What’s going on in Kenmark?

OVER 20 years of sweat equity by the founders and employees of Kenmark Industrial Co (M) Bhd must have seemed to have come crashing down in just a span of a week.

The only one who has the answers to the strange and unexpected developments in the company is 59-year-old Taiwanese national Hwang Ding Kuo @ James Hwang, the company’s managing director. But his sudden “disappearance” and surprising reappearance days later with an apologetic note that he was taken ill and unconscious, has in fact, added more fodder to the unusual circumstances.

Along with Hwang, two other Taiwanese directors had also gone missing.

The uncertainty had led the share price to nose dive, wiping out some RM100mil in market value over this week.

The factory in Port Klang

The business

Kenmark is a big supplier of goods to the international supermarket chain Wal-Mart and other global stores either directly or via its agents.

The predicament in a nutshell – the company failed to submit its financial records on time; two creditor banks has asked the company to pay up; several banks and stockbroking firms have force sold the shares in the open market and its suppliers, to put it mildly are worried.

The first red flag had come from Bursa Malaysia with its query to the company on the unusual market activity, points out Rita Benoy Bushon, chief executive officer of the Minority Shareholder Watchdog Group (MSWG). Suspicions were further heightened when it failed to issue its fourth quarter results.

Rita is calling for Bursa Malaysia and the Securities Commission to conduct a thorough investigation on the matter and if wrongdoing is ascertained, to mete out the necessary penalties.

In a written reply, Bursa Malaysia said it was investigating the matter and “will pursue enforcement action for any breaches of the listing requirements.”

“Bursa Malaysia had engaged with the company’s independent directors, external auditors and officials to ascertain the state of affairs of the company immediately when the issues came to light,” it added.

In comes Ishak

And just as market observers found themselves gobsmacked by the slew of strange developments in the company, the story took on another dimension. Datuk Ishak Ismail, who made his mark in Malaysia’s corporate stage in the early 90s but had bowed out of the limelight in early 2000 following a conviction by the securities regulator, has emerged as the single largest shareholder of Kenmark after acquiring a 32% block.

Kenmark’s new directors (from left) Ho Soo Woon, Datuk Abd Gani Yusof and Woon Wai En at the press conference on Friday.

 

Ishak and Hwang are old pals. In fact, Ishak was the bumiputera shareholder of Kenmark with a 20% stake when the company was listed in 1997 but had subsequently unwound his holdings.

Ishak tells the StarBizWeek that he had received a call from Hwang on Monday night to “help out”.

Based on announcements to Bursa Malaysia, BHLB Trustee Bhd, a trust for Ishak’s family, scooped up 30 million shares or 16.83% stake in Kenmark on Tuesday. A day later, he used another vehicle, Unioncity Enterprise Ltd to acquire 27 million shares or 15.53% of Kenmark, raising his stake to 32.36%, just shy of the trigger point for a mandatory general offer.

Based on Kenmark’s share price over the two days of the acquisition, it can be assumed that he had acquired the shares at not more than 8 sen apiece. When trading on Kenmark’s shares resumed on Friday, the counter shot up to 26 sen, a 126% gain from its last traded price of 11.5 sen. This means Ishak could be sitting on a paper gain of some RM10mil.

When contacted by the StarBizWeek, Ishak who was in Baghdad, explained why he had acquired the shares: “It is a good company. I checked and there was nothing wrong with the operations. There is just some misunderstanding. What I am thinking now is how we can get the business operations re-started. I have been an investor before and this company is involved in a lot of export business. Imagine the foreign earnings it brings into Malaysia.

“There is also another aspect. About 400 jobs are at stake if the plant does not restart. So, I wanted to help bring the employees back to work. So, it is not about (grabbing) an opportunity but doing a social service. What is wrong with that?’’ he asks.

How much did he acquire the shares for? “I do not know. The purchases were done by the trustees. They make independent decisions,’’ he replies.

Still, many observers expect Ishak to exit not too long from now, pocketing some handsome capital gains. Will that happen? “It all depends on the trustees, it is not about me. This is a family trust and I am not in control of the trust. But this (Kenmark) is a good company,’’ he adds.

Lost confidence

Meanwhile, 133 Malaysian workers of the total workforce of 413 employed by Kenmark are seeking RM1.4mil in damages for being locked out of the factory at the Labour Court in Port Klang. The claims were for termination benefits, compensation in lieu of notice and unused leave.

Quite clearly, the four new directors on board have an uphill battle ahead to regain lost confidence. After their first board meeting on Thursday, they had proceeded to the factory in Port Klang but were barred from entering the premises. On Friday, they met up with the senior team.

CLICK to view graphic

“We just met key management staff and asked them what is required to restart the whole production again. We will take it from there,’’ said newly appointed executive chairman Datuk Abd Gani Yusof.

At the start

Kenmark was set up in Taiwan back in 1978. Kenmark Industrial Co Ltd, which had a factory in Nei Hu, Taipeh, set up its first overseas plant a decade later in 1988. The plant in Malaysia began operations in 1989 on a 10-acre site in Port Klang.

Hwang, the founder of the company, is said to be a very enterprising man; within a short span, the operations expanded to Singapore, Australia, London, Hong Kong, Vietnam, US and China.

The Malaysian operations was listed on Bursa Malaysia in 1997. There are two other Taiwanese directors in the company - Chen Wen-Ling and Chang Chin-Chuan. Chen owned 18.7% stake in the company, according to the company’s latest annual report. With Hwang, the Taiwanese collectively owned 46.4% of Kenmark.

A substantial amount of these shares, it is believed, were pledged to banks and several stockbroking firms for share margin financing. Given the counter’s free fall over the week, many of these shares were force sold, which led many to believe that this is how Ishak could have accumulated his interest in the company.

Domino effect

On Wednesday, after Hwang had “disappeared”, the factory in Malaysia was shut down.

Some suppliers, spooked by the developments, were believed to have taken back their supplies.

On May 27, the company’s two independent directors Zainab Abu Bakar and Yeunh Wee Tiong had called off the audit committee meeting because Hwang had failed to appear. They could not reach Hwang or the two other Taiwanese directors.

Much to their dismay, Zainab and Yuenh had found the factory sealed. They both had stepped down from the board on Thursday.

One of the creditors, EON Bank had caught wind of these developments and wasted little time engaging their solicitors to seal the company. The company received letters of demand from EON Bank and Export-Import Bank for some RM71mil.

In a statement to Bursa yesterday, Kenmark said “There were some trade bills due for payment at the end of May 2010 but due to the unfortunate situation last week ... the trade bills could not be paid and EON Bank in safeguarding their interest had then appointed the Receivers.”

As for its Vietnam plant, Kenmark said that it has learnt from Hwang that the local authorities were requested to take control of the operating premises to safeguard the assets when some looting occurred during the absence of senior management staff.’

Hell breaks loose

On Monday, the situation worsened. The staff who turned up for work that day were told to go home. On that same day, Kenmark’s independent directors had updated officials from Bursa Malaysia on these developments, which led the latter to slap the company with a PN17 status.

After two days of wild speculation, Hwang appeared with his apologetic note that he was “sorry for the confusion” and that he was “taken ill in China ... and was in a delirious state from lack of sleep and was in and out of consciousness.”

Naturally, most found the excuse hard to swallow.

“It shows total disregard of shareholders, suppliers and employees. Even if he was not around, how could anyone expect the company to run rudderless?,” asks an observer.

Those who are close to Hwang say that he largely handled the business on his own, preferring that to delegating the work to the rest at top management. “This could explain the chaos his absence had resulted in,” says a source.

The task ahead

Since then, four professional managers have been appointed to the board. They are Ho Soo Woon, Ahmed Azhar Bin Abdullah, Woon Wai En, Datuk Abd. Gani Bin Yusof. Woon was formerly with Vads Bhd while Ho has his own family business. Gani has several businesses of his own but not much is known about Ahmed.

Evidently, the team is determined to get things back to normalcy. One of the most urgent matters that needs to be addressed is that the company needs to submit the fourth quarter results. The directors have failed to get an extension of time to June 30 from Bursa Securities to submit its results as the application was submitted less than fifteen days prior to the due date for submission.

“The Directors do not have access to the accounting records as yet and shall endeavour to have the results released as soon as available,” it said in a note to Bursa Malaysia late Friday.

Time is not a luxury it has. Bursa has given Kenmark till June 8 to submit the results, failing which the trading of shares will be suspended.

Analysts expect the group’s showing in the fourth quarter to be “less impressive” as orders from the European markets have been soft due to the economic slowdown.

In the company’s latest annual report, it had stated that it will focus on strengthening the wood-based business as margins were better than the LCD television business unit which was facing stiff competition. It also expected demand for wood-based products to remain stagnant until the economy in the European and North American markets pick up.

About 78% of Kenmarks business, said the analyst is export driven; one of its largest export markets for its furniture products is Europe. As such, he expects the weakening Euro to put a damper on the company’s latest results.

For the year ended March 2009, Kenmark made a net profit of RM3.8mil on the back of RM259mil sales compared to RM10.1mil and RM308mil a year ago.

Questions left unanswered 

Without a doubt, the whole debacle has raised key corporate governance issues. The unusual market activity in the counter also needs to be prodded further by the authorities.

Was this simply a case of one thing leading to another? Or is there more to it than meets the eye?
“From a corporate governance view, it is astonishing that it has reached this stage. Some processes and checks and balances had failed. If so, how and why?” asked a peeved observer.

By B.K. SIDHU
bksidhu@thestar.com.my

 Related Stories:

Kenmark among firms that broke listing rules

Ishak – no newcomer to corporate controversy

Stock an easy buy after force-selling

Directors shed some light

A bizarre run of events 

No payment so no audit report released on Kenmark

By DANNY YAP ,danny@thestar.com.my,  Thursday September 16, 2010

PETALING JAYA: Just when it seemed that more clarity could emerge on what transpired at troubled furniture-maker Kenmark Industrial Co (M) Bhd, a new hurdle has emerged.

Reliable sources said that while the special audit report on the company had been completed by accounting firm UHY Malaysia, the report had yet to be released to the relevant regulatory bodies because no one had paid UHY.

When contacted, an official from UHY’s forensic accounting division confirmed that it had yet to receive payment for its professional audit fees for the special report from Kenmark.

The situation poses a dilemma for the regulators as it is only expected that any firm carrying out an audit will need secure payment for work done on such a report.

To recap, UHY was directed and endorsed by Bursa Malaysia to conduct the special audit report on Kenmark back in July to determine if there had been any accounting irregularities, potential breaches of rules and regulations that contributed to the current RM150mil recorded losses.

Moreover, the special audit report was conducted to find out if there were any more losses that the new management had to deal with and debt exposure that shareholders should know.

Bursa Malaysia had confirmed to StarBiz that it had so far not received the special audit report on Kenmark.
A senior auditor of a local accounting firm said professional fees for scope of work that had been identified and endorsed by the regulators should not be disputed, especially when the work had been completed.

“If payment is not made to the accounting firm conducting the special audit report it would be difficult to know the actual financial position of Kenmark and on technical grounds and the lack of pertinent information (on the company’s past undertakings and accounts), it is likely the company would get away with any missdeeds because of the lack of evidence.”

For latest Bursa Malaysia indices, charts and other information click here

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Whither finance for innovation?

THE New Economic Model (NEM) characterises Malaysia in 2020 as market-led, entrepreneurial and innovative. A deliberate move towards a more competitive society, dedicated to value-adding to achieve high-incomes. A year ago, I wrote in this column: “The centrepiece to promote recovery and quality growth during hard times is to drive innovation.”

The key element here being the Government’s will to make some fundamental changes, including “a stubborn resolve to change mindsets in order to instil and build (and effectively put on the ground) a creative and innovative culture, and a national entrepreneurial spirit.”

A year later, I wrote: “…we can’t be expected to grow efficiently by simply doing more of the same. To become an increasingly higher income nation, we need to shift to an economy that is innovation led.”

Innovation simply means fresh thinking and approaches that add value to consistently create wealth and social welfare. In the end, “innovation drives productivity, and productivity drives the flow of real income.” I ended with a remark on venture capital: “From Asean to North-East Asia and from India to Japan, the big risk to innovative ventures remains the lack of ready access to finance.” Policy makers have turned to creating tomorrow’s jobs rather than saving yesterday’s. The buzzwords in government are entrepreneurship, innovation and venture capital.

Asian environment is set in a culture that does not take on risk easily. Thomas Watson (founder of IBM), when asked about risk taking, said: “If you want to succeed, raise your error rate.”

I believe our Government has to become a bold enabler when it comes to nurturing the build-up of risk capital. I also believe any government that takes no risk in promoting innovative ventures is likely to make the bigger error of not trying hard enough. Accept the hard-headed Sun Tzu rule that making omelettes will require breaking egg shells.

Venture capital vs private equity

Venture capital (VC) and private equity (PE) are not the same. VC provides development funding to early stage firms in high-technology and bio-technology. In contrast, PE backs established enterprises using equity and debt.

VC helps fund innovation – to grow seed and start-ups into major break-throughs that dazzle. PE thrives at the other end of the spectrum – offering equity and leveraged finance to spin deals. PE backed enterprises are usually run by the same executives who ran them before PE moved in.

Essentially, PE teams up with entrepreneurs to create value. However, VC managers bring professional advice and managerial and organisational support to the table, help manage start-ups and “teenage” ventures.

PE executives make money from fees; capital gains are just a bonus. The standard “2 & 20” fee structure, whereby managers charge investors 2% on monies managed and 20% of profits earned, is lucrative. They also charge transaction fees and fees for monitoring portfolios.

In contrast, VC takes are more modest since their fund size pales in comparison. VC ventures do fail but occasionally they get a hit – returns of 10 to 50 times. In the end, VC is all about real big successes.

PE is never easy; funding and executing private investment is hard. Competition is fierce and much financial engineering has already been tried. Only operators who are talented – and lucky – can keep producing high returns. Similarly, VC funding is difficult in terms of staying power.

The easy-to-profit schemes of 1990s created impatient investors. But building new ventures take perseverance. Most 100 largest publicly traded US software companies took six years or more to generate enough revenue to reach IPO (initial public offering). Microsoft and Oracle, which went public in 1986, were founded in 1975 and 1977 respectively.

VC fuses innovators and entrepreneurs with intelligent capital (and business know-how) in a combination that’s capable of spectacular successes, such as Apple, Google, Intel and FedEx. This also needs enlightened government policies. That’s how wealth creation takes place.

Be that as it may, NEM needs a dynamic VC and PE industry to meet its goals. Innovation and finance go hand in hand. With economic recovery, VC and PE must get back to providing growth capital – from seed to start-ups and then, on to expansion, refinancing, buy-outs, in the drive to maturity. Indeed, recession has left them with lots of “dry powder” (uninvested committed capital) before they need to raise new money. Yet, many have fallen victims of a world-wide reshuffle. Survivors will have to get used to a diet of smaller deals and lower returns, at least until economies fully recover.

VC in Malaysia

In Malaysia, chronic risk aversion defines the financial landscape. So much so the VC industry remains grossly under-developed, unwilling to take on seed and early-stage big-bang bets. In the 1970s, Bank Negara took small steps to set up VC funds. The first real move was Bank Industri’s joint venture (JV) fund with San-Francisco based Walden International to finance nascent ICT ventures. The JV later set up two additional venture funds in the 1980s.

Since then, the Government has introduced a wide array of VC funds, soft loans and tax incentives. But according to Prof N. Takahashi of Musashi University, Malaysia today ranks very low among 54 countries with less than 0.5% of those aged 18-64 involved in start-up activities, compared with 10% in US, 6% in Britain and 4% in Japan.

Structurally, the VC industry in Malaysia is very skewed and weak. Among 114 players, 104 were 100% locally-owned, nine joint-ventures and one, 100% foreign-owned. Together they managed RM5.36bil of funds at end-2009 (less than 1% of gross national product), of which only 48% (RM2.6bil) was invested.

In 2009, only RM597mil was invested; 80%-85% of committed funding came from government and only 12.6% from banks, financial institutions and individuals. Of the funds invested in 2009, only 24% went to seed (3%), start-ups (6%) and early stage (15%). The bulk was utilised to fund expansion (53%) and bridging (17%). Not only is VC funding highly reliant on government, but the ecosystem presents difficulties in private fund raising because of risk averse institutional investors, restricted regulations on asset allocation, and VC firms lack track record.

While entrepreneurs recognise there are improvements in start-ups, changes are in small and many barriers remain. The lack of “real” venture funding is a problem and funds are highly risk averse. About 85% of VC funds is provided by the Government. Since the mandate is to lend, they just do so and quickly take them to IPO, rather than take on the risk to nurture them, as in the US and Europe.

In the Government, the culture is to avoid taking risk. Malaysia is not unique here. VC companies in Japan have long suffered from a dearth of “risk” capital with a conservative attitude. According to Prof S. Kagani of Tokyo University, Japanese VC firms do not take risk even though they offer “risk” capital. Typically, they invest with other VC, scatter their funds widely and keep them small to minimise risk.

Japan invested US$2bil in 2008 (as against US$25bil in the US), of which only 10% was in start-ups (18% in the US). In Malaysia, the ratio is 6%. Like Japan, Malaysian VC still has much “dry-powder” in hand, totalling RM2.7bil (or 52% of capital committed). They still have money to spend.

Compelling challenges

US President R. Reagan used to joke that the nine most terrifying words in the English language are: “I’m from the government and I’m here to help.” To be fair, government has helped ignite entrepreneurship. It also helped develop the VC industry – warts and all. Indeed, most great entrepreneurial hubs, from Bangalore to Hangzhou, from Singapore to Seoul bear the stamp of public intervention.

In Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurships & Venture Capital Have Failed – and What to Do About It, Prof J. Lerner (Harvard Business School) points to two foolish tendencies among politicians.

First is temptation to spread wealth to regions and interest groups. France, for example, tried to transform Brittany (a backward region) into a hive of high-tech activity but failed miserably. Second is suspicion of foreign investors. In the 1990s, Japan lavished billions on start-up VCs but was reluctant to embrace foreign VCs or invest in non-Japanese VCs. Today, Japan has the rich world’s weakest VC market. Sound familiar?

Start-Up Nation by D. Senor and S. Singer tells the story of how Israel plugged itself into the global VC market in 1992 with a US$100mil publicly funded VC. It was designed to attract foreign VC and foreign expertise to do the job. This market-driven fund attracted foreign VC to participate. The nascent high-tech industry boomed, domestic VCs learnt from this experience and foreign expertise was passed on. Its VC industry flourished. In 2009, Israel attracted as much foreign VC as France and Germany combined; and had more companies listed on Nasdaq than China and India combined.

New approach to VC

The Malaysian VC community is too government-centric: the Government provides funding and calls the tune on what to invest, who to invest in, how to invest and whom to manage.

Funds are risk averse in practice, reflecting conflict between its developmental and commercial agenda. But, they are risk averse by necessity because VC lacks risk management skills; activities are largely insulated from global inter-connectivity, with only a limited window abroad. As a result, it has poor deal flows. Its overall performance has been dismal.

The fundamental weakness lies in a lack of focus on seed and start-up enterprises; these account for 9% of total VC funding. Including early-stage, their combined share is about 24%. But there are only a handful of professionally managed, genuine early-start VC funds – targeting pre-revenue, unproven businesses. Organised angel investing, where affluent individuals invest in seed and early start-ups, is rare.

Yet, early-stage funds play a critical role; they create jobs and new industries as well as generate high returns. Importantly, without continuing flows of early-stage funds, later-stage funds would be starved in subsequent years. So why aren’t there more early-stage funds? Two main reasons. First, there is genuine lack of expertise. Second, most VC funds effectively force them to do deals of RM2mil or more to ensure a manageable number of investments.

Indeed, a few smaller-ticket early-stage deals are done as an afterthought. While VC investing traditionally has been a “home-run” business, venture firms are backing far safer investments. What’s needed are smaller funds of RM50mil and a fresh outlook from investors willing to take calculated risks on small but good opportunities and strong teams, and patience to wait for real value creation.

To succeed VC has to dramatically change direction. Creating a more dynamic environment must be high on the agenda. Here, taking risk and managing risk have to be seen in a more positive light in the Malaysian business culture.

To begin with, VC needs to be market driven. To survive, the business must be risk-, people- and innovation-driven. The Government will be needed to act as an enabler: a funder with private investors and markets; and a provider of incentives to deepen business commitment. VC focus must be on seed and start-ups.

To better serve and service the business, VC’s structure and organisation (systems processes and skills) have to be re-vamped within a more friendly ecosystem. Also, VC must be regionalised and globalised in scope.

To complete the chain, PE must also be restructured but approached differently to complement VC growth in vital areas of re-financing, mergers and acquisitions, and buy-outs.

All these simply mean a complete mind-set and culture change. In the end, VC and PE business must be seen to be talent- and skill-oriented, with the world as its marketplace. Transformation of the VC-PE landscape (restructured to up-skill with due emphasis on generating deal flows) becomes critical. Finally, VC-PE needs to find its niche business on the Islamic finance radar screen.

Source: WHAT ARE WE TO DO By TAN SRI LIN SEE-YAN

·Former banker Dr Lin is a Harvard educated economist and a British chartered scientist who now spends time writing, teaching and promoting the public interest. Feedback is most welcome at starbizweek@thestar.com.my.

CFA Exam Draws Record 139,900 as Asia Applicants Increase 12%

June 2 (Bloomberg) -- A record 139,900 candidates enrolled for the Chartered Financial Analyst exam in June, an increase of 9 percent from last year as applicants seek a hiring edge in the recovering financial-services industry.

The number of registrations rose 12 percent in Asia, 9 percent in Europe and 5 percent in the Americas, the Charlottesville, Virginia-based CFA Institute said today in a statement. The first level of the exam is in December and June; the final two levels are administered only in June. Fewer than half the applicants at each level passed last June.

Candidates take the test hoping the certification can lead to better jobs, higher salaries and a deeper understanding of finance. Financial firms worldwide have cut more than 346,000 workers since the credit crisis began in 2007, according to data compiled by Bloomberg. U.S. banks posted their highest profits in two years in the first quarter, the Federal Deposit Insurance Corp. said last month.

“At this time of global economic instability, we believe it is especially important for the investment industry to be led by professionals who put investors’ interests first,” John Rogers, chief executive officer of the CFA Institute, said in the statement. “Finance markets cannot function effectively without ethical behavior, and transparency, and CFA charterholders are integral to this.”

Candidates from 160 countries are scheduled for the three levels of the exam. Forty percent of registrations for the test in June come from Asia, according to the CFA Institute statement. Applications from China climbed 19 percent to 15,700. India had the largest increase, 39 percent to 11,800. The U.S. had the most registrations with 38,200, up 3 percent from a year earlier.

The Topics

There are about 88,700 CFA charter holders globally, according to the organization’s website. The not-for-profit CFA Institute said candidates spend an average of 300 hours studying for each phase of the test. 

Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. Completing all three levels costs about $2,500 and takes an average of four years.

The CFA program started in 1963 and stems in part from Benjamin Graham, a pioneer of value investing who mentored Warren Buffett and advocated a rating system for financial analysts.

By Michael J. Moore

--Editors: William Ahearn, David Scheer

Mission to Mars - 6 Volunteers begin Mars500 isolation

The door shuts on the six astronauts for the next 520 days

Six would-be cosmonauts have entered a sealed facility where they will spend 18 months with no windows and only e-mail contact with the outside world. 

The men are taking part in the Mars500 project, which aims to simulate a mission to Mars.

They entered the craft, located at a medical institute in Moscow, just before 1100 BST on Thursday.

Scientists say the study will help them understand how humans would cope on a long journey to another world.

During a press conference on Thursday morning, the six men - three Russians, two Europeans and a Chinese man - all described what motivated them to take part in the experiment.

Twenty-six year old Wang Yue from China, the youngest of the volunteers, said he was excited to be involved in a project that he felt would be "excellent for science and for all of humankind".

French volunteer Romain Charles acknowledged that it would be a "difficult" mission and said that he would miss his family and "the Sun and fresh air".

Space on Earth 
 
The project has been designed to be as realistic as possible even though some elements - such as the weightless conditions of spaceflight - cannot be recreated here on Earth.

"They will have to cope with limited consumables, for example," said Dr Martin Zell from the European Space Agency, a key partner in the project.

Continue reading the main story

When the very first human steps on Mars, I will be able to say, 'yeah, I helped do that'

Diego Urbina European Mars500 participant

 

"That means everything will be onboard at the start. There will be no re-load, re-supply whatsoever. It will be like a real mission."

The craft is based at Moscow's Institute of Biomedical Problems and comprises a series of interconnected steel canisters. The total interior volume is about 550 cubic metres.

Four of the tubes provide the living and working environment on the "journey" to and from Mars. Their interior has been decorated with wood panelling to give the cylinders a more homely feel.

A fifth module is a mock-up of the Red Planet itself, an enclosed room with a floor covered in rocks and sand.

THE LAYOUT OF THE MARS500 'SPACESHIP'
MEDICAL MODULE: The 12m-long cylinder acts as the laboratory. Should a crewmember become ill, he can be isolated and treated here HABITABLE MODULE: The main living quarters. The 20m-long module has beds, a galley, a social area. It also acts as the main control room LANDING MODULE: This will only be used during the 30-day landing operation. There is room only for the three crewmembers who will visit the "surface" STORAGE MODULE: The 24m-long module is divided into four compartments, to store food and other supplies, to house a greenhouse, a gym a refrigeration unit SURFACE MODULE: To walk across the soil and rocks of Mars, crewmembers must put on Orlan spacesuits and pass through an airlock

About half-way through the mission, three of the crew will have to "land" on this "surface" and walk about on it while dressed in heavy space suits.

The "cosmonauts" will be commanded by 38-year-old marine engineer and astronaut trainer Alexey Sitev, who has only recently been married.

His compatriots - Sukhrob Kamolov (32) and Alexander Smoleevskiy (33) - have medical backgrounds. The two Europeans in the group - Diego Urbina (27) and Romain Charles (31) - are engineers by training. Wang Yue has a "day job" training Chinese astronauts.

 
Near a hundred experiments will be performed during the "journey"

Colombian-Italian Diego Urbina said his motivation came from his desire to work in space research.

"I'm also very interested in being a part of the story of getting humans to Mars," he told BBC News. "When the very first human steps on Mars, I will be able to say, 'yeah, I helped do that'. That will make me feel very proud."

Scientific investigations during the experiment will assess the effect that isolation has on various psychological and physiological aspects such as stress, hormone levels, sleep quality, mood and the benefits of dietary supplements.

Dr Berna van Baarsen, from the Free University Medical Center, Amsterdam, Holland, is a principal investigator on Mars500.

"We expect Mars500 to have Earth applications, in understanding group dynamics connected to isolation and loneliness, for example," she said.

"I hope it will also help us understand better some groups, such as those elderly people who are isolated in their homes. It should tell us about coping behaviours."

 
The experiment even simulates surface operations at the Red Planet 
 
The spaceship itself will come under scrutiny, also, as the crew monitor their surroundings to see which types of bacteria take hold and thrive in the enclosed space.

All of the results of these investigations will have to be emailed to "mission control" as the organisers of the project intend to introduce a 20-minute, one-way time-delay in communications to mirror the real lag in sending messages over the vast distance between Mars and Earth.

"Everything will be done in a telemedicine environment, where the crew has to do the analysis and we receive the data by telemetry," said Dr Zell, who heads up Europe's space station utilisation programme.
This 520-day mock mission with its 30 days of "surface operations" is the final phase of the three-part Mars500 project.

Look around the spacecraft that will be the crew's home for almost 18 months

There have already been two smaller studies, one lasting 14 days and another taking 105 days to complete.
Space agencies describe Mars as the "ultimate destination" for human explorers. However, they do not possess the technology to complete such an endeavour and are unlikely have it for many years yet.

By Jonathan Amos Science correspondent, BBC News 

Woman loses RM1.2mil to ‘British’ man through Internet

KUALA LUMPUR: A virtual friendship cost a 47-year-old housewife a very real RM1.2mil.

The con man she had befriended on the Internet did not just wipe out her savings but also that of her mother, sister, niece and her husband’s funds for investments.

The woman, who only wanted to be known as Madam Lee, said a man who claimed to be a British offshore engineer named Jeff Brian Manik had added her to his list of online friends last year.

Serious matter: Chong speaking to reporters at Wisma

MCA in Kuala Lumpur on Wednesday. On his right is Lee.

 

Lee said the man told her that he was sending 10 gifts for Easter, including a designer wrist watch, perfume, a Louis Vuitton bag, jewellery, a laptop computer, a camera and his latest picture through a courier service in April.

“He asked me to pay RM16,500 as a deposit to claim those gifts, which I did by banking the money into two local bank accounts, but I did no see any gifts in the end,” she told a press conference held by MCA Public Services and Complaints Department head Datuk Michael Chong yesterday.

She said she received an e-mail from a man said to be Manik’s agent about two weeks later who told her Manik wanted to invest in property in Malaysia and needed her help to handle his £2.3mil for the transaction.
“I was convinced after I met the agent at a hotel with a suitcase of pound sterling notes,” she said.

Lee said she deposited cash close to RM400,000 with various agents via various account names between April 20 and May 11 for the transfer of the money here.

She said she deposited RM586,000 into a company account on May 16 after she received a call from one of the agents that there was a 5% tax charge on the £2.5mil.On May 26, Lee said she paid another RM258,000 to the same company.

Lee said she felt something was amiss when she never received the gifts but she was convinced by the so-called agent about the so-called Manik’s interest in investing in Malaysia.

“I just wanted to help a friend but I did not expect it to turn out like this, I just want the money back to repay my family and friends,” she said, adding that she had never met Manik.

This week, she lodged a police report. Chong said he had received complaints from 18 women of a similar cheating scam with losses amounting to more than RM2.4mil since 2007.

“Please be wary of these con men,” he said. “Some of these women were not only cheated of their hearts but all their money, too.”

Chong said the British High Commission had received many complaints of such cases where a man with a British accent would befriend a woman through the Internet.

Lawyers Claim Google Street View Wi-Fi Sniffing ‘Is Not an Accident’

Lawyers suing Google claimed Thursday they have discovered evidence in a patent application that Google deliberately programmed its Street View cars to collect private data from open Wi-Fi networks, despite claims to the contrary.

“At this point, it is our belief that it is not an accident,” said Brooks Cooper, an Oregon attorney suing Google in one of several class actions lawsuits around the country arising from Google’s disclosure that its Street View cars intercepted Wi-Fi traffic around the world. Google has described the sniffing as a coding error.

The evidence, the relevance of which Google disputed Thursday, is a 2008 Google patent application (.pdf) describing a method to increase the accuracy of location-based services — services that would allow advertisers or others to know almost the exact location of a mobile phone or other computing device. The patent application involves intercepting data and analyzing the timing of transmission as part of the method for pinpointing user locations.

The so-called “776″ patent application, published by U.S. Patent and Trademark Office in January, describes “one or more of the methods” by which Google collects information for its Street View program, Cooper’s legal team said in court documents filed late Wednesday in federal court in Oregon.

Google spokeswoman Christine Chen said in an e-mail that the patent in question “is entirely unrelated to the software code used to collect Wi-Fi information with Street View cars.” In a follow up e-mail, Chen added that Google files “patent applications on a variety of ideas that our engineers come up with. Some of them mature into real products or services, and some of them don’t.”

Chen did not immediately respond to an e-mail asking whether Google has performed the “776″ method in practice.

Whether Google willfully sniffed out internet traffic on unsecured Wi-Fi hotspots in dozens of countries is an enormous public relations headache. It also carries huge legal and monetary ramifications in the United States, where the Mountain View, California, internet giant is being sued for privacy violations in multiple federal courthouses.

Among other reasons, Google might escape liability if it accidentally collected and never divulged the data, which includes web pages users visited or pieces of e-mail, video, audio and document files.

Google must turn over the U.S. data it siphoned to a federal judge in Oregon by Friday. The data will remain under lock and key.

Street View is part of Google Maps and Google Earth, and provides panoramic pictures of streets and their surroundings across the globe.

The internet giant has maintained the collection of data was inadvertent –- the result of a programming error with code written for an early experimental project that wound up on the Street View code. Google said it didn’t realize it was sniffing packets of data on unsecured Wi-Fi networks in dozens of countries for the last three years, until German privacy authorities began questioning what data Google’s Street View cameras were collecting.

By David Kravets 

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Google's Street View probe joined by Spain, Italy, France

Google, under investigation in Germany for the data-gathering practices of its Street View mapping service, now faces probes in Spain, France and Italy for possible violation of privacy laws.

 

Google, under investigation in Germany for the data-gathering practices of its Street View mapping service, now faces probes in Spain, France and Italy for possible violation of privacy laws.

Spain's Data Protection Authority on Tuesday ordered an investigation of whether Google breached national privacy rules by collecting and storing data from Wi-Fi networks and information sent over these networks. Italy and France also ordered inquiries.

The Spanish agency "will call on Google to explain whether it has captured data without the consent of citizens in Spain," it said in an e-mailed statement May 19. It sent a formal request urging Google "to block the data associated with wireless networks gathered in Spanish territory."

The Hamburg Prosecutors' Office said it is investigating people at Google on suspicion of criminal-data capture. German data regulators are already looking into how cars that Google used to take pictures for Street View ended up with private data from Wi-Fi networks that weren't password-protected.

Google co-founder Sergey Brin said Wednesday that the company "screwed up" by collecting and storing information from Wi-Fi networks while gathering data for its Street View mapping service. The company is imposing more internal controls after it mistakenly captured the data, Brin said at a news conference in San Francisco.
Street View allows Google users to click on maps to see photographs of roadsides. Officials from 30 European countries on May 11 adopted a common approach to keep Google from infringing privacy rights as the service is rolled out in Europe. They want Google, owner of the world's biggest search engine, to improve blurring techniques used to disguise images.

"The product as such is not in breach, but more measures have to be taken to improve how images are gathered and used," Gerard Lommel, a Luxembourg member of the so-called Article 29 Data Protection Working Party, said May 11. The group is made up of the European Union's 27 nations, plus Iceland, Liechtenstein and Norway.

Switzerland's data-protection agency sued Google in November for allegedly failing to comply with proposals to make it harder to identify people and cars on Street View. That case is pending.

Google will open an online-applications store for Web browsers including its own Chrome offering, as it works to make more software accessible via the Internet.

The store, slated to open later this year, will provide free and paid apps, Sundar Pichai, a Google vice president, said Wednesday at the company's developers conference in San Francisco. Magazines, games and music providers will be among the offered applications.

By Stephanie Bodoni

Bloomberg News

No let-up in war against graft

Subsidy cuts will not hamper bid to remove wastage or curb inefficiencies

PETALING JAYA: The proposed subsidy reduction will not deter the Government from fighting corruption, removing wastage and curbing inefficiencies.


Minister in the Prime Minister’s Department Datuk Seri Idris Jala said this was clearly spelt out in the Government Transformation Plan (GTP), where one of the national key result areas (NKRAs) was to combat corruption.

He cited the approval of the Whistleblower Protection Act in Parliament and the conviction of 97 offenders for corruption as examples of work in progress.

In an interview, Idris reassured low-income earners that the poor would continue to be protected.
The Performance Management and Delivery Unit’s (Pemandu) proposal to reduce subsidy last week had stirred a strong reaction from Malaysians, with many questioning the Government’s rationale. Idris, who is also Pemandu CEO, took the questions head on as he explained the rationale behind the recommendations.

Q: Why did you say that Malaysia will go bankrupt in 2019? Have you misled us?

A: During the Open Day, I presented some salient facts about the economy. For the last 10 years, we have been running a fiscal deficit which has been growing progressively from RM5bil in 1998, to a record high of RM47bil in 2009. This was due to Government expenditure, including subsidies, escalating whereas Government revenue has not kept pace as our GDP grew at only 3% per annum. Consequently, the Government has to borrow a lot of money to cover for the shortfall. Our Government debt in 1997 was RM90bil and has grown at a rate of 12% per annum to reach a record RM362bil in 2009.

In addition, as a proportion to GDP, Malaysia is one of the world’s highest subsidised countries with 4.7% of GDP compared to Indonesia 2.7%, Philippines 0.2% and OECD countries at 1.5% on average. (See chart 1)
To be clear, I said we could go bankrupt IF, and I repeat the word IF, we continue with the same trend as in the past 10 years. Based on an annual increase of 12%, our debt will reach 100% of GDP in 2019 (a staggering RM1.158 trillion) and we could potentially go bankrupt then. Together with escalating fiscal deficit exceeding 10%, we could end up in a similar economic situation like Greece. (See chart 2)

According to studies conducted by Boston Consulting Group (BCG), countries get into sovereign crisis (bankruptcy) when:
> Government debt is more than 100% of the GDP,
> Fiscal deficit is more than 10% of GDP.

This is because Government revenue is not enough to service its debt and it does not have any money to operate.

All economists make assumptions and I did not say Malaysia will go bankrupt without qualifying it with certain assumptions. These assumptions are:
– The GDP continues at a rate of 3% per annum;
– Our deficit continues to balloon; and
– Our Government debt continues to increase at a rate of 12% per annum.

The outcome of this projection is that by the year 2019, our debt will be 103% of GDP and our fiscal deficit will reach RM449bil (38% of GDP).

Unfortunately, some of the reports about Pemandu’s bankruptcy projections did not state these assumptions and therefore can be taken out of context.

Some people question whether our assumptions are realistic. I think it is fair to make projections into the future based on our historical trends over the last 10 years.

It is on this basis that Pemandu made its assumptions and therefore its projections.

These assumptions are used by Pemandu to make forecast about the future.

In reality, as a country, we will have to do everything we can to avoid this from happening. The Prime Minister has laid out four strategic pillars which make up the country’s roadmap to achieving Vision 2020 i.e.

> 1 Malaysia, People First, Performance Now;
> Government Transformation Programme;
> New Economic Model; and
> 10th Malaysia Plan.

The future is clearly in our hands. And if all of us Malaysians work together, we can achieve Vision 2020. This involves concerted effort to grow our economy and be prudent in our spending.

> Surely there must be some positive things that are happening in our economy? Why are you not highlighting them?

Actually I highlighted those positive aspects of the economy. Firstly, I said our economy is rebounding in the first quarter of this year by 10.1%. This is the highest quarterly result in a decade. Our international competitiveness ranking has improved from 18th to 10th position. This is a phenomenal jump of eight places in one year. This should give us, as Malaysians, the comfort that we can shape a better future for our country.

> The Government should focus on growing the economy (thereby increasing Government revenue) rather than reducing the subsidies. 

As I explained during the presentation, the Government will conduct 12 laboratories on National Key Economic Areas (NKEAs) to recommend ways for us to increase our economic growth (GNI per capita) from US$7,000 to US$15,000 by the year 2020. This will help to potentially increase Government revenue in the next 10 years. These laboratories, which run from June 1 until the end of July 2010, comprise more than 400 representatives from the private and public sector, facilitated by Pemandu. Once these laboratories are completed, we will conduct open days to exhibit the labs’ recommendations to the public. (See chart 3)

The Subsidy lab’s view is that growing the economy is necessary, but not sufficient.

We have to take a holistic approach by addressing both economic growth as well as expenditure/subsidy reduction.

> The Government should cut its expenditure rather than focus on subsidy reduction.

As part of the measures to reduce Government expenditure in the 2010 budget, the prime minister has announced a RM24bil reduction in expenditure and a projected reduction in fiscal deficit from 7.6% to 5.5% of GDP.

The prime minister also emphasised that all Government projects deliver “value for money”. Going forward, the Government will continue to adopt a prudent approach in terms of its spending and this will be apparent in the 10th Malaysia Plan.

> Why didn’t the Government conduct independent polls from the rakyat to gauge public feedback on the subsidy rationalisation?

That was exactly what we did. Before the Open Day, we asked Maxis to send an SMS blast to their phone subscribers asking whether Malaysia needs to reduce its subsidy bills.

Some 190,152 people responded, which showed that 115,246 people (61%) agreed for Malaysia to reduce subsidies and 123,557 people (67.5%) suggested to reduce subsidies gradually over three to five years.

During the Open Day, 1,899 people who attended responded. Of which, 1,712 people (90%) agreed that we should reduce subsidies and only a small minority (187) opposed the subsidy reduction.

> Why are we not protecting the poor and the low income in this Subsidy Rationalisation proposal?

For every subsidy reduction proposal, the lab has recommended mitigation measures to protect the rakyat, particularly the poor.

For example, in the case of increases in the electricity tariff, the mitigation measures are as follows: For those whose electricity consumption is less than 100 kWh per month, the Government will continue with the current practice of giving it free of charge. For those who consume between 101-200 kwH per month, the existing tariff apply (no change). Based on our statistics, these two categories constitute 56% of all consumers.

In the case of fuel price increase, the mitigation measures include cash rebate of RM126 per year for owners of cars less than 1,000cc and RM54 per year for owners of motorcycles less than 250cc.

Car and bike capacity is used as a proxy to determine the low income and the poor category.

In the case of flour, sugar and cooking oil and LPG cooking gas, the mitigation measure will include a cash rebate of RM20 per person per year. For a family of five, they will receive RM100 cash per year.

> We should not remove subsidy on Education, Health and Agriculture. 

The lab agrees. Education is indeed an investment in Human Capital. We will continue to provide subsidies on education such as scholarship, text book assistance, food, etc. However, we will remove wastage and abuse, such as abolishing the subsidised fee for foreign students. For Health, we will continue to provide subsidies but with nominal outpatient fee of RM3, which incidentally is one of the lowest outpatient fees in the world.

For Agriculture and Fisheries, the subsidies will continue but we will improve implementation so that the subsidies will reach the target audience.

> Instead of subsidy reduction, the Government should focus on fighting corruption, removing wastage and improving efficiencies. 

Under the Government Transfor-mation Programme (GTP), one of the six National Key Result Areas (NKRAs) is fighting corruption. To date, we have implemented several key initiatives to address this. For example, since January this year, we have passed the Whistleblower Protection Act in the Parliament, we have convicted and published 97 offenders in the Malaysian Anti-Corruption Commission (MACC) website.

In the spirit of transparency, we have published 2,665 Government contract awards in the procurement portal and we have issued clear guidelines to prevent supporting letters from being abused.

In addition, we are implementing the Integrity Pact as recommended by Transparency International in Government procurement contracts. The Government is following up on the findings and recommendations of the Auditor General’s report.

> The Government should app-oint a high-powered team to renegotiate existing contracts with the Independent Power Producers (IPPs) and Highway Toll Conces-sionaires. 

This is a fair suggestion. The lab will recommend this to the Cabinet.

> Don’t you realise that this is a very unpopular action by the Government that will cause Barisan Nasional to lose votes.


During the Open Day, we acknowledged this is the most unpopular action that the Government would have to take since independence and understandably, people will be shocked and angry.

The lab is of the opinion that we should not be partisan in addressing the issue of subsidy rationalisation. Indeed, in our panel discussion during the Open Day, we also invited DAP’s Tony Pua as a panellist.

However, we have to face realities and now we have to make the sacrifice for our future generations.

If we ask all Malaysians who are not yet born to participate in a public vote, we are sure that all of them would ask us to implement subsidy rationalisation now and they will condemn us for not having the courage and foresight to take this bold step.

The lab’s view is that we must take into account the views of both the existing and future generations of Malaysians.

By TEH ENG HOCK
enghock@thestar.com.my

Prostate Cancer Patients' Weight Linked to Tumor Size, Study Finds

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ScienceDaily (June 2, 2010) — The size of tumors in prostate cancer patients is directly linked to their weight, according to a new six-year study conducted by researchers at Henry Ford Hospital in Detroit.

The research team, led by Nilesh Patil, M.D., of Henry Ford's Vattikuti Urology Institute and Department of Radiology, found heavier patients, or those with the highest body mass index (BMI), also had the largest tumors. They discovered the connection after studying 3,327 patients who had undergone robotic removal of their cancerous prostate glands and surrounding tissue.

"As the patients body mass index increased, the tumor volume increased synchronously," says Dr. Patil. "Based on our results, we believe having a larger percentage of tumor volume may be contributing to the aggressive nature of the disease in men with a higher BMI."



The study will be presented June 2 at the 2010 American Urology Association's annual meeting in San Francisco.

Working from a well-established link between aggressive prostate cancer and higher BMI, the team set out to find if overweight and obesity specifically affects the tumor volume in cancerous prostates.

The BMI measures body fat based on combined height and weight in adult men and women, and sets a number that defines underweight, normal weight, overweight, and obesity -- from 18.5 or less for underweight to 30 or higher for obesity. Tumor volume is the size of a malignant tumor as a percentage of the space it takes up in the affected tissue, in this case the prostate gland.

Patients were studied from October 2001 to October 2007. They were divided into six categories based on their BMI -- 24.9 or less (normal or underweight), 25 to 29.9 (overweight), 30 to 34.9 (obese), and 40 or higher (morbidly obese). In each category, the mean age was about 60.

After their tumors were removed, each was weighed and compared to a categorized database of prostate weight. In each BMI category, they found the weight of the patient to be directly correlated to the size of the tumor (i.e. the smaller the patient, the smaller the tumor, and the heavier the patient, the larger the tumor).

In addition to Dr. Patil, study co-authors at Henry Ford Hospital included Sanjeev Kaul, M.D.; Akshay Bhandari, M.D.; James Peabody, M.D.; and Mani Menon, M.D.

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