage, we had money to invest,” says Dr Mahathir.
The idea of a “dawn raid”, where a surprise assault is carried out on the shares of a target company by a “raider” as soon as stock market trading opens, was mooted by Ismail and Raja Mohar, says Dr Mahathir.
“Between the two of them they designed the strategy of acquiring selected companies. And they then went to London and they recruited quite a number of people who would buy a small amount of shares so that at one go, all these people would buy and then the total amount would be sufficient for them to gain control [over Guthrie],” Dr Mahathir explains.
According to former Bank Bumiputra chairman Tan Sri Tengku Razaleigh Hamzah, although Guthrie was “a jewel” for the British, it had been ignored and neglected.
“To them it was quite strategic, because they got it cheap. I’m sure they got the land for free, during the British [colonial] time. And our money was probably also used to plant all those trees and they were just collecting the profits,” says Tengku Razaleigh, explaining that the British owners had left the running of the plantations to agents, “forgetting” about the commodities here.
He says the idea to acquire Guthrie was initially struck during a meeting between himself, Raja Mohar and Ismail at a golf club.
“We were talking about the Felda [Federal Land Development Authority], which was such an achievement by [former PM, Tun] Abdul Razak Hussein and all the people helping him. Then we came to the realisation that we didn’t have enough land,” Tengku Razaleigh says.
Ideas were mooted about investing in parts of Thailand, the Philippines and Indonesia to plant oil palm and process the fruits in Malaysia – however, this meant losing out by partially exporting an important industry elsewhere.
“But then it came to our minds, there were plantation businesses available in Malaysia,” said Tengku Razaleigh.
“They were well managed, well looked after. Why not just buy them over as the yield is quite good for the price that was available on the market?
“And that’s why we went for it,” recalls Tengku Razaleigh, who says he stepped away once he became finance minister in 1976.
Once the foundations were set, PNB swooped in with its lightning assault and returned control of Guthrie land back to Malaysia.
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