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Monday, August 13, 2012

Get married and have babies, LKY to Singaporeans!

Migrants are a temporary solution, in the long term, mindsets must change, former PM says




Singaporeans need to marry and have children if they do not want the country to fold up, Mr Lee Kuan Yew warned on Saturday night.

In his annual National Day dinner speech to residents of Tanjong Pagar GRC and Tiong Bahru, Mr Lee kept his message on population simple: The country's citizens are not reproducing enough, and migrants are needed as a temporary solution.

But in the long run, mindsets must change, and the trend of declining birth rates needs to be reversed.

"If we go on like that, this place will fold up because there will be no original citizens left to form the majority," he said.

|And we cannot have new citizens, new PRs to settle our social ethos, our social spirit, our social norms,” he said, noting that Chinese reproduction rate is now at 1.08, Indians at 1.09 and Malays at 1.64.

“So my message is a simple one. The answer is very difficult but the problems, if we don’t find the answers, are enormous,” he added.

Lee acknowledged the pivotal role that work permit holders have played in building Singapore’s infrastructure, and the contribution of permanent residents, without which he said the country’s population would be older, smaller and would lose vitality.

Further, he noted that in the long term, Singapore’s “educated men and women must decide whether to replace themselves in the next generation”. Currently, 31 per cent of women and 41 per cent of men are choosing not to do so, he noted.

“But we’ve got to persuade people to understand that getting married is important, having children is important,” he said. “Do we want to replace ourselves or do we want to shrink and get older and be replaced by migrants and work permit holders? That’s the simple question.”

MSF to tackle problem: Chan Chun Sing

Responding to Lee’s call for solutions to Singapore’s citizen population crunch, current acting Minister for Community Development, Youth and Sports Chan Chun Sing, who will be taking on the newly-established Ministry of Social and Family development (MSF), said the latter will pursue efforts to encourage younger Singaporeans get married and start families earlier.

Speaking to reporters on the sidelines of the same event, Chan acknowledged that the issues are “challenges that cut across different ministries”, and said there are two aspects to the population situation — material and economic, which the government will work on, reported Channel NewsAsia.

“But like what Mr Lee said, the most important aspect has to do with the less tangible... (what) we value as a society — the institution of the family,” he said as quoted by the media outlet. “How do we see the institution, and the family... these are things we really need to work on as a society because it concerns our common future.”

- The Straits Times/Asia News Network

Malaysia's loan growth strong in sight

Analysts still bullish on strong loan expansion

PETALING JAYA: Despite slower banking loan growth indicators for June, analysts and industry observers are still bullish of a double-digit loan growth this year.

 Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias said on the whole, the rating agency still foresee a relatively strong expansion in loans this year, notwithstanding the recent dip in loan applications and approvals.

Strong corporate demand would likely offset the moderation in household demand for loans, he said, adding that the agency envisaged loan growth to moderate slightly to about 10% to 11% this year amid the weaknesses in the external environment.

<B>Nor Zahidi:</B> “Loans have expanded at a relatively strong pace.’ Nor Zahidi:Loans have expanded at a relatively strong pace.’
“The banking sector's loan growth has remained resilient despite a slowdown in the country's economic activity as reflected in slower GDP growth in the past few quarters. Overall, loans have expanded by double-digit rates in the first six months of the year, after reaching the peak of 13.8% in September 2011.

“At the end of June, loans expanded at a relatively strong pace of 12.6%, supported by strong corporate demand for loans which grew by 13.6% year-on-year, offsetting the slower pace of loans to the household sector. Household sector's loan growth had softened to 11.8% in June from a cyclical high of 13.9% in November 2010, Nor Zahidi told StarBiz.

Based on Bank Negara's latest banking statistics for June 2012, loan growth was stable at 12.6% year-on-year versus 12.5% in May the same year. The growth was slightly higher for both consumer and business loans at 11.8% and 13.6%, respectively, in June.

The growth in loan applications moderated from 15.1% in May to 10.5% in June, while approvals contracted by 2.1% year-on-year, versus an increase of 18.2% in May. On an annualised basis, loans grew by 12.7% in June compared with 11.4% in May.

The pace of loan applications and approvals has been volatile partly due to the responsible lending guidelines. In the first six months of this year, the average growth in loan applications fell to 14.9% year-on-year compared with an average expansion of 25.5% recorded in the similar period last year. The average growth rate in loan approvals during the period shrunk to 2.8% against 22.6% average expansion in the first half of last year.

RAM Ratings head of financial institution ratings Wong Yin Ching said the total banking system's year-to-date loan growth was 6.4% in the first half compared with 13.6% for the whole of last year, adding that the growth was driven by lending for purchase of residential properties, working-capital financing, as well as financing for purchase of non-residential properties.

“We expect the growth momentum to be sustained in the second half of this year supported by stronger financing demand from the corporate and commercial sector, as the rollout of projects under the Economic Transformation Programme (ETP) and 10th Malaysia Plan gradually gains traction. In recent months, we have observed a pick-up in loan applications from the business and services sectors,” she noted.

Wong expects household loan growth to moderate following the various prudential measures introduced since late 2010. To this end, she said it had seen a sharp slowdown in loans extended for personal use, which only grew by 3.2% in the first half of 2011 (full-year: 20.1%).

Loan growth for residential mortgages also moderated slightly to 6.3% in the first half of 2011 (full-year: 13.2%). She said the rating agency also noted a slight shift towards lending for the purchase of non-residential properties following the tighter criteria for residential property financing.

Meanwhile, Alliance Research Cheah King Yoong said the brokerage was maintaining its forecast of 11 % domestic loan growth this year, for now. Nonetheless, he said it foresaw there was increasing likelihood of an upside risk to its 11% domestic loan growth forecast in view of the strong pick-up of loans in June.

Should the loan growth momentum continue to be sustained in the second half with ETP related loans gaining pace, Cheah added he would not be surprised if this year loan growth could match last year's growth of 13.6%.

Based on the latest statistics, although property loans remained the key driver, where loans to purchase residential and non-residential properties constitute 46% of the annualised 12.7% loan growth for June, he said loans for “other purpose” and working capital had been gathering pace, contributing 28.8% and 22.3% of the loan growth drivers respectively.

He said business loans had recorded a commendable annualised growth of 15.9%, ahead of household loans' annualised growth rate of 10.1%.

Cheah said this reaffirmed Alliance Research's expectations that despite having a slow start in early 2012, overall domestic lending activities were picking up, with stronger growth of business loans stemming from the roll out of ETP's Entry Point Projects, which filled up the vacuum left by the moderation in property loans.

Kenanga Research said despite the lending indicators showing a slowdown, it still believed loan growth would be able to outperform its industry forecast this year.

“Having already achieved a 12.6% loan growth this month, we believe that the banking industry will be able to outperform our industry loan growth forecast of 11% to 13% despite a slightly weaker set of lending indicators,'' it noted.

A banking analyst with a bank backed brokerage felt it was too premature to indicate whether loan growth for the second half would pick up solely based on slower loan indicators alone. Loan growth may slow down in the second half but much would depend on how the results season pans out, he said, adding that, nonetheless, he still expected loan growth this year to be around 10.5%.

By DALJIT DHESI daljit@thestar.com.my

Sunday, August 12, 2012

Tiger Woods to return to Malaysia in CIMB Classic

Malaysia is set to grab the golfing headlines in October – thanks to the rebranding of the CIMB Classic.


The future of the CIMB Classic looks as good as it could ever be.

DATUK Seri Nazir Razak spoke for just 10 minutes and the function was over in less than 30 minutes, not withstanding this, the quick-do was probably the most significant event for Malaysia, or even the region, in terms of golf, in the past few decades.

In the least, not since the joint-sanctioning of the Malaysian Open by the European and Asian Tours have we witnessed such an important change to the local golf landscape.

No, we’re not talking only about Tiger Woods coming in October for the CIMB Classic, but rather that in 2013 the tournament will become a full-fledged US PGA Tour event, whose winnings will count towards the money list and also carry all-important FedEx Cup points.

Prime Minister Datuk Seri Najib Tun Razak told the function that it has always been his dream to one day see a full-fledged PGA Tour event staged in Malaysia and added that he was grateful to CIMB for making it possible.

The CIMB Classic, as it is now known, will definitely consolidate Malaysia’s standing in global golf and bring the country’s courses into greater focus for the millions of golf tourists around the world.

The prize money in 2013 will be increased to US$7mil (RM21.8mil) and make the CIMB Classic among the richest in the world. At the moment, the tournament with the biggest prize purse in the world is the Players Championship with US$9.5mil.

This is followed by the two WGC (World Golf Championship) events – the Cadillac and the Bridgestone – at US$8.5mil apiece. The four majors (the Masters, US Open, the Open and PGA Championship) and the three FedEx Cup play-off events (The Barclays, Deutche Bank, BMW and Tour Championship) pay out US$8mil each.

There are no PGA Tour events that have prize money of more than US$7mil. Even the WGC-HSBC at Guangzhou’s Mission Hills has an equivalent purse of US$7mil.

The CIMB Classic, a no-cut event, will have 60 PGA Tour players taking part from next year.

By design, the CIMB will precede the WGC-HSBC, event thus offering two hefty paydays for the PGA professionals at the start of the new season format of the US Tour.

Todd Rhinehart, the PGA Tour’s executive director of the CIMB Classic, revealed that the new format would see the golf season start in the fall from next year.

Rhinehart has been brought in specially to run the CIMB Classic – his last job was to organise the season-ending Tour Championship – which decides the FedEx Cup winner.

Another big change to this tournament, besides the name change (it was previously the CIMB Asia Pacific Classic) is that the bank is now dealing with the PGA Tour directly on the event.

As for Tiger’s appearance from Oct 24, it could not have come at a better time.

His last appearance in Malaysia was also at the Mines Resort & Golf Club for the 1999 World Cup.
His return visit and the rebranding of the CIMB Classic comes as we Malaysians have gotten used to the top European names coming to our shores. This year’s event should stir quite a bit of interest.

Between now and October, look out for the various ways and contests to win tickets to watch Tiger and the other PGA Tour players at the Mines.

A point to note, Nazir in his closing remarks jokingly told the audience including, the Prime Minister that he hoped there would not be “any major sporting or political event” during the Oct 24-28 week.

In his reply, Najib said he was looking forward to playing with Tiger in the Pro-Am – provided there was no important events on.

In 1999, when Tiger partnered Mark O’Meara to win the World Cup – it was right in the middle of the campaign period of the GE10.

Let’s hope this time we can watch the CIMB Classic without distraction.

Caddy Master By WONG SAI WAN

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Women driving car market growth

Women seek foreign brand cars for style, performance and confidence boost.


 SEOUL: After years of driving Korean cars, Chung Ji-eun, a 33-year-old businesswoman, recently purchased a Benz C-Class sedan for herself.

“I used to enjoy shopping for European designers’ bags or shoes. But the satisfaction level with the Benz was the highest,” she said.

“I like the luxury design and performance. But, above all, I feel more confident driving alongside the tough male drivers on the road.”

The number of female drivers has surged in Korea since 2000. By the end of 2011, female drivers made up 29.5% of the nation’s drivers, up from 19% 10 years ago.

With their number growing recently, female drivers are expanding their presence in the local car market, especially the market for import car brands that are seeing soaring popularity.


For Korea’s largest car maker Hyundai Motor, 25% of customers are women. At the same time, the figure for import cars is 40% on average.

Hyundai, which claims about 40% of the domestic car market, said it is very difficult to figure out the exact number of female customers in Korea since many of them buy cars in the name of their husband or father.

Thus far, compact cars with cute styles such as Nissan’s Cube and BMW’s Mini have been favoured by female drivers here.

“For all Nissan cars, the male-female ratio is about 6:4. But for the pastel-coloured Cube, the figure is nearly 5:5,” said a Nissan Korea spokesperson.

“I feel the preference of females has become a more important factor in choosing cars (to sell) here.”
According to BMW Korea, the biggest selling foreign brand in Korea, 40% of their customers are also female.

A rising trend is the moderate growth in the number of women choosing sport utility vehicles in recent years, a BMW Korea PR official said.

“The age of our drivers is getting younger and the rate is more aggressive.

“And the number of female SUV drivers is increasing 2% to 3% every year nowadays,” he said.

Of the total BMW SUV drivers, female drivers accounted for 26% in 2011, up from 21% in 2009 and 24% in 2010.

Drivers say import cars are easier for women to drive as most of them are high-performance, luxury vehicles. Of course, the nation’s never-abating appetite for luxury goods may have also affected the growing trend.

Roh Hyun-jung, 50, drives the BMW 5-Series sedan that she bought two years ago on the recommendation of her husband, who still drives a Korean car.

Driving a BMW requires a middle-aged woman like me to spend less energy. The luxurious interior design was also another reason for choosing the car,” she said.

Kim Jeon-kyu, who teaches at a local driver’s training institute, gave an interesting perspective based on a driving culture unique to Korea.

“I sometimes recommend my female students to buy an import car,” he said.

“Female drivers, especially those who have just started driving, are highly likely to be bullied by tough male drivers here. But if you drive a luxury car, they would just avoid you because they are well aware of the high maintenance costs.”

Korea Herald By Lee Ji-Yoon , AsianNewsNetwork

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When the wife is boss

Hubbies fall victim to abuse of high-earning, dominant spouses

PETALING JAYA: Earning less than your wife can be hazardous to your wellbeing as quite a number of men have discovered.

Although incidents of wives abusing husbands rarely appear in the media, the Welfare Department has been receiving cases of men being mistreated by dominant women every year.

Many of the culprits are women who earn more than their spouses.

The Welfare Department received 25 reports from men who were abused by their wives or girlfriends last year, 32 in 2010 and 14 in 2009.

Most cases were reported in Selangor, followed by the Federal Territory, and the offences included threatening injury, causing physical harm, emotional abuse and locking up the men.

The Department of Women Development received four cases of abused men last year, with financial disagreement being the root of all cases.

In each case, “the wife is more dominant in the family and earns a higher income than the husband,” it said in an e-mail.

Women, on the other hand, reported 117 cases of domestic abuse up to June this year, compared to 649 last year and 663 in 2010.

Neuro-psychologist Dr Nivashinie Mohan said that financial stress was the major cause of domestic violence against men.

“Studies have shown that women assault men about as often as men assault women,” she said.

“While men tend to cause more damage because they are usually stronger, women can even the odds with weapons such as knives, high heels and sharp nails.”

Dr Nivashinie said abused men were reluctant to turn to the authorities for fear of appearing “unmanly”.
“Society also teaches men that it's wrong to hit women, so they don't retaliate,” she added.

Many of the women who abused men were alcoholic while some could be suffering from certain personality disorders that cause them to be violent towards their partners.

MCA Public Services and Complaints Department head Datuk Seri Michael Chong said that some women were breadwinners and abused their husbands for “reckless spending”.

He also encountered four cases of wives becoming violent after learning that their spouses had affairs.

Consultant psychiatrist Dr Ting Joe Hang said women might look on spouses who earn less as “useless” and as a result, would abuse them.

He said there may be reasons other than money problems.

Deputy Women, Family and Community Development Minister Datuk Heng Seai Kie said there was no excuse for domestic violence and advised the victims both women and men to contact the Welfare Department or its 104 district offices nationwide or Talian Nur at 15999

By P. ARUNA and YUEN MEIKENG The Star/Asia News Network

US threat: superpower gun barrels pivot east

As US election fever sizzles, pressure mounts to spread the militarist mindset deeper and wider.

African agenda: Clinton (right) visiting a clinic in a suburb of Cape Town. — Reuters

THE heavy-duty globetrotting of Hillary Clinton as US Secretary of State was bound to take in Africa sooner or later. Now it has done so with as much gusto and relish as a new colonial carve-up of the continent.

This was the “dark continent” before it was “discovered” by the white man, before the African could succumb to Western maladies from various illnesses to the “structural adjustments” imposed by Western-controlled multilateral lending agencies.

And Africa today is the continent that Washington sees China moving into. How could the world’s sole superpower let that go unchallenged, particularly when the moves come from the world’s fastest rising power?

China is seeking natural resources for its growth, scouring the earth from South America to Africa and anywhere else with potential. The US, coming from behind in Africa, wants to get even and then pip China at the post.

Just what that means in real policy terms, or how that can benefit US interests, would have to be determined later.

So Clinton goes to nine countries in 11 days, posing with Nelson Mandela in South Africa and holding hands around campfires and singing Kumbaya from Benin, Ghana, Kenya and Malawi to Nigeria, Senegal, South Sudan and Uganda.

All of it made for good diplomacy and even better feel-good US news copy. However, some analysts observe that the US just does not have the funds to fulfil its African pledges.

Predictably, Washington denied this was in competition with China over Africa. And like all such official denials, it was as good an unofficial confirmation as any.

Clinton’s African agenda was formally based on the White House white paper “US Strategy Toward Sub-Saharan Africa” produced just weeks before. This policy document aims to strengthen democracy, boost growth, promote peace and security, and encourage development.

Clinton asserted that the US had had a long history in Africa (before China), and it had been there for all the right and good reasons. But whether China is in the picture or not, US policymakers have a problem in credibly claiming both altruism and a long history in Africa.

Such claims of early US engagements typically neglect mentioning the slave trade from the late 15th century. This notorious denial of human rights through massive human trafficking involved the kidnap of countless African men in their prime over centuries by Europeans who sold them to Americans, setting back African development for generations.

Abraham Lincoln reputedly fought a civil war to end slavery only in the 19th century. That showed how embedded slavery had become in the New World, requiring a civil war to abolish.

Yet even this stain on Western history was predated by several decades by Admiral Zheng He’s three voyages to Africa in the early 15th century. These were Chinese trading missions that came to barter goods, not to extract vital human resources in a criminal fashion.

Later, Ronald Reagan’s administration infamously did business with the international pariah state of apartheid South Africa, while branding Mandela a terrorist leader. When questioned, Reagan called it “constructive engagement” to excuse his collaboration with a racist Pretoria.

Other US experiences elsewhere in Africa resulted in gross corruption and denial of human rights. From Rwanda and Somalia through Zaire (Democratic Republic of Congo), Equatorial Guinea and Ethiopia to Egypt and Libya today, the positive gains are not as rosy as they have been advertised.

More lately, the Obama administration overturned 10 years of hard work internationally by abruptly dumping a global arms trade treaty at the United Nations. Both legal and illegal arms and munitions supplies have devastated the developing world, notably Africa, which continues to lose thousands of lives and more than US$18bil (RM56bil) a year through armed conflict.

Clinton’s asides on China’s African presence come amid general criticism of Beijing’s modus operandi when doing business in Africa. China stands accused of not placing conditions on its African hosts before proceeding to deal with them.

To those intent on demonising China, however, Beijing can never win: it will be condemned whatever it does or does not do. If China were to impose political conditions on business deals, those who now complain it is not doing so will again be the first to complain.

There is a historical record for reference: once, an ideologically rampant China offered inducements to factions in developing countries to support their domestic communist movements.

Beijing has wisely refrained from such preconditions. Should China still offer such inducements, if only to make its own Communist Party or government look good?

Would it really be better if China exerted pressure on its trading partners or investment destinations to do what it considers important for its own values and objectives? To do so would be China’s equivalent of imposing US conditions on the developing world.

Some countries have also been guilty of offering “aid programmes” that hire their nationals as expatriates in the country supposedly aided. In contrast, China is said to hire African nationals for work on infrastructure projects it builds in Africa.

This provides local employment, while the infrastructure once built will remain in those countries to produce a multiplier effect for development through improved transportation for trade, investment, tourism and the distribution of educational opportunities and healthcare facilities.

Unlike the US variety, Chinese aid, trade and investment come with no strings attached, no crippling IMF or World Bank conditions, no military industrial complex supplying weapons to one side or the other, and no promises or threats of destabilisation, subversion, invasion, occupation, war or “regime change”. And Western critics pick on Beijing for that.

African analysts cite these as reasons why Africans will welcome China’s presence more than a competing US presence. China’s business deals come without the extra baggage of self-righteous preachiness and ideologically loaded value judgments.

Like the rest of the Third World, Africa may want to get as much as possible from both China and the US. So, in practice, it will not be a question of one suitor or the other.

But if Africa on its own is such a compelling case for renewed US interest, with China not a factor at all as officially claimed, why did Washington take so long to get interested? US policymakers must know that the official narrative of a rising Africa is not quite accurate.

To a degree, the Obama-Clinton act over Africa has also resulted from Mitt Romney’s presidential challenge. A leading US specialist on China, Prof David Shambaugh, finds that the Romney campaign is building a foreign policy team based largely on George W. Bush advisers.

This team sees China as a “global competitor” over Africa, and which despite some diplomatic platitudes in the preface, is relying heavily on greater military power. Lethal fallout may yet land in other regions from a superpower tottering in West Asia through teetering in South Asia on the way to Obama’s “pivot” in East Asia.

US presidential campaigns traditionally focus on domestic issues, but China and Africa are now generating a buzz among Americans online. Obama may also win a second term, but Romney’s influence on the campaign trail and Republican pressure in Congress may yet set the tone for US-China relations to come, to impact inevitably on East Asia as a whole.

Behind The Headlines By Bunn Nagara The Star

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Saturday, August 11, 2012

Land sold for a song?

Taman Manggis land sold at half the market price


GEORGE TOWN: A company owned by a businessman from Kuala Lumpur bought the 0.4ha state land in Taman Manggis here for RM11mil although the market price is RM22mil.

Contentious issue: The 0.4ha plot of land in Taman Manggis at the junction of Jalan Zainal Abidin-Lorong Selamat in Penang.

State Barisan Nasional information chief H'ng Khoon Leng, who revealed this, questioned why the land was sold so cheaply.

He said only two bids were received and both bids were from companies owned by the businessman, who is a Datuk.

He said Chief Minister Lim Guan Eng should explain if he knew the businessman personally.

“I challenge Lim to declassify the open tender documents, including minutes of the exco meeting which approved the sale of the land,” he told a press conference here.

H'ng said information obtained from the land office showed that Kuala Lumpur International Dental Centre Sdn Bhd and Victoria International Medical Centre submitted bids for the land.

Kuala Lumpur International Dental Centre Sdn Bhd emerged successful when it submitted a bid of RM232 per sq ft or RM11mil.

H'ng said the businessman owned more than 20 companies, including several medical specialists centres, tour agencies and foreign workers' agencies.

It was reported that the land at the Jalan Zainal Abidin-Lorong Selamat-Jalan Burma junction had been sold to a company which plans to set up a private medical specialist centre.

The land was earlier reserved for a People's Housing Project.

By KOW KWAN YEE kowky@thestar.com.my

Mom: 'I didn't know my son was in NFC' Cowgate scandal

KUALA LUMPUR, Aug 10 (Bernama) -- Former Women, Family and Community Development minister Datuk Seri Shahrizat Abdul Jalil told the High Court here that she did not know her second son was involved in the National Feedlot Centre project until informed about it in 2007.

In today's hearing of a defamation suit against Parti Keadilan Rakyat Wanita chief Zuraida Kamaruddin and the party's strategic director, Mohd Rafizi Ramli, Shahrizat said she had been unaware of Wan Shahinur Izran Mohd Salleh's appointment as a director of National Feedlot Corporation Sdn Bhd in December 2006.

"I didn't know about the bidding of the project. I only knew around 2007 after my husband (Datuk Seri Dr Mohd Salleh Ismail) said he intended to have our children return from abroad to help with it.
"It was after he had won the project," she said during cross-examination by Ranjit Singh who represented both the defendants.

To a contention that Wan Shahinur Izran was too young to be a director of the company as he was only 22 years old at the time, Shahrizat said it was not wrong as her son had graduated when he was 19 in the United States and was a top student.

She said Wan Shahinur Izran lived with her since 2004 and the other two children, Wan Shahinur Izmir, 32, and Wan Izzana Fatimah Zabedah, 26, returned home from abroad to join NFC in 2007.

Saying that the family lived together but did not concern themselves with each other's work, she added that she only paid attention to the matter after it was reported in the media and asked her husband for an explanation.

Questioned as to which parts of the defendants' statements during the press conference damaged her reputation, Shahrizat responded, "Their words made the public blame me."

Earlier in the proceedings, the court was shown a video recording of the press conference at Parliament building.

Zuraida and Mohd Rafizi were seen uttering the allegedly defamatory statements before several reporters and photographers.

On Jan 19, Shahrizat filed a defamation suit against Zuraida and Mohd Rafizi claiming they made defamatory statements about her in relation to the NFC issue.

She sought RM50 million in general damages and an additional RM50 million in exemplary and aggravated damages.

She also applied for an injunction to prevent the defendants from making the same statements, either written or verbal, on the matter.

The hearing resumes on Sept 18 before Judicial Commissioner Vazeer Alam Mydin Meera.

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Will Malaysian audit have its day in court?

Silver Bird may well be the first local listed company to sue its internal and external auditors.

IF ever there were Malaysian parents who had hoped that their kids would go into audit, there's probably quite a bit of serious rethinking going on right now. It looks like the audit profession is in for some harsh scrutiny and painful soul-searching.

On Aug 1, Silver Bird Group Bhd and two wholly-owned subsidiaries filed an action in the Kuala Lumpur High Court in relation to financial irregularities at the three companies. One of the 10 defendants named in the suit was Crowe Horwath, Silver Bird's longtime external auditors.

According to Silver Bird's announcement through Bursa Malaysia, the suit against the accounting firm is premised on alleged negligence and breach of duty of care and/or its duties and responsibilities to the plaintiffs as external auditors.

The bread and confectionery maker links this to Crowe Horwath's “failure to discover and/or detect the financial irregularities”.

It is believed to be the first such legal action by a listed company in Malaysia against its external auditors.

In recent years, it's increasingly common to hear of auditors in the United States, Britain and elsewhere (Japan, India and Hong Kong, for example) being sued for professional negligence because they had failed to spot fraud and warning signs of business collapses.

It's perhaps an indication of the current thinking that when companies go under, certain parties should be held accountable for the huge losses and suffering, and these include the auditors, whose opinion on the companies' financial statements are widely relied upon.

The day after Silver Bird initiated the civil suit, Crowe Horwath issued a press release to deny the allegations in the suit, as laid out in the Silver Bird announcement. The auditors pointed out that they had, in fact, discovered the irregularities and immediately reported these to Silver Bird's audit committee and board of directors.

“We believe that the suit by Silver Bird is frivolous in nature and without basis. We strongly believe that we have fully discharged our duties professionally and will vigorously defend our position in court,” added the firm.

Indeed, as that last line in the press release indicates, right or wrong will be decided before the judge, unless the case doesn't go to trial.

However, there were no such statements from Audex Governance Sdn Bhd and Focus Internal Audit Solutions (FIAS), who are also among the defendants. Both are on the list because they have done internal audit work for Silver Bird, which had outsourced its internal audit function to Audex Governance before switching to FIAS.

Suits against internal auditors appear to be rare overseas and it's almost certain that Silver Bird's civil action against Audex Governance and FIAS is a first for Malaysia.

The Silver Bird case has thrown the spotlight on the roles and responsibilities of internal auditors.

Internal audit became a more visible component of corporate governance in Malaysia when it was made mandatory beginning Jan 31, 2009, for a listed company to have an internal audit function.

Bursa Malaysia's listing rules require that the internal audit function be independent of the activities it audits and that it reports directly to the audit committee.

In addition, the listed company's annual report have to include a statement relating to the internal audit function, informing whether the function is performed in-house or is outsourced, and the costs incurred for the function in respect of the financial year.

Despite these rules, most people tend to underestimate the importance of internal auditors, probably because few people really appreciate what internal auditors do.

In a brochure, The International Institute of Internal Auditors (IIA) reports this lament: “There is a universal lack of understanding of the internal audit profession, how it makes a difference in regard to organisational governance, risk, and internal control; and its value to stakeholders.”

In addition, there's more emphasis on the audit opinion of the external auditors as it's a tangible product of their work.

Also, the external auditors are seen as independent of the management, whereas an in-house internal audit function is undertaken by those on the company's payroll.

The IIA defines internal audit activity as a “department, division, team of consultants, or other practitioner(s) that provides independent, objective assurance and consulting services designed to add value and improve an organisation's operations”.

It adds: “The internal audit activity helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes.”

On the other hand, as Crowe Horwath puts it in Silver Bird's financial statements for the year ended October 2011, the external auditors are called in primarily to express an opinion on the financial statements “based on our audit in accordance with approved standards on auditing in Malaysia”.

Silver Bird's move to sue the internal auditors tells us that it's time to take a closer look at the internal audit function, whether in-house or outsourced. The regulators and the internal audit profession should be asking some tough questions.

Would it be possible for companies to sue internal auditors for professional negligence if they are employees? Who watches over the outsourcing of the internal audit function and the firms that take on such jobs? What more can be done to ensure the independence and quality of the internal audit function?

When financial irregularities are not picked up by the internal and external auditors, is it possible for one of the auditors to be exonerated while the other is found to be at fault?

The Silver Bird case may or may not lead to answers to these questions, but if the audit profession is truly proactive and dynamic, it wouldn't wait for the case to be resolved before responding to the reality that in Malaysia, resistance to the idea of suing auditors is waning.

> Executive editor Errol Oh hopes he will have the stamina and patience to follow closely the developments in the Silver Bird lawsuit.

Friday, August 10, 2012

Gu Kailai: High flying lawyer turned murder accused

As a high-flying international lawyer married to one of China's most promising and charismatic politicians and with a son at Harvard, Gu Kailai appeared to have it all. Now she is on trial for murder.


China Official's Wife Doesn't Deny Killing Briton
This frame grab taken from CCTV video shows Gu Kailai, the wife of Chinese politician Bo Xilai, facing the court during her murder trial in Hefei, Aug. 9, 2012. (CCTV/AFP/Getty Images/Newscom)

As a high-flying international lawyer married to one of China's most promising and charismatic politicians and with a son at Harvard, Gu Kailai appeared to have it all. Now she is on trial for murder.
  
Since her detention earlier this year on suspicion of poisoning a British businessman a new picture has emerged of an at times volatile woman with a troubled childhood and a reported history of depression.
  
The daughter of a renowned general, Gu, like her husband Bo Xilai, is a so-called princeling -- an elite group in Communist China whose family background has given them influence and privilege not enjoyed by most.
  
Like Bo, she studied at the prestigious Peking University, although the pair did not meet until 1984, while she was on a research trip near the eastern city of Dalian, where he had taken a post as a local party secretary.
  
"He was very much like my father, that sort of extremely idealistic person," Gu, 53, told the Southern Weekend, a local weekly, in an interview published in 2009, recalling her first encounter with Bo.
  
"He lived in a small dirty room. He offered me an apple before telling me about his ideas."
  
They married two years later and in 1987 had a son, Bo Guagua, who attended one of Britain's most prestigious private schools, Harrow, followed by Oxford University and a postgraduate degree at Harvard.
  
She began work as a lawyer the same year the boy was born, later setting up her own firm and winning plaudits as the first Chinese attorney to successfully challenge a legal decision in US courts -- an experience she recounted in two books that became bestsellers in her home country.
  
Ed Byrne, an American lawyer who worked with Gu, recalled her as "smart, charismatic, attractive". "I was very impressed with her," he said in a television interview.
  
As her husband's political career took off, Gu gave up the law, a sacrifice to which Bo paid tribute at a press conference in March that was to prove one of his last appearances before the couple vanished from public view in April.
  
He described her as a stay-at-home mother who had given up a promising career to take care of her family, and hit out at allegations -- which at that stage were not yet public -- that he said had been made against her.
  
Details that have emerged in recent months of Gu's life with Bo, however, suggest that his portrayal of a humble housewife was far from the reality.
  
She is reported to have spent several years in Britain while her son was at school there -- a place arranged by Neil Heywood, the 41-year-old Briton she is charged with murdering after their business relationship went sour.
  
While in Britain, she stayed at the most expensive hotels and enjoyed access to a private jet owned by a billionaire friend, according to sources quoted in the New York Times.
  
Such privilege will have offered scant preparation for a life in jail -- experts in the Chinese legal system say she is likely to be sentenced to around 15 years -- although Gu's life had not always been so comfortable.
  
During the Cultural Revolution her parents were detained and her four sisters sent to the countryside for re-education, forcing her to drop out of school and scrape a living variously as a construction worker, a butcher and a lute player.
  
State news agency Xinhua has said the evidence against Gu and her co-accused, a family aide, is "irrefutable" and suggested she was acting to protect her son from unidentified threats by Heywood.
  
This has been seen as a possible mitigating factor in her sentencing, along with the bouts of depression that she reportedly suffered in recent years.

Source: AFP

The Standard Chartered Debacle; How Not To Go After A Big Bank?


There’s a big bad bank in London doing all sorts of bad things with a member of the Axis of Evil.

That’s what the head of the New York State Department of Financial Services is alleging and he’s done so by releasing some pretty ugly details about the bank, Standard Chartered. Unfortunately for Benjamin Lawsky, head of the NYSDFS, he’s become a bigger story than the actual allegations.

Why? Lawsky went after Standard Chartered without the assistance of fellow regulators like the Department of Justice, U.S. Treasury and New York Federal Reserve Bank. All of which had their own ongoing investigations related to Standard Chartered’s alleged $250 billion money laundering transactions tied to Iran. But Lawsky moved forward with his allegations without giving the others much of a heads up.

The move has some calling Lawksy a rogue regulator.

Lawsky’s allegations against the London bank make his solo attempt that much more delicate. Typically regulators act together when they go after financial institutions–especially when they’re investigating such serious issues like money laundering.

Think Barclays and Libor. In that record $450 million settlement regulators from both the U.S. and the U.K. worked together and included the Financial Services Authority, the US Commodity Futures Trading Commission  and the United States Department of Justice.

Serious allegations like the ones Lawsky is throwing at Standard Chartered need to be handled with care. If Standard Chartered broke the rules the way Lawsky and his group say it did then there should have been greater fire power behind them. (You know, like the number one federal criminal investigation and enforcement agency, the DoJ.)

Instead, Lawksy went it alone and it’s starting to work against him. The New York State Department of Financial Services is a new regulator created just last year, and its first major action could be viewed as a way to make a name for itself.

What’s worse is that its fellow U.S. regulators are apparently angry with Lawsky for going rogue. Treasury and the Federal reserve were blindsided and angered by Lawsky’s move, Reuters reports. Signs of frustration are also being shown among British members of parliament who think the U.S. is unfairly targeting London’s banks.

Of course, if Standard Chartered engaged in illegal behavior (it denies the extent of the NYDFS’s claims) then none of that should matter. The problem is that the story is now becoming much more focused on all these political and regulatory riffs rather than the alleged massive wrong-doing by the British bank.

Halah Touryalai By Halah Touryalai, Forbes Staff
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Thursday, August 9, 2012

Global arms market hits post-Cold War high point


Experts say increase due to rising security risks around the world

Despite the gloomy world economy, Chinese observers have cast their sights to a prosperous global arms market, which has hit the post-Cold War peak in 2012 according to a Russian report issued earlier this month.

The seemingly abnormal situation, driven by complex factors including turmoil in the Middle East and big appetites of international arms dealers, is likely to cast shadow over the already troublesome situation in East Asia, they said.

According to the report Russia's Center for Analysis of World Arms Trade issued in early August, global military equipment exports are to hit $69.84 billion this year, the highest level since the end of the Cold War.

It is a 3.84 percent increase on the $67.26 billion in 2011, which was already nearly 20 percent higher than the $56.22 billion in 2010.

Increases in 2010 and 2011 were a result of weapon deals that had been delayed by the financial crisis that started in 2008, said the report.

Li Qinggong, deputy secretary of the China Council for National Security Policy Studies, said the recent surge is due to rising security risks around the world, especially turmoil in West Asia and North Africa, and escalating terrorism threats.

"Many countries, not only the ones in West Asia and North Africa, now feel more threatened. The traditional risks are still there, and new ones keeping emerging," Li said.


"Major weapon exporting nations are also trying to support the industry to stimulate the dim economy," he said.

Li said the trade had also benefited from countries worldwide updating their weapons.

Su Hao, an expert on political and security affairs with China Foreign Affairs University, noted escalating tensions in East Asia.

"Rising uncertainties in the region is also a contributing factor," he said.

Tensions on the rise

Tensions in the South China Sea have increased in recent months following a confrontation between China and the Philippines near China's Huangyan Island in April. The US and Japan have announced plans to help further equip the Philippine armed forces.

The Russian report said exports will hit $77.5 billion in 2015, after a slight drop in 2013 and 2014. The peak in 2015 is due to "huge contracts" signed between the United States and Saudi Arabia and other countries in the Near East, it said.

"Turmoil in the Middle East is likely to maintain and even escalate in the near future, so it is not hard to understand Saudi Arabia's need to better equip itself," Su said.

"In another view Western countries also need a strong Saudi Arabia and other regional powers to balance their traditional enemies such as Iran."

According to the report, Russia is the world's second-largest weapon supplier in 2012, with an export volume of $13.29 billion - 19 percent of the world market.

Russia had a good sales result, although it lost markets in Iran and Libya due to arms sanctions on the two nations and partly lost the Syrian market. It has also been crowded out of the market in Saudi Arabia by the US. 


The Russian report showed France ranked third, with $5.61 billion in exports, a figure expected to rise to $19 billion by 2015.

France is followed by Germany, which has $4.57 billion in exports, the United Kingdom with $3.24 billion and Iran with $2.8 billion. Italy, China, Spain and Sweden rank successively after Iran.

Hu Siyuan, an expert with PLA Defense University, said China's weapon exports are second-class compared with the world's leading exporters, "especially in the fields of material and sensing technique".

Li Qinggong said China sells combat fighters to Pakistan and training jets to other countries.

Japan relaxed its self-imposed decades-old ban on military equipment exports in December 2011, and the Philippines became its first consumer.

Japan is not a big player in the world arms market, but it is now trying to have a finger in the pie to help boost the domestic economy, Li said.

"But Japan may not manage to achieve that goal, as Washington will not allow it to sell weapons based on technology mainly learned from the US," he added.


US leads market

The US leads the global arms market, with its export volume hitting $25.52 billion, or 36.53 percent of the global figure. Its status will further be consolidated in 2013, accounting for 40 percent of the world share.

Chen Fei, a scholar majoring in international issues at Zhongnan University of Economics and Law based in Central China's Hubei province, said on a TV program on Sunday the Obama administration's fanning of tensions in East Asia is partially driven by US arms dealers.

"Congressmen, political figures and arms dealers in the country have formed a close mutual interest community," he said.

Neither presidential candidate has talked about domestic gun control this year, as it has been deemed a "politically toxic" topic.

Chen said that under such a political environment, the Obama administration has to create a more favorable outside environment for arms dealers through moves including its high-profile strategic pivot to East Asia.

In late July, on the last day of a UN conference involving the 193 member nations aimed at forging a world regulation on weapon deals, Washington blocked efforts by insisting that all member nations should have veto rights on the document.


By Li Xiaokun, Zhou Wa  (China Daily)  

Malaysian Constitutional posers for G. Election 13

Once Parliament is dissolved, a general election need not be held immediately. The Constitution permits a delay of 60 days from the date of dissolution.

A GENERAL election may be around the corner. So we need to brush up on our knowledge of the constitutional principles relating to elections.

No fixed term: Under Article 55(3) of our Constitution, the life of Parliament is stated to be five years from the date of its first meeting. As that date was April 28, 2008, the existing Parliament will automatically dissolve when the sun rises on April 28, 2013.

However, it is constitutionally permissible for the Prime Minister to advise the Yang di-Pertuan Agong to dissolve Parliament before the expiry of its term and thereby to give himself the advantage of choosing the most favourable time for the electoral contest.

This is in contrast with many Commonwealth countries including Britain which have enacted laws to have fixed term legislatures. Malaysia may wish to emulate this wholesome practice.

Early dissolution: Though the King is a constitutional monarch required to act on advice, in the matter of early dissolution, he has been explicitly vested by Article 40(2)(b) with a discretion to accept or reject his PM’s counsel. Conventionally, however, he always obliges though in exceptional circumstances he may not do so.

Elections: Once Parliament is dissolved, a general election need not be held immediately. Article 55(4) of the Constitution permits a delay of 60 days from the date of dissolution. This means that contrary to popular expectations of early polls, the next election can be held as late as the last part of June 2013!

One must note, however, that the timing is not for the PM to determine. The nomination date, the date of polling and the campaign period are in the hands of the Election Commission, which must act with independence and impartiality. The present law permits a campaign period of no less than seven days though news has it that for the next election, the EC will permit 10 days.

Interim period: Between the dissolution of one Parliament and the convening of the next, who steers the ship of state? The Constitution is gloriously silent on this important issue. For this reason, the British constitutional convention is adopted that the incumbent PM who called the election continues to remain in office in a caretaker capacity.

Powers of the caretaker PM: Leadership during interim periods poses problems of democratic legitimacy for the caretaker government. This is due to the fact that once Parliament is dissolved, the PM ceases to satisfy the twin requirements of Article 43(2).

These requirements are that the PM must belong to the House of Representatives and he must in the judgment of the King command the confidence of the majority of the members of the House. As the House ceases to exist, the legitimacy rug is pulled from under the PM’s feet.

For this reason there is worldwide debate about the need to impose clear curbs on the powers of interim governments.

In Australia, a Caretaker Conven­tion has been drafted to outline that the proper role of such a government is to be a night watchman, to hold the fort, not to initiate radical policies, not to dismiss or appoint new judges or undertake significant economic initiatives.

In India, the President has on several occasions vetoed caretaker governments’ measures because exercise of such powers may embarrass the government to be formed.

In the Malaysian case of PP v Mohd Amin Mohd Razali (2002) the court held that Article 40(1), which requires the monarch to act on advice, is not applicable if the advice is rendered by a caretaker government during the dissolution of Parliament.

Hung Parliament: If no single party or coalition emerges with an absolute (50% + 1) parliamentary majority, the new legislature will be referred to as a hung Parliament.

Such parliaments exist and function throughout the world but have never made an appearance in Malaysia at the federal level. Commentators are deeply divided about their demerits or merits.

Appointment of PM: Whatever one’s views on hung parliaments may be, it has to be conceded that they create massive problems for the Head of State on a number of issues, among them the critical one of who is to be trusted with the mantle of leadership. Several competing considerations are available.
First is the incumbency rule. If no one secures an absolute majority, the caretaker PM must be given the first chance to form the government.

Second, in Nepal there is a constitutional rule that in a hung Parliament, the first bite of the cherry must be offered to the leader of the largest party.

Third, if a viable coalition or a unity government can be hammered out, it should get the chance to lead the nation.

Fourth, if no coalition can be cobbled together, the Head of State should appoint a “minority government” that is capable of obtaining ad hoc support to pass the budget and other critical measures.

If the defeated PM asks the King for an immediate “double dissolution”, should His Majesty consent? It is submitted that Article 55(4) requires that after one dissolution the new parliament must be convened within 120 days.

The proper course of action would be for Parliament to meet, a vote of no-confidence to be taken and then only the House dissolved for a new election unless an alternative government can be put in place.

Caretaker’s tenure: If the ruling party fails at the general election, must the caretaker PM who took the country to the poll resign immediately? In England Gordon Brown refused to step down till he had (unsuccessfully) exhausted efforts to form the government.

If the caretaker PM refuses to step down, can the King dismiss him?

If the formation of a unity or coalition government takes a long time, must the defeated Prime Minster re-main in office till a new PM is appointed? Most amazingly, Belgium went 535 days with a caretaker government because the new government took time to be pieced together.

The permutations of politics are many and more than any other aspect of a nation’s political life, general elections throw up issues that test our wisdom to the fullest.

> Dr Shad Faruqi is Emeritus Professor of Law at UiTM

Many Job Applicants Using Fake Degrees!

PETALING JAYA: With the employment market becoming increasingly competitive, many people are using bogus degrees, diplomas and certificates besides telling outright lies to secure jobs.

A company specialising in pre-employment screening has detected an average of five applications with forged degrees or certificates every week while a fraud-investigation firm found that 10% to 15% of applications it scrutinised had fake paper qualifications, some of them from non-existent universities.

Dubious record: Pre-employment screening firms routinely detect about 15% of fake qualifications sent in by applicants.
 
Verity Intelligence Sdn Bhd managing director Mark Leow Boon Kuan, whose clients are mostly multinationals and finance companies, said many of the documents were cleverly forged and could fool anyone.

He added: “Of about 2,000 applications we check each month, about 20 are found to have fake degrees or certificates. That's five a week. We have detected 130 forged documents so far this year.
 
* Full report in The Star today
The Star/Asia News Network
Thursday, Aug 09, 2012 

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Cops building case against bogus degree mill operator