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Sakmongkol ak 47

Monday 24 May 2010

Sime Darby Code

We have a non functioning board of directors. We also have a management committee that misleads the board.

I read in the Edge recently the thinking that asking the board to resign is NOT going to sort out Sime Darby's recent financial mess. I think otherwise. It should be made to resign so that an impartial and unfettered inquiry can be made into the losses. Its removal or resignation helps to unravel the Sime mess in the sense that it removes the need to be less thorough and less severe. The existence of a board and close proximity with board members may be a cause of restrained investigation. Better to remove any fetters that could hinder an honest thorough, rigorous and stringent investigation.

Would the young man with that formidable accounting degree be self assuring enough to ask tough questions to the Tan Sris, Dato's and the Sime Tun?

The agenda of uncovering this mess requires absolute thoroughness and ruthless forensic accounting, the two requirements that could be hampered by the existence of the same board under whose supervision, the rogue management carried out its misdeeds.

The existence of a board of directors seen to be ineffective and part of the whole mess should not fetter any impartial inquiry into the fiasco. At the very least they should stand down until investigations reveal their non complicity and ignorance. If there is no conspiracy, then it was complete ignorance. And in law, we cant plead ignorance of the law as an excuse for doing or not doing what we did.

Indeed as a redemption measure, the board should make haste in calling an independent inquiry team to look into this mess.

By his own admission, Tun Musa Hitam said:-

"Semua laporan yang sepatutnya (sampai), tidak sampai kepada pihak Lembaga Pengarah. Kalau ada pun, ia tidak memberi gambaran sebenar. Kami tidak mempunyai laluan untuk maklumat sebenar."

The second part is intriguing. If the reports were presented to the board, at what point in time did the board realise that the information given were misleading? Was it after the mess became public knowledge? Saying so, does not absolve the board.

That places the board in the same category as the ignorant public. The public can be excused but not the board- because the board is an involved and interested party. It can't be conferred the same leniency as the uninvolved public. You are liable for the behaviour of those over whom you exercise duty.

How does the board establish the veracity of the information given? That could only suggest that the board has a possible source channelling the real information to counter the misinformation given. Why was this source act so belatedly? If it does, then its actions (the source) can be conspiratorial.

Musa' statement taken as a whole also mean, that beside the board of directors, the management committee is also responsible and therefore liable for its actions. The million dollar question then is why the punished should be confined to Zubir Murshid only. The responsibility and liability should go down the entire line of decision makers involved in the business deals.

The overall strategy is to isolate the gangrenous parts lest they infect the whole body.

How extensive is the rot? If every level of Sime's management bears the fingerprints of Zubir's kind of management, then Sime Darby and Malaysia are looking at a bigger catastrophe in the making. If Zubir's style of management is characterised most of all by a cloak and dagger approach, the current Sime Darby's financial mess is just the tip of the iceberg. If the original merger between Sime Darby, Golden Hope and Guthrie was kept secret by Zubir and his collaborators , it seems likely that the current 'costs overruns' are also kept secret until the very end. Tun Musa's admission that the board is kept in the dark or was fed with false information, confirms that this is the management style of Zubir and his coterie of like minded managers.

If that is so, removing Zubir and having him replaced by a person moulded in the same management philosophy, isn't going to save Sime Darby. The person currently standing in for Zubir is one such person. Indeed Azhar and Zubir and another one Zarif( the person in charge of foreign labour) are known within Sime Darby as the 3 Abduls. They all came from the same division- Sime Tyres. And there's nothing comical about how these 3 are running Sime Darby.

This strengthens the reasons to look at the other operations of the Sime Darby group. Tun Musa appears to pre-empt any moves to look into Sime's other business operations when he stated that the problems are confined only to the E&U division. But because the overall style of management at Sime is dictated by Zubir and gang, and problems can occur, it doesn't hurt to look into Sime's other businesses.

For example, now is the right time to start looking also on how the plantations division are managed. Why do we need to? Because the public is made to believe that the losses incurred by the Energy and Utilities division can be cushioned by the healthy earnings from the plantations division. The losses can still be absorbed and Sime as a whole can still remain profitable.

That belief can only be supported IF the plantations division continue to be profitable. Its profitability depends on good management and productivity. These two things are fast depleting. As we are aware, the turnover rate of experienced managers within the plantation division is very high. Good managers are leaving the division.

As a result productivity is adversely affected. In Sime's estates a lot of palm fruits remain unharvested because of chronic labour shortage. Losses are mounting. If fruits are unharvested, that translates into millions ringgit losses per month.


Quiet Despair,  24 May 2010 at 18:32  

Hahaha Sak

We must be so fond of Tiga Abdul.
In Tun Hussein's administration, there were the infamous Tiga Abdul.
Now we have it in Sime Darby too.
In Najib's circle, better check whether it also exist.
P. Ramlee is a genius, he can see it ahead of his time.
Do this people give royalty to his estate for the copyright?

Anonymous,  24 May 2010 at 20:33  

I shudder to think that what if your fear of the plantation sector in Sime Darby going downhill too is true. Time to cleanse this gargantuan organization of its cancer. The best way is to break it up into smaller manageable sizes. I know by doing so that Merchant bank will make another killing.
Pak Tua

Anonymous,  24 May 2010 at 21:23  

Can somebody tell the MUSAng that if he can resign as TPM, doing the same for his postion in Sime Darby would uphold his prestige....for whatever that is left.

Moo....,  24 May 2010 at 23:13  

What happen to the auditors' report?

Do the auditors gave Sime Darby a clean report?

What happen to the audit committe?

Anonymous,  25 May 2010 at 00:17  

Salam Bro……

What kind of statement is this;-
By his own admission, Tun Musa Hitam said:-
"Semua laporan yang sepatutnya (sampai), tidak sampai kepada pihak Lembaga Pengarah. Kalau ada pun, ia tidak memberi gambaran sebenar. Kami tidak mempunyai laluan untuk maklumat sebenar."

An “elegant statesman”, an “elegant intelligence” or the best of all an“elegant pariah”. The whole world knew about the amalgamation yet the inner circle was not completely informed and yet again the merger was done. Simply put, the clerk is having all the information and the General Manager is having part of the information. What type of stupidity does the reasoning belong too? Aha…..are they telling us that we are the bastard and they are the elegant bastard. Hooray… we are witnessing the elegant 30% bumiputera’s getting giddy.

Thank you

Donplaypuks® 25 May 2010 at 01:33  

"Semua laporan yang sepatutnya (sampai), tidak sampai kepada pihak Lembaga Pengarah. Kalau ada pun, ia tidak memberi gambaran sebenar. Kami tidak mempunyai laluan untuk maklumat sebenar." Musa Hitam.

This is what we call a classic cop out and CYA.

The all powerful Govt appointed non-Exec Chairman of an MNC like SD "tidak mempunyai laluan untuk maklumat sebenar"??!!

Them wtf is he there for? If he didn't or doesn't know how to crack the whip and get the CEO and exec directors and senior managers to submit the info pronto, then he should go NOW!!

More than likely they skimmed over the reports and did not have the figures analysed/explained to them or ask the difficult questions which is what they are there for.

Ask SD to disclose how much Salary, Fees, Bonus and perks Musa Hitam and each and very director was paid post-merger and then we will all understand why "..laporan2 ia tidak memberi gambaran sebenar"!!

we are all of 1 race, the Human race

Anonymous,  25 May 2010 at 02:13  

How many GLCs are there? That is the number of investigating team required to form.

MOre to come...

Who in the right mind would work for pennies (salaries) when hundreds of millions are just in front of you for the taking and no drastic punishment .. just go on leave to enjoy the fruits.

I remember one guy ... he was Tunku Abdul Rahman... He died without much money. Has to ask for money for his medical treatment from his enemies. Poor chap. Yet this guy gave guys like Lim Goh Tong to make fortunes.

Anonymous,  25 May 2010 at 02:45  

be careful of the cunning fox. especially if it is black.


flyer168 25 May 2010 at 08:53  

Whilst in Euphoric Stupor as the Boss of the Largest Conglomerate, he overlooked the "Too good to be true" factor, did not checkout the details & did not listen to the ground...

Madey offered him, he accepted the "Poison Chalice" & he enjoyed the "Wine" he must now be Honourable to accept his shortcomings...

To blame all the "Thamby Guys" when he is the ultimate intellectual & experienced boss, is most unbecoming of a Corporate Chairman...

Anonymous,  25 May 2010 at 09:28  

I don't recall one instance of a major GLC forces its entire board to resign except for when it got entirely sold or merged.

kuldeep 25 May 2010 at 11:03  

Hindsight is wonderful.
Looking through SD quarterly cashflow statements>the trends not dissimilar to MAS.Profits looks good but cash seems to be depleting.And receivables & payables trending in likewise manner.

I wonder if those guys earning a living and paid handsomely to look into "such things" have the foresight to look for the signals and ask the right questions.

Its not only the Board,Senior Mgmt but also external auditors,analysts,credit rating agencies,bankers,Khazanah that shld be looking at the mirror and asking.."Did I do enough?"

Anonymous,  25 May 2010 at 11:42  

Dato' Sak,

I recommend Ibrahim Ali to replace Tun Musa. This will ensure Ibrahim Ali will be able to implement his "blue ocean" strategy (or whatever he thinks he understands by blue ocean strategy) that he had been harping on. Ibrahim Ali can then bring in the rest of his Perkasa members to make up the new Slime Dirtby board of directors.

If the above does not work, how about selling Slime Dirtby to the Berjaya Group. I am sure Vincent Tan and his Berjaya board are very capable of taking Slime Dirtby to even greater slimier heights.

Anonymous,  25 May 2010 at 15:59  

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