Ahad, 24 Jun 2012

Philosophy Politics Economics

Philosophy Politics Economics

Tan Sri Syed Mokhtar's Empire Built on RM34.3 Billion Debt

Posted: 22 Jun 2012 10:07 AM PDT

In 1998, the Asian Financial crisis precipitated the collapse of UMNO crony company, Renong Bhd.  Renong which had debts in excess of RM20 billion, or approximately 7% of all loans in the banking system then, went bankrupt under the weight of its debt.  It caused hundreds of millions in losses to investors, the collapse of the stock market index and triggered a RM10 billion bailout of the company.  Renong was one of the largest and favoured conglomerates by the BN government with interests in highways (PLUS, UEM, Linkedua), rail (KTM, Putra LRT), property, telecommunications (TIME) and a whole host of other companies.

Fast forward 14 years later, we now have Tan Sri Syed Mokhtar Al-Bukhary's group of companies which have a combined debt of RM34.3 billion or more than 10% of all local currency outstanding corporate bonds as at 2011.  These companies have an estimated total cash and cash equivalents of RM7.8 billion as at May 2012.

Hence the debt far exceeds that of Renong's, causing genuine fears that a repeat of the crisis requiring monster bailouts with tax-payers' funds.  This fear is especially real in the light of a global economic slowdown and a fallout from the Eurozone financial crisis.

Tan Sri Syed Mokhtar's empire spans across scores of companies and industries, which are generally held under 4 listed entities.  The largest of them is the 51.8%-owned MMC Corporation Bhd whose group alone has outstanding debt of RM24.2 billion.  The key subsidiaries of MMC Corporation are Malakoff Corporation, Gas Malaysia, Aliran Ihsan Resources (water utility company), Port of Tanjong Pelepas, Johor Port, Senai Airport Terminal Services, SMART Tunnel and the MMC-Gamuda joint ventures.

His second largest entity is the 55.9%-owned DRB-Hicom Bhd which has debt of RM5.7 billion, inclusive of the most recent RM3.0 billion debt raised to acquire Proton Bhd.  The other companies of the group are Edaran Otomobil Nasional, MODENAS, Honda Malaysia, Bank Muamalat, PUSPAKOM, Alam Flora, POS Malaysia, Defence Technologies and several property development companies.

The third entity is 43.0%-owned Tradewinds (M) Bhd which has debt of RM3.48 billion.  It owns BERNAS which has a monopoly of rice purchase, import and distribution in Malaysia, Central Sugar Refinery and smaller stakes in Malaysian Sugar Manufacturing Bhd which together monopolises the Malaysian sugar market, and Tradewinds Plantations.

The final entity is 71.5%-owned Tradewinds Corporation Bhd which has debt of RM890 million. Tradewinds Corporation runs several major hotel chains in Malaysia, including Crowne Plaza Mutiara Kuala Lumpur, Hilton Kuching and Petaling Jaya and Hotel Istana.

Despite the expansiveness of his empire, and the load of his debt holdings, the Prime Ministers' Department has just confirmed the privatisation of Penang Port to him.  With no details yet available, the acquisition will certainly require him to raise possible several billions of additional debt to fund the exercise.  What's more, it has been widely rumoured that Tan Sri Syed Mokhtar is also leading the race to acquire Port Klang (Northport Holdings) as well as KTM Berhad.

The Government must explain the measures which are being taken to ensure that a repeat of the 1998 financial crisis will be avoided at all cost.  The Ministry of Finance must make available data on how much our financial institutions, statutory bodies such as the Employees Provident Fund (EPF), Civil Service Retirement Fund (KWAP), Tabung Haji Fund and Armed Forces Fund (LTAT). In addition, we call upon the Government to assure the Malaysian tax-payers that in the event of default, the rakyat's monies will once again not be made to pay for the follies of Barisan Nasional cronies.

Crime Statistics: 1 Question, 3 Answers

Posted: 21 Jun 2012 10:02 AM PDT



Home Ministry's third boo-boo over crime rate?
S Pathmawathy
1:46PM Jun 21, 2012

Selangor's actual crime data is under scrutiny after it was pointed out that the Home Ministry has given three conflicting sets of figures for the crime rate in 2009.

Petaling Jaya Utara MP Tony Pua said he received a written parliamentary reply in 2010, which states the total crime cases in Selangor as 54,443 for 2009.

Two days ago, Pua received a written reply to a similar question, which had sought a detailed breakdown - by type and district - on crime in Selangor, which was stated as 56,689 cases.

Pua then held a press conference to complain about the vague details in the reply and claimed that it does not show that the war against crime was succeeding.

Yesterday, Home Ministry secretary-general Abdul Rahim Mohamad Radzi withdrew the written reply to Pua and revised the 2009 crime figure to 54,994.

Rahim had claimed that the written reply contained a "typographical" error.

'Correction sent out on Monday'

According to the secretary-general, the new figures show a 19.4 percent drop in Selangor's crime rate since 2009, and a 24.7 percent drop nationwide.

Rahim also said that the correction was sent to Parliament on Monday for Pua's reference, a day before the media conference, but Pua said nothing had been placed on his desk.

"Are these figures adapted as and when the ministry wants to adapt them? If they are genuine about the crime statistics, they should publish all breakdowns as requested," Pua hit out.

He had earlier complained that the ministry had not been forthcoming with the thorough statistics since 2010, when the National Key Results Area (NKRA) on crime prevention under the Government Transformation Progamme was announced.

Prior to that, there had never been a problem in getting statistics on the rise or reduction of crime rates, he said.

Insisting that crime prevention "warrants serious attention" from the authorities, Pua urged the government to release the complete breakdown on crime in the country.

"If they are really proud that crime has been reduced by 20, 30 or 40 percent, then they should not hesitate to publish the results," he added.

BAFIA Breach - Bank Negara in Denial?

Posted: 20 Jun 2012 10:05 AM PDT

The Malay Mail carried the front page story on Monday 18 June that local banks are disposing of their non-performing loans (NPLs) or bad debts to companies owned by foreign entities.  Under the Banking & Financial Institutions Act 1989 (BAFIA), "banks can only sell to locally incorporated companies which the purchaser is majority owned by domestic shareholders as the purchaser is subject to a foreign equity ap of 49%".

The Bank Negara (BNM) has chosen to issue a flat denial to the report claiming it was "inaccurate and misleading".

BNM statement said that "banking institutions can dispose of their NPLs as part of the bank's risk management practice.  Disposal of NPLs provides the flexibility for banks to manage their loan portfolios effectively and efficiently to maximize recovery to protect depositors' interest. Any  recovery action must be in accordance with the law."

However, in today's Malay Mail frontpage report, evidence was provided of several such companies who bought NPLs from local financial institutions where it is clear that the ownership breached the 49% limit.  Sinesinga Sdn Bhd for example, is 75% owned by Standard Bank London Holdings PLC.  Similarly, another company, Resolution Alliance Sdn Bhd is 55% owned by Standard Chartered Bank (Hong Kong) Limited.  What's more, all 3 directors of Resolution Alliance are foreigners.

When posed these questions during the Supplementary Budget Bill 2012 debate yesterday, the Deputy Finance Minister Datuk Seri Dr Awang Adek refuses to give a straight answer as to whether the BAFIA has been breached, and was only willing to repeatedly emphasize "in his experience as an ex-Bank Negara official… I am confident ("yakin") all necessary approvals would have been obtained by the local financial institutions from Bank Negara, because they would not act otherwise".

Despite the seriousness of the matter, which has been reported since Monday, the Finance Ministry is obviously still completely clueless over the matter.  In fact, there are even questions as to whether the above companies who are acting as debt collecting agencies are in fact licensed to do so in Malaysia.

What is worse is the accusation by The Malay Mail in its Monday report that "a foreigner, who is the son in-law of a prominent local banker, owns the majority of shares in one such debt collection agency, which had procured a vesting order from a premier locally based foreign bank."

The above raises the issue of serious conflict of interest, criminal breach of trust and even fraud and must be investigated by the relevant authorities.  Such incidences jeopardises the integrity of our financial institutions and the trust investors and consumers place in our banking system.  It also raises the question as to whether BNM is willing to act independently and expediently without fear or favour, or would it prefer to get cosy and collude with the movers-and-shakers of the local banks.

BNM must not sweep the issue under the carpet while the Finance Ministry cannot come to Parliament completely clueless and ignorant.
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