OPTIMISTICALLY CAUTIOUS By ERROL OH
Here are some important reminders of our business history
IT'S
clear of late that
Malaysia has an awkward relationship with its past.
Controversy after controversy have shown that it's hard for us to agree
on the facts and interpretation that form a widely accepted version of
our history, or indeed, on what separates historical facts from mere
stories.
This is troubling. George Santayana was a philosopher,
essayist, poet and novelist, but if he is to be universally noted for
just one thing, it should perhaps be for the fact that he wrote this:
“Those who cannot remember the past are condemned to repeat it.”
Try arguing against that.
What's
more worrying is that there's no collective effort by corporate
Malaysia to enrich what we know about the pivotal developments in the
country's business landscape. Key documents, publications and other
forms of information from companies should be aggregated, organised and
presented to a broad audience.
In other words, we should have a Museum of Corporate Knowledge. As a bonus, it has an easy-to-remember acronym
Muck.
Of
course, it ought to have features you would find in any other top-notch
museum, such as objects of great significance, dioramas, interactive
displays, and narratives.
Considering that corporate Malaysia is
well over a century old the
Companies Commission of Malaysia's origins
go back to the late 19th century a major challenge is to select the
people and events that deserve to be showcased in Muck.
And after
that task has been completed, there's the equally difficult job of
designing exhibits that best tell the story behind each choice. Some
suggestions:
The power of no power
The story: Lightning
struck a transmission facility on Sept 29, 1992, causing a blackout
throughout Peninsular Malaysia. It took 48 hours to fully restore
electricity supply. The incident prompted the Government to allow others
to enter the business of generating power, until then the monopoly of
Tenaga Nasional Bhd (TNB).
This paved the way for the birth of the independent power producers (IPPs).
Six months after the blackout, TNB signed a 21-year power purchase agreement (PPAs) with
YTL Corp Bhd.
Four more PPAs were inked in 1993. These early PPAs are highly
lucrative, to the point that they were regarded as lopsided in favour of
the IPPs.
The terms of subsequent PPAs were less generous, but
the structure of the IPP programme has proven to be less than ideal
because of the strain on TNB. Attempts to renegotiate the
first-generation PPAs have failed.
The exhibit: The TNB equipment
damaged by the September 1992 lightning strike. This serves to remind
us of how an act of God can have far-reaching consequences.
AirAsia's transformation
The story: On Sept 5, 2001,
DRB-Hicom Bhd agreed to sell its 99.25% stake in
AirAsia Sdn Bhd to
Tune Air Sdn Bhd
for RM1 cash and the assumption of half of AirAsia's liabilities. Back
then, AirAsia was making losses and was weighed downs by debts. The
transaction was completed three months later.
Founded by
Tan Sri Tony Fernandes,
Datuk Kamarudin Meranun,
Datuk Aziz Bakar and
Datuk Pahamin Ab Rajab, Tune Air relaunched AirAsia as a low-fare carrier. Now listed on
Bursa Malaysia, the airline has famously changed the region's aviation and travel industries.
The
exhibit: If Tune Air had paid for the acquisition with a RM1 banknote,
let's hope somebody has kept it as a souvenir and is willing to donate
it to Muck. Framed and displayed prominently, it makes a great symbol of
entrepreneurial vision and drive.
Kenmark scandal
The story: Furniture manufacturer
Kenmark Industrial Co (M) Bhd announced on May 31, 2010, that its quarterly results were delayed because, among other things,
managing director James Hwang had gone missing. At the same time, the company was classified a PN17 stock because of loan default by a subsidiary.
The next day, businessman
Datuk Ishak Ismail
emerged as a substantial shareholder, and new directors of Kenmark were
appointed. It was also around that time that the company released a
letter and a press statement purportedly from Hwang, explaining his
absence (supposedly due to illness) and promising that he would return
to Malaysia. The share price rebounded strongly.
A week later,
Ishak started selling his shares and soon ceased to be a substantial
shareholder. The stock plunged again and this time, there was no
reversal.
Kenmark was delisted on Dec 31, 2010. It appears that
Hwang has not come back to Malaysia until today. The Securities
Commission (SC) has initiated civil action against Ishak for insider
trading and for making false or misleading statements.
The
exhibit: Hwang's letter and press statement dated June 2, 2010, that
were emailed to Kenmark's independent directors. These were instrumental
in convincing people that it wouldn't be long before the company's woes
were over.
Transmile fraud
The story: When
Transmile Group Bhd
was delisted in May last year, it marked the conclusion to a
spectacular corporate flop. The air cargo company was once considered a
top stock pick, mainly because it was part of
Robert Kuok's empire and
was poised to grow rapidly in tandem with Asia's trade boom.
The
first sign of trouble surfaced in April 2007, when it missed the
deadline for submitting its audited 2006 accounts. A special audit
commissioned by the board of directors uncovered shocking
irregularities. The company's revenue from 2004 to 2006 was overstated
by hundreds of millions of ringgit. The audited shareholders' fund as at
December 2006 was 55% less than the unaudited figure announced earlier.
Transmile took too long to get out of PN17 status and was booted out by the stock exchange.
In July 2007, the SC charged three Transmile senior executives, including
CEO Gan Boon Aun, for abetting the company in making misleading statements. I
n
November the same year, two former independent directors and audit
committee members were charged for authorising the furnishing of a
misleading statement to Bursa Malaysia.
The two ex-independent directors were found guilty in October last year and were jailed and fined. Gan's trial is ongoing.
The
exhibit: Altimeter from one of the Transmile planes. The instrument for
measuring altitude is a great representation of the ups and downs in
the stock market. At its height, the Transmile share price reached
RM14.40. It had been trading at less than 10 sen before its suspension
and subsequent delisting.
Executive editor Errol Oh believes
that when we know our follies may be put on public display, we're likely
to be more careful and responsible.
Related post:
Malaysian History & Legend; facts & fallacies; myths, heroes or zeroes?