THE FEDERAL CONSTITUTION AND THE CO-OPERATIVES MALAYSIA -vs- COOPERATIVE SOCIETIES COMMISSION

Plaintiff’s DRAFT Affidavit in Reply

{for information and comments of Sister Co-operatives }.




IN THE HIGH COURT IN MALAYA AT KUALA LUMPUR
(APPELATE AND SPECIAL POWERS DIVISION)
ORIGINATING SUMMONS NO R1-24-01-08

In the matter of Order 15 Rule 16 of the High Court Rules 1980

And

In the matter of Sections 34, 42, 43 and 54 of the Malaysia Cooperative Societies Commission Act 2007

And

In the matter of Section 43 (2) of the Cooperative Societies Act 1993 (as amended by the Cooperative Societies (Amendment) Act 2007)

And

In the matter of Articles 4 (1), 5 (1) and (3), 10, 13 (2), 97, 102 and 104 of the Federal Constitution.

BETWEEN

KOPERASI KERETAPI BERHAD PLAINTIFF

AND

1. MINISTER OF FINANCE
2. MINISTER OF ENTREPRENEUR AND
COOPERATIVE DEVELOPMENT
3. MALAYSIA COOPERATIVE SOCIETIES COMMISSION
4. GOVERNMENT OF MALAYSIA DEFENDANTS

Plaintiff’s 2nd Affidavit (Draft)

I, CHE HANI BIN ISMAIL (NRIC No: 500410-10-5683/3618512) of Block E-3-2, Railway Quarters, Lengkok Abdullah, Bangsar, 59020 Kuala Lumpur being a retired employee of the Malayan Railway Administration affirm and state as follows:

1. I am the Secretary of the Plaintiff Cooperative Society.

2. I am authorised by the Plaintiff to make this Affidavit.

3. I have knowledge of the contents of this Affidavit from the records of the Plaintiff available to me.

4. I make this affidavit in reply to the affidavit of Dato’ Mangsor bin Saad affirmed on 9th July 2008 and served on the Plaintiff’s solicitors on 11th July 2008 more than six months after the service on 2nd January 2008 of my affidavit dated 2nd January 2008 on all the 4 defendants. The Plaintiff will rely both on the matters stated in this Affidavit and on the submission of our counsel at the hearing of this application.

Preliminary - Legality and not policy in question before this Honourable Court

5. I aver that the said Dato’ Mangsor Bin Saad has totally failed to address the objections raised by the Plaintiff as to the invalidity of Section 34, 42, 43 and 54 of the Malaysia Co-operative Societies Commission Act 2007 and Section 43(2) of the Cooperative Societies Act 1993 as amended by the Co-operative Societies (Amendment) Act 2007 as being inconsistent with, repugnant to and /or not in harmony with Articles 4(1), 5(1) and (3), 10, 13(2), 97, 102 and 104 of the Federal Constitution.

6. The Plaintiff has not objected to the setting up of the Malaysia Cooperative Societies Commission as such, nor has the Plaintiff objected to all the other amendments to the Cooperative Societies Act 1993 made by the Cooperative Societies (Amendment) Act 2007. The Plaintiff is objecting to what it contends are excessive and undefined unconstitutional powers given to the Malaysia Cooperative Societies Commission by the above mentioned provisions of the said two Acts of Parliament which the Plaintiff contends are unconstitutional.

7. The said provisions came into force on 1st January 2008 which was a public holiday. The Plaintiff commenced this action on the very next day on 2nd January 2008.

8. I verily believe that the said unconstitutional measures encroach on the rights of individuals to associate for their common good. I verily believe they are totally unnecessary in a democratic society, will be an impediment to all the cooperative societies and their members, are misconceived and if taken to address perceived wrongs in the co-operative movement are totally disproportionate measures .

9. Dato’ Mangsor Bin Saad in his affidavit made on behalf of all the 4 defendants appears to try to justify the said unconstitutional measures as being necessary to promote the national economy and to remedy what he claims to be an unhealthy state of affairs. He has also stated that various bodies have given their support to the establishment of the Malaysia Co-operative Commission.

9.1. The Plaintiff’s solicitors advise me and I verily believe that this Honourable Court is not properly placed to consider what is good government and it is not the function of this Honourable Court to decide on national economic policy matters, but is only concerned with whether the provisions the Plaintiff intends to impugn are consistent with the Federal Constitution.

9.2. I am further advised that no person or body can authorise law which is contrary to or inconsistent with the Federal Constitution which I aver is the supreme law of Malaysia.

9.3. Since the Defendants have made this an issue, I shall in this affidavit deal with the substance of the averments of the said Dato’ Mangsor bin Saad. However, I do this without prejudice to the Plaintiff’s contention that the said averments are irrelevant in considering the constitutionality of the provisions in question.

Preliminary - Attorney General’s Chambers cannot represent 3rd Defendant

10. I am advised by the Plaintiff’s solicitors and I verily believe that being a corporate body set up by statute the 3rd Defendant and its chief executive officer cannot be represented by the Attorney General’s Chambers and the learned Senior Federal Counsel attending to this matter who are not competent to act on behalf of the 3rd Defendant and its chief executive officer nor to give them legal advice pursuant to section 35 of the Legal Profession Act 1976, section 24 of the Government Proceedings Act 1956 and Article 145 of the Federal Constitution.
Preliminary - Authority to affirm this affidavit

11. I verily believe that Dato’ Mangsor Bin Saad’s objections to my authority to affirm the affidavit of the Plaintiff are unwarranted.

11.1. Under Section 44 of the Cooperative Societies Act 1993 the board of the Plaintiff is authorised to take legal action on behalf of the Plaintiff. As the secretary of the Plaintiff cooperative society, I verily believe that I am one of the principal office–bearers of the Plaintiff and I am authorised to execute affidavits herein.

11.2. I attach as exhibit P-8 a copy of the minutes of the Annual General Meeting of the Plaintiff held on 19 April 2007 which I attended. I verily believe that at the end of the meeting, the meeting unanimously approved an allocation for legal fees to take legal action in respect of amendments to the Cooperative Societies Act 1993 and the new laws to be imposed on co-operatives.

11.3. I attach as exhibit P-9 a copy of an extract of the minutes of the Annual General Meeting of the Plaintiff held on 25th June 2008 which unanimously approved this action against the Defendants and a copy of an extract from the speech by the Chariman of the Plaintiff Co-operative drawing the members’ attention to the action filed in this Honourable Court and the affidavit affirmed by me herein. I aver that a copy of the Originating Summons and my previous affidavit filed herein was published in the Annual Report booklet of the Plaintiff which was sent to all members of the co-operative, and no objections have been received from any member of the plaintiff to this legal action until now.

11.4. I verily believe that Dato’ Mangsor Bin Saad has stated that the Plaintiff has 1,749 members although I did not state how many members the Plaintiff has in my affidavit. I verily believe that the knowledge the Malaysia Cooperative Societies Commission has about the Plaintiff and the use of that information against the Plaintiff in these proceedings is unnerving.

12. I verily believe that the Registrar General of Co-operatives who oversees all co-operative societies and with whom the members of the Board of the Plaintiff are registered is an officer under the purview of the 2nd Defendant’s Ministry and should be fully aware that I am the Secretary of the Plaintiff.

13. I verily believe Dato’ Mangsor Bin Saad himself has not produced any evidence of any prior written authority from any of the four Defendants to affirm his affidavit and his representation by the Attorney General’s Chambers, which as I have contended earlier is against the law. I verily believe that this fact also foretells the degree of good faith or the lack of it which will prevail when the Malaysia Cooperative Societies Commission and the other Defendants use their unbridled powers under the various offensive sections.
Role of ANGKASA

14. I verily believe that the averment that is effectively trying to say that ANGKASA represents all cooperative societies and that it was authorised to endorse the unconstitutional provisions of the said two Acts is incorrect.

15. I am advised by the Plaintiff’s solicitors and I verily believe that it cannot reasonably be inferred that ANGKASA or any other party at all has authority to authorise or approve unlawful and unconstitutional provisions of the said two Acts.

16. Even on the facts, I verily believe that

16.1. although the Plaintiff is a member of ANGKASA the Plaintiff did not at all ever receive drafts of the said two Acts from ANGKASA for the Plaintiff’s consideration and comments

16.2. ANGKASA and Yang Mulia Professor Ungku Aziz have been inappropriately noted as supporting on behalf of all cooperative societies the unlawful provisions objected to

16.3. Yang Mulia Professor Ungku Aziz is a distinguished economist and also an academic but may not be familiar with and/or may not have any real practical knowledge of the cooperative spirit which makes a cooperative society truly effective

16.4. in any event, prior to the date when this action was filed, both ANGKASA and Yang Mulia Professor Ungku Aziz were obviously not properly appraised of the unconstitutionality of the said offending provisions. Alternatively, even if they had been so appraised they were not competent to approve these provisions which are objected to on the basis of their unconstitutionality.

17. I am advised by the Plaintiff’s solicitors and I verily believe that the provisions of the Federal Constitution cannot be ignored even by consent.

18. I am also advised and I verily believe that all citizens and the Federal and State Legislatures must all abide by the Federal Constitution and each and every one of its provisions which is the supreme law of the land.

Objections within the Co-operative movement

19. I verily believe that the article in the “Pelancar” October 2007 issue shown in exhibit DM-1 of the affidavit under reply appears to have been written by the General Manager of ANGKASA, an administrative officer.

19.1. He says that two persons Yang Mulia Professor Ungku Aziz and Puan Hajah Rahaiah Baheran studied the two Acts, put them up for discussion in conferences and approved them. The article does not give particulars of the offending provisions at all. I verily believe that neither Yang Mulia Professor Ungku Aziz nor Puan Hajah Rahaiah Baheran properly noted and realised the force and effect of the offending provisions.

19.2. I verily believe that the Plaintiff was not at all invited to any such conference to discuss any of the provisions of the two Acts even if there was in fact any such conference.

19.3. I verily believe all cooperatives were kept totally in the dark about the offending provisions of the two Acts. I verily believe that the drafts of the two Acts which have far reaching implications for cooperative societies was never distributed to the 5,170 cooperative societies in the country nor were their views sought.

19.4. I attach as exhibit P-10 a copy of a police report lodged on 14 April 2008 by one Datuk Hj. Ahmad Ghazi bin Hj. Abdul Hamid, who is known to me personally. I verily believe he is 65 years old and an active co-operator of more than 40 years standing. In the report, he states that the entire cooperative movement was kept in the dark on these offending provisions of the said two Acts.

20. I verily believe there has been a groundswell of opposition to these amendments once their full effect became known, and that the co-operative movement is shocked and dismayed at these draconian provisions stifling their freedoms.

20.1. I attach as exhibit P-11 a copy of a letter dated 7 January 2008 to ANGKASA from the Midlands Cooperative Union, which represents 39 cooperative societies, querying as to whether ANGKASA had met any party with reference to the establishment of the 3rd Defendant and referring to the Article in the Pelancar October 2007 issue.

20.2. I attach as exhibit P-12 as a bundle a copy of a letter dated 19 June 2008 from the Midlands Cooperative Union and sent to Y.M. Professor Ungku Aziz requesting him to state when ANGKASA consulted co-operative societies on these amendments and a copy of a reply dated 2 July 2008 failing to answer the query.

20.3. I verily believe that the Cooperative Union of Malaysia Berhad, which currently represents 4 cooperative societies, fully supports this action and has joined forces with the Midlands Cooperative Union to protest against the unconstitutional provisions in the two Acts. I attach as exhibit P-13 a copy of a letter dated 13 July 2008 from the Cooperative Union of Malaysia addressed to chairmen of cooperative societies calling upon everyone to support this action and also a copy of their letter dated 15th August 2008 to the 2nd Defendant objecting to these amendments with a resolution from a Workshop of co-operatives fully supporting the Plaintiff's legal action herein.

21. I attach as exhibit P-14 as a bundle documents shown in the “Pelancar” magazine of June 2008 relating to a dispute within the Board of ANGKASA which resulted in a majority of the Board terminating Y.M. Professor Ungku Aziz as Chairman of ANGKASA, and a decision by Dato Mangsor bin Saad, the chief executive officer of the 3rd defendant and the deponent of the affidavit in reply, reinstating Y.M. Professor Ungku Aziz.

21.1. I verily believe that Dato Mangsor bin Saad the Chief Executive Officer of the 3rd Defendant acted in bad faith, in conflict of interest and unlawfully in adjudicating the dispute between Y.M. Professor Ungku Aziz and the board members of ANGKASA purportedly under sections 62 and 64 of the Co-operative Societies Act 1993 and in reinstating Y.M. Professor Ungku Aziz.

21.2. I am advised by the Plaintiff’s solicitors and I verily believe that such a dispute more properly ought to have been adjudicated by the Cooperative Societies Tribunal pursuant to section 83 of the Co-operative Societies Act 1993 which is an independent tribunal which took over the duties of the Registrar General of Cooperatives to adjudicate such disputes.

21.3. I verily believe that one of the 7 charges against Y.M. Professor Ungku Aziz made by 9 out of 14 Board Members of ANGKASA was that Y. M. Professor Ungku Aziz failed to voice out and defend the interests of co-operatives in the drafting of the Co-operatives Commission Act whilst acknowledging that ANGKASA had never organised any discussion with its members relating to the establishment of the 3rd Defendant and the drafting of the Act.

21.4. I verily believe Dato Mangsor bin Saad’s conduct in exercising powers in excess of his jurisdiction in a matter in which he was implicated gives an indication that the Malaysia Cooperative Societies Commission is moving from the outset in the wrong direction.

22. I am advised by the Plaintiff’s solicitors and I verily believe that undefined powers given to government controlled corporations will promote despotism. I verily believe that the public will be left unprotected when the despot is not entirely benevolent. I verily believe that there is no substitute for the checks and balances as provided for and as required by the Federal Constitution.

23. I verily believe that Dato’ Mangsor Bin Saad who affirmed the affidavit under reply dated 9 July 2008 was formerly the Secretary General of the Ministry of Industrial Development and Cooperatives. I verily believe that he was fully aware or ought to be fully aware that the proposed two Acts were not distributed to all cooperative societies for comment but Dato’ Mangsor has affirmed an affidavit giving the impression that the offending provisions of the two Acts were agreed to by all cooperatives. Alleged liquidity problems of certain co-operatives

24. I crave leave to refer to Dato’ Mangsor Bin Saad’s averments to the effect that these offending provisions are necessary to remove the incidence of liquidity problems faced by cooperatives societies in the 1980s and in 1998.25. I verily believe that it is common knowledge that the recession in 1985 and the Asian Financial Crisis in 1997/1998 affected all sectors of the economy and not merely cooperative societies.

25.1. I verily believe that licensed banks, listed public companies, finance companies, private limited companies and even small registered businesses were all badly affected by the said 1985 recession and the 1997 Asian Financial Crisis. I verily believe that the Government in Malaysia as well as other countries that were affected had to take measures to assist enterprises in crisis because of the general economic downturn in those two periods. I verily believe this assistance was rendered even to licensed Banks, licensed Finance Companies and Government linked corporations.

25.2. It is not fair because of the recession in 1985 and the Asian Financial Crisis in 1997/1998 now to single out cooperative societies to be subjected to laws which are on the face of it, draconian, which will curb their enterprise and deprive them and their members of their money at the whims and fancies of persons in control of the defendants utilizing their unlimited powers given by the provisions now being challenged in this action.

26. I crave leave to refer to the newspaper article dated 1 January 2008 attached as exhibit DM-4 to the affidavit under reply. I verily believe that the said newspaper article does not state the name of the author and it is more in the nature of an advertisement for the Malaysia Cooperative Societies Commission the 3rd Defendant.
Mismanagement by a few no reason to infringe liberties of the many

27. I aver that there are sufficient safeguards which are constitutional within the Co-operative Societies Act 1993 which if properly utilized will protect members of co-operative societies from mismanagement.

28. I verily believe that the Bank Negara Malaysia’s audit of the accounts of 13 cooperatives in 2004 showing that the accounts of 10 cooperatives were unsatisfactory or very unsatisfactory does not justify breaches of the Federal Constitution. I verily believe that under powers contained in Section 71 of the Cooperative Societies Act 1993 the Registrar-General of Cooperatives ought to have dissolved those cooperative societies whose accounts were unsatisfactorily kept. I verily believe that the officers who were responsible for the maintenances of such unsatisfactorily maintained funds ought to have been charged in court. I verily believe that no such action was taken. I verily believe that it is not proper to castigate cooperative societies as a whole because of the state of a few.

29. I verily believe that exhibit DM-5 in the affidavit under reply shows that 3 cooperative societies’ accounts were very unsatisfactory in the year 2003. I verily believe that the affidavit does not say what action was taken against those cooperative societies. I verily believe that these 3 cooperative societies have not to this day been liquidated by the 2nd or 4th Defendant through the Registrar-General of Cooperatives under his powers in Section 71 of the Cooperative Societies Act 1993 nor were their officers charged in court. I verily believe that if existing laws are not properly enforced further unconstitutional laws will not help at all.
Bank Rakyat & CCB

30. I verily believe in the same said newspaper article the crisis in Bank Kerjasama Rakyat (Bank Rakyat) in 1978 and the financial crisis in Bank Pusat Kerjasama (CCB) in 1985 are incorrectly lumped together as if they were similar instances of mismanagement.

31. I verily believe that it is public knowledge that in the case of Bank Rakyat there was criminal breach of trust and its managing director one Dato Abu Mansor was convicted and served a prison sentence.

32. I verily believe that in the case of Bank Pusat Kerjasama (CCB) there was no mismanagement. The said Bank Pusat Kerjasama was affected by the recession in 1985. I verily believe that there was no evidence of financial mismanagement of CCB at all whatsoever. I verily believe that the Government and Bank Negara Malaysia were unable to identify any instance of criminal breach of trust or any similar misconduct in CCB at all.

ANGKASA

33. I verily believe and reiterate what I stated earlier that ANGKASA has not acted as a representative of cooperative societies in the country. I verily believe that if ANGKASA is indeed a body representing cooperative societies in this country ANGKASA totally failed to assist numerous cooperative societies who had invested money in and who were shareholders in CCB.

34. From my recollection, from information in the Plaintiff records and from my conversations with other co-operators aver that in 1985 CCB had very large sums of money owing to it payable in monthly instalments over several years. I verily believe that there was more money owing to CCB than money owing by CCB to others. I verily believe that despite this, after substantially settling depositors and when the recession had cleared, Bank Negara Malaysia assigned the business of CCB to Phileo Allied Bank Berhad, a corporation which is not a cooperative society, leaving high and dry the shareholders of CCB most of whom were cooperative societies.

35. I verily believe that ANGKASA (if it in fact “represented “cooperative societies) did nothing whatsoever at all and could do nothing at all to prevent cooperative societies who were shareholders in CCB losing the whole of their investments running into millions of Ringgit in CCB.

36. I verily believe that when ANGKASA was originally formed the idea was that it would look after and represent the interests of rural cooperatives in addition to urban cooperatives. I verily believe that sometime in 1972 or thereabouts when ANGKASA was formed, it was intended to neutralize the Cooperative Union of Malaya which at that time represented cooperative societies in the country to promote the interests of cooperative societies and to make representations to the Government from time to time on matters relating to cooperative societies. The Cooperative Union of Malaya had no other function and was a force to be reckoned with, perhaps, I verily believe to a discomforting extent for the authorities then.

37. I verily believe that ANGKASA was thereafter given a sort of licence by the authorities to receive deductions from the salaries of members of any cooperative society and to pay the money so received to that cooperative society in consideration of payment to ANGKASA of a commission of 1% of the receipts. Such commissions were deducted by ANGKASA from the salary deduction at the expenses of the cooperative society to whom the salary deductions amount was payable as a loan instalment repayment. This commission was a substantial sum when lumped up altogether. I verily believe with the increase in cooperative societies using this facility the commission is now reduced to 0.6%. This is also a substantial income for ANGKASA. I attach as exhibit P-15 a copy of the audited income and expenditure of ANGKASA for the year ending 30 June 2007 showing about RM44,000,000.00 as substantially the commission income of ANGKASA from these salary deductions. I verily believe ANGKASA was wholly spending the money that they were collecting and did not act as a representative of the cooperative societies at all.

38. I verily believe that up to that time salary deductions were made by employers in accordance with the provisions of Section 24(3) (a) in the Employment Act 1955 permitting such deductions from salaries and the employers paid such deductions directly to the cooperative society to whom that deduction was owing without payment of any commission to a third party. I am advised by the Plaintiff’s solicitors and I verily believe that except as permitted by Section 24 of the Employment Act 1955 deductions cannot be made by employers from salaries of employees.

39. I verily believe that since then almost entirely the only business of ANGKASA has been to receive such loan deductions and to distribute them. I verily believe that ANGKASA also organises some courses, seminars and conferences. I verily believe that this is a duplication of the function, of the Cooperative College of Malaysia in Petaling Jaya which, as its sole function organises courses in cooperative enterprise. I verily believe that these courses, seminars and conferences organised by ANGKASA are usually poorly attended although large sums are expended in organising them.

40. I attach as exhibit P-16, P-17 and P-18 one set each of the annual reports of the national executive council of ANGKASA for 3 consecutive years showing their activities for the year 1 July 2006 to 30 June 2007, for the year 1 July 2005 to 30 June 2006 and for the year 1 July 2004 to 30 June 2005 respectively which I verily believe show that ANGKASA never made any representations whatsoever at all to the Government or to any party at all whatsoever on behalf of cooperative societies in the country. I verily believe that for as long as I am aware ANGKASA never considered it their function to ascertain problems of cooperative societies to make any representations on their behalf at all.

41. I am advised by the Plaintiff’s solicitors and I verily believe that the gazette notification published by the 2nd Defendant shown in exhibit DM-2 in the affidavit under reply stating that ANGKASA is the body representing cooperative societies is only for the limited purpose of Section 57 (2) (b) of the Co-operative Societies Act 1993 and does not authorise ANGKASA to make representations on behalf of the Plaintiff to agree to unconstitutional measures. I verily believe that unless ANGKASA is in communication with all cooperative societies on different issues and they make representations on behalf of cooperative societies in times of need ANGKASA cannot be considered at all to be both in fact and in law a true representative of cooperative societies on all matters. I verily believe that it is for cooperative societies to declare that ANGKASA is authorised by them to represent cooperative societies and not for the Government to do so.

Banks are different compared to co-operative societies

42. I verily believe that the provision requiring persons wishing to be appointed as directors of licensed financial institutions to first seek the approval of Bank Negara Malaysia should not be a precedent for requiring persons elected to the board of cooperative societies to be approved by the Malaysia Cooperative Societies Commission.

43. I am advised by the Plaintiff’s solicitors and I verily believe that the provisions in the Banking and Financial Institutions Act 1989 when read as a whole are materially different to the impugned provisions in the amended Co-operative Societies Act 1993.

44. I verily believe that licensed banks take deposits from members of the public whereas cooperative societies only deal with their own members.

45. I verily believe that currently all cooperative societies have by-laws approved by the Registrar General of Cooperatives. Unfit persons are already excluded by provisions in the by-laws disqualifying members not in benefit, members previously expelled from other cooperative societies within the preceding two years and members who are in default of their dues. I verily believe that such provisions if strictly enforced are already sufficient to ensure transparency and good management

46. I verily believe that there are only a few licensed banks in the country whereas there are 5,170 cooperative societies. On an average of 12 members in the board of each cooperative society the Malaysian Cooperative Societies Commissions will have to vet about 62,040 ordinary people each year to ascertain who are fit to serve in the board and who are not.

47. Members of cooperative societies are by and large ordinary people. I verily believe that submitting names of ordinary people to the Malaysia Cooperative Societies Commission for their approval before such ordinary people take office to manage their own funds is a severe interference with the rights of ordinary people to assemble and associate for their mutual benefit. I verily believe that with ordinary people as members of cooperative societies there is a real danger that the Malaysia Cooperative Societies Commission will not be likely to consider ordinary persons who oppose the Commission’s decisions as fit persons to serve in the board of any cooperative society.

48. I aver that the said offending amendment requiring the Commission to certify elected representatives to be fit persons does not fit Abraham Lincoln’s definition of a democratic system as being Government “of the people, for the people, by the people”.

Too much potential for abuse

49. I verily believe that the initial action of the Defendants foretell the future of the Malaysia Cooperative Societies Commission. I verily believe that Dato’ Mangsor Bin Saad, when he was Secretary General of the 3rd Defendant, the Ministry of Industrial Development and Cooperatives, had previously while in service studied and put up proposals and approved the setting up of the Malaysia Cooperative Societies Commission and approved the funds to be paid for the said purpose. I verily believe that he has been now appointed the executive chairman of the Malaysia Cooperative Societies Commission. I verily believe that there is a likelihood that there may have been a lack of detachment previously in the said administrative decisions. I am advised by the Plaintiff’s solicitors that for good Government the Federal Constitution envisages and provides for an independent civil service who have to be detached from politicians when carrying out and implementing policies for the common good.

50. I verily believe that cooperative societies develop out of the self-help motives of its members and should not be used or abused for political purposes, but the provisions of the two Acts leave it open to such abuse.

50.1. I attach herewith as exhibit P-19 a copy of newspaper reports in both the Berita Harian and New Straits Times of 6-7-2008 showing that a sum of RM30,000,000.00 from the Malaysia Cooperative Societies Commission will be distributed by state assemblymen in consultation with local cooperative department officers to the “poor”. I verily believe that this shows that the Malaysia Cooperative Societies Commission is likely to be used as an engine to promote the popularity of politicians.

50.2. I attach as exhibit P-20 another report dated September 2007 but only now shown to me which shows in page 8 and 9 that this allocation has been increased to RM69.5 million. I verily believe this increased allocation will be used for political purposes and not to promote cooperative societies which are always based on contributions from its own members and based on their use of such funds for their mutual benefit.

51. I verily believe that this same principle will be used to give out loans and give out doles from the collection from cooperative societies paid to the Central Liquidity Fund and the Cooperative Deposit Account which will be totally under the control of the officers of the Malaysia Cooperative Societies Commission and politicians without any benefit whatsoever to the cooperative societies from whom the money is compelled to be paid out to the two funds.
Provisions clearly inconsistent with Federal Constitution

52. I verily believe that the offending provisions of the said two Acts for contribution to the Cooperative Deposit Account and Central Liquidity Fund have the effect of stripping cooperative societies and their members of control over their own money or part thereof and their management of it without the need under Article 13 of the Federal Constitution to give adequate compensation to the said cooperative societies for the use of such funds.

53. I verily believe that making every single offence under the Malaysia Cooperative Societies Commission Act 2007 and the Cooperative Societies Act 1993 as seizable without regard to the severity of the offence or offences, is both draconian and contrary to the Federal Constitution. I verily believe that it will give the Malaysia Cooperative Societies Commission and politicians enormous, and in situations absolute powers not only over the funds of members in cooperative societies but also over the person and personal liberty of ordinary people who join cooperative societies and who serve as officers in cooperative societies. I verily believe that the said provisions can be used or abused to frighten or terrorise innocent members of cooperative societies to submit to various unconstitutional demands of the Malaysia Cooperative Societies Commission.

54. I verily believe that there is a degree of confusion on the part of the Defendants. On the one hand Dato’ Mangsor Bin Saad quotes figures to show that cooperatives societies are badly managed but on the other hand the Defendants have announced in their newspaper reports that they want to increase the number of cooperative societies from 5,170 societies to 10,000 societies by 2013 as shown in exhibit P-19 above.

55. I am advised by the Plaintiff’s solicitors and I verily believe that while Parliament has powers to make laws on cooperative societies, under the Federal Constitution such laws must be consistent with all the provisions of the Federal Constitution.

56. I ask that the fact that the Malaysia Cooperative Societies Commission has already started functioning should not be held against the Plaintiffs. This is because I am advised that the Plaintiff’s solicitors were prepared to proceed on 18-3-2008 and 20-6-2008 when this matter came up for hearing but on both dates counsel appointed by the Defendants asked for adjournments to prepare and file an Affidavit In Reply which said affidavit was only served on the very morning of 11-7-2008 when the action came up for mention. I verily believe that during this time the 3rd defendant carried on functioning despite matters pending before this Honourable Court.

57. I ask that the affidavits filed herein be read in open court and arguments be held in open court because cooperative societies and all their members will be affected by and are interested in these proceedings.

Affirmed by the deponent named above


Before me,


Commissioner for Oaths