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Sakmongkol ak 47

Monday 12 September 2011

MAS- Air Asia deal revisited.

We hear of disturbing news that 15,000 MAS workers want the MAS-AA deal stopped. They have threatened to not vote BN in the coming GE. Is this the proverbial spanner thrown or does it suggest that the MAS-AA deal was indeed opaque and shady?

I asked the Oracle of Syed Putra- can the MAS-AA deal be stopped?  And what do you think of the deal?

It’s difficult for anyone not to impute some massive insider trading in the deal. Just like the recent purchase of E&O by Sime Darby just after a central figure in E&O increased his shares. But the authorities appear to be neutered when it comes to the rich powerful and the connected.
A few months ago, the same person increased his shares ahead of the announcement involving Kencana and Sapura Crest Petroleum. Now I hear, there are rumors saying that the PDA (Petroleum Development Act) is going to be amended that will effectively turned Sapura- Kencana into a second PETRONAS. It will acquire the same monopolistic rights over energy resources.  PETRONAS our national oil company will have to share the industry cake with somebody.

These bastards at the top seem to have an insatiable lust when it comes to greed. It’s the same with MAS. MAS is an exalted brand name. It’s a crime to dilute the brand name and take the lazy man’s way out by cannibalizing it and making money in that process. Khazanah buys back shares from Singaporeans not on account of good business sense but on account of national pride. Yet it doesn’t seem to have the same patriotic sentiments when it comes to diluting and divesting MAS shares even to AAsia.

Hey- I like your analogy of the modern Hamman cutting his teeth both in Pharaoh’s and Moses’s business.

To answer your question as to whether the deal can be revoked- I will have to say yes.

Yes it can- depending on the will and resolve of the PM. That’s a very tall order, suggested the Oracle.
The will and resolve of the PM depends on his understanding of the problem, what he wants to do and the significance he attaches to a strategic asset such as MAS. If the PM’s thinking over these elements are fluid and ephemeral ( for want of less brutish terms) then the opaque and shady deals involving MAS and Air Asia will move on to its conclusion.

So I read with interest when Nazir Razak pompously declared stop the shady and opaque deals or suffer the consequences. I thought he was referring to the deal in which CIMB played, in his own words, a mere matchmaker for Air Asia and Khazanah.

Khazanah forces MAS to lose its manhood by parting away with a substantial portion of its equity in return for a lower number of shares but which are more valuable in Air Asia. Before the deal, the shares of Air Asia were traded on the high side, but after the deal was announced, the shares of Air Asia plummeted. It would almost appear that before the deal, the shares of Air Asia were artificially pushed up to allow its owners to part away with a smaller portion of their shares.

Maybe, it would have been better to wait for the shares of Air Asia to go lower and swap shares. In that way, Kahzanah would have acquired a bigger portion of Air Asia and through that action, improved our national pride.
If they had done that, then maybe, its talk about pride contains some credibility. If not shut the F**k up about national pride.

Meanwhile, we are happy to note that the banker who has once said that the NEP has been bastardized and the ladder by which he has reached the top should now be thrown away is a workaholic coming to his office on Sundays and sometimes, as the guards below will tell you, coming at 2 am in the morning. I told the guard- 

I can do better- if I am paid RM 1.2 million a month, I will even sleep in the office.

With all the deals done by Khazanah and other GLCs are accomplished with stealth, opaqueness and even shady, what’s the conclusion? Did we hear of any AGM preceding the MAS-AA deal? What happens to the minority interests?

The conclusion is: The country’s economy is in unsafe hands. A few private individuals will make mountains of money whereas the problems of MAS will escalate.

Study the 3 points:-
1.      In an attempt to bolster the fortunes of the flag carrier, state asset manager Khazanah Nasional Berhad swapped 20.5 per cent of MAS stock for a 10 per cent stake in Asia’s biggest budget carrier AirAsia on August 9.
2.      The swap enabled AirAsia bosses Tan Sri Tony Fernandes and his partner Datuk Seri Kamaruddin Meranun to sit on the MAS board and will ostensibly help turn it around.
3.      Shareholders of AirAsia will get one free MAS warrant for every 10 shares in the low-cost carrier while MAS shareholders will get one free AirAsia warrant for every 30 MAS shares.

Khazanah thinks the solution to sort out the problems in MAS is to do a share swap. So it exchanges 20.5% of MAS shares with 10% shares in Air Asia. Why must the shares be swapped in the first place? If the source of MAS‘s problems is the quality of managerial talent, then outsource it from somewhere else. Pay talented people high salaries but get them to turn around MAS. After paying them, you are still left with full ownership of the company.

You don’t need Tony or Kamarudin or the business model of Air Asia to turn around MAS. Let’s see they turn around Asia-X first. You people are easily mesmerized by the glib salesmanship of a pirated CD seller that even you, some with advanced ad double degrees from Ivy League universities seem to have lost your marbles in trying to sort out MAS.

I can’t shake off this feeling. We pay peanuts we get monkeys. We pay giant peanuts we seem to get bigger monkeys. But I have to thread carefully here. The boss of Khazanah has been described to me as cheese compared to some other chap who is chalk. I swore I nearly puked when I heard him described in those terms.

What’s the source of MAS’s problems? Is it leadership? Management problem? Managerial quality? Or corruption? Or incompetence? If these are the main sources of MAS’s dismal performance, how can these be sorted out by the share swap?

Because, reasons Khazanah, the share swap will allow the problem solvers get into MAS board and help solve the problem. So, Khazanah, with its reputation of being filled with luminaries from the consulting world, the builders and the fuckers fikir-rers, place the future of MAS on the shoulders of 2 people. 2 people will bring the Midas touch that can sort out MAS through the agency of one of us- Danny Rashdan. If this guy is chosen, the basis of the choice can easily be guessed- he’s likely to be from MC gay gay and he is a friend of Azman ‘the chalk’ Mokhtar. These two factors have been cited and heard repeatedly. A person is chosen to lead and head some government business units owned by the government because he is from MCKK and “ he is my friend”.

Mr Fernandes and Kamarudin Meranum may not be from MCKK, but they are friends to Azman Mokhtar.
What’s my point? My point is, if Khazanah believes the main sources of MAS problems are those mentioned above, then we don’t have to do the share swap. Bring in talented leadership, bring in people with first rate managerial quality and proven record, re structure MAS or even , take the drastic measure by closing down MAS in order to re build it.

Before Fernandes and Meranum have even proven they can do anything to MAS, they are given the incentives in the form of MAS shares. The same dubious modus operandi is repeated all over the place- before services are completed, the service provided is paid all in advance. Remember the service provider to the deal involving the Scorpene submarines?  Those guys were paid in full even before the support services are completed.


Anonymous,  12 September 2011 at 09:21  

salam datuk,

I had really ROTFLOL when you said that "we get bigger monkeys by paying bigger peanuts".

Conversely, the govt. of the day has really lost its marbles as well too; other than parting away the national pride (MAS-AA deal versus Singapore-Temasek-Pantai) back then; we will soon be parting our rights to adult suffrage when the government go cheating again with permanent-residents voters and the newly legalised illegal immigrants.

I would really relish the idea of going back to China or India (whereever my earlier ancestorial root)comes from the day this turns out to be true.

But unfortunately; I had yet to lose my marbles; I never really came from India/China but my ancestor did. Anyhow my previous previous ancestor is long slumbering in the graves whilst the future generations like us are squandering with a Malaysian citizenship which is proverbially diluted as in shares with violation of voting rights and where migratns seem to have more rights than naturalised born Malaysians?

Back to China/India ? I would love too but too bad I was being borned a Malaysian.



Anonymous,  12 September 2011 at 09:43  

someone says part of deal is to get Tony to let go Team Lotus F1 name.... eemmm....!!!he lost the case anyway...damn...

Anonymous,  12 September 2011 at 10:18  

All these shady deals get done whilst the rakyat's attention is diverted with silly issues. More shady deals, more silly issues dished out. Today, we have the unnecessary debate on our history, yesterday, it was debate on Mat Sabu's comment. The more rubbish is dished out the more shady deals done. The main stream media is just lap dogs to UMNO and they need to be made independent.

Fatty Liver Treatment 12 September 2011 at 10:25  

What you saying Dato might be right but there is one contradiction which is how can alter ego of Oracle agree to the reversal as he has vested interest in the deal too.

bruno,  12 September 2011 at 10:56  

Dato,first of all if Tony Fernandas wasn't sucking up to Umnoputras,he will still be an unknown.He is just a front,like Vincent Tan was to Dr Mahathir.And just look how much VT is worth now.Billions of ringgit.

What can TF and KM do for MAS.They will make MAS go bankrupt faster,or MAS will need another bailout soon.These people think that they can conned the public,to believe that they can perform miracles.What they didn't understand is that MAS doesn't need the cronies of Umnoputras to make it better.MAS needs honest managers to help turn it around and make it profitable.

These crooks are sure going to make the GLC's all go belly up if Umno is not send to the cleaners this coming GE.Every big losses these GLC'S take are bound to go to some robber barons pocket.Even Sime Darby buying ENO is making some big profits for the hubby of the SC lady boss.

Anonymous,  12 September 2011 at 11:11  

Datuk Sak,
I get the picture now. We need to change the government if we want to safguard our country's strategic assets. So much has been lost and much more will be lost as long as the present leaderships are retained.
Pak Tua.

bruno,  12 September 2011 at 11:26  

Dato,these bastards of Khazanah and Air Asia have already sucked truckloads of ringgit out of this country.And they just couldn't have enough.They must suck every last penny then only these bastards will be happy.

These bastards and pariahs must be rounded up,tied and hanged upside down,stark naked in public.Then they shall be whipped and have their bolas neutered for everybody to see.That is their punishment for being too greedy.To turn them into pondans.

Anonymous,  12 September 2011 at 11:57  


The MAS-AA swap deal has the words "GREED & CORRUPTION" written all over it. When is ever a deal done by Khazanah that makes economic sense to the nation but to enrich someone who is well connected to your beloved party? You tell me lah Dato'.

Anonymous,  12 September 2011 at 13:12  

its time to make hay when the sun shines. then what friends for, dato. we sama sama binafikir and got flung with our WAU. You have goons managing out the state coffers so this is what what we got.

Try ask Khazanah what happened to Biotropic, the herbal company they set up with the Germans. The Germans had gone with our money......what stupid goons we have up there.

Anonymous,  12 September 2011 at 16:10  

I am also from MCKK.Am I a buttloving gay cos I studied there?I think your own dear Sultan also MCOBA.I don't think he is gay.

Anonymous,  12 September 2011 at 16:39  

If I were paid RM 1.2 million a month. I will make the office my home. Well that is certainly better performance than Nazir Razak.

Anonymous,  12 September 2011 at 16:45  

what else is new with you guys?

Arif write as if he is houlier than thou and his opposition 'dungu's' says wahhhh latok your article is so good that we feel you have the answers to all our problems!!! my take is if you morons like him so much put him as a candidate la and see if he can get any votes!! probably he'll get 3 or 4 votes from supoorters from his blog!! thats all!!!

Anonymous,  12 September 2011 at 17:56  

no need to put nice words, just say it as raping n that would be the right word for those bastards.

the whole shitload of bastards are preying for victims n they'll never stop until all asses belong to them.

bruno,  12 September 2011 at 18:22  

Anon 12 September 2011,16:45

You cannot be more correct that if Dato Ariff were to stand on an opposition DAP ticket,his opponent from Mca or Umno would probably get 3-4 votes.Even if they get more than 4 votes,most probably will lose their deposit.

Anonymous,  12 September 2011 at 19:20  

Assalamualaikum Datok,
I had said it several times, and i will say it again.
Khazanah thinks that the two guys TF and KM are the best people to turnaround MAS. Let's talk of the worst case scenario. What if both these guys suddenly die ? Won't we have problems now in BOTH MAS and Air Asia ?

Anonymous,  12 September 2011 at 20:21  

well its easy to manipulate Air Asia shares as its literally controlled by TF and gang ..look at its books, and you can see there is no plausible reason for the shares to have gone up from RM1 + to RM3+ - just did not add up..
huge debts on its books...this deal was cooking for a while. announce MAS big losses and then big fat hero in the form of Air Asia come flying in to rescus MAS - eh..f*&*) shame ah?? cant cari makan the legitimate way hah? pathetic morons..!

Anonymous,  12 September 2011 at 21:18  

While Sak, sorry how to bring real people capable if the only qualification to head MAS or any GLC is from a special race?

We know how this race is faring in the business world anyway.

Tony is not from there. Lim Guan Eng also not.

Well is there any hope? None whatsoever when you have guys like "Quiet Despair" who hates to "pander" to these othere people.

..."Pander" friend. I Puke at this guy.

To us now, we do not careless what happens to MAS like you soooo dearly do .

Now you know how frustrated guys like us have been for all these years. ..until we say .. who cares...

In fact we are leaving.. so none of our business. We get on with the world come what may.

Only thing is hopefully when we return for a visit , MAS or others are still around.

Anonymous,  12 September 2011 at 21:27  

Seriously, this MAS and AA merger makes most investors going bonkers. Did TM and KM propose any achievable targets for the Board of MAS or Khazanah to consider. Why is MAS or Khazanah so keen to dish out the share swap to TF or KM.

I don't know about other Malaysians. I am very tired of reading all these shady deals. They make me so sick. After MAS, comes IWK.

Come on, Mr PM, how much longer do you want to bleed this country. Don't you have any empathy or understanding for ordinary Malaysians, like myself, in trying to make ends meet everyday.

Mr PM, I plead to you to lend us, ordinary Malaysian, an ear to listen to our grouses. If you do that, I am sure more Malaysians will appreciate what you are trying to do.

umar,  12 September 2011 at 21:48  

MCKK was set up by the british to train the future administrators of the British Malaya. So that they do their biddings in the name of nation building and be subservient to the British interest.
Every boarding school has its gay waywards be it MCKK or RMC
Business was on networking basis of the old boys allumni in corporate deals and wheels.
Business schools don't teach national pride or patriotism , only business interest to plunder the country.

wandering troubadour 12 September 2011 at 21:56  

Salaam Datuk...

"Whatever ye sow, so shall ye reap"... Your beloved party gives birth to these kind of stupidities and goes on protecting the idiots who commit all the sordid affairs. You continue to have faith that your party will one day reform and therefore you just have to be patient for YOUR people to slowly come out of this problem. You can continue & wait sir! Have a swell time. Hahahahaha...

Anonymous,  12 September 2011 at 22:15  

What they are projecting is TF will turnaround MAS. But how could he do it when he is only a board member, not CEO (TF is still CEO of AA). To turnaround MAS is a full-time job.

Now in his capacity as MAS board member and with the backing of those people upstairs, TF is in the position to influence the board to get what he wants for the benefit of AA particularly in terms of "route rationalization".

Today we saw MAS being forced to share the cost of sponsoring QPR.

Anonymous,  12 September 2011 at 22:23  

Has anybody here thought of employing "Ryan-Air" CEO to run MAS for a year and pay him his dues. We will see vast leakages plugged.

Anonymous,  12 September 2011 at 22:44  

put it thsi way, Air asia needs mas more than ever now. Tony just bought airplanes that he could chew without new routes. he needs to put the new planes in the air else he is deadmeat. and that means lucrative mas routes. and firefly is putting a huge dent on his seemingly untouchable airasia. punch for punch, eddy leong is giving him bloody nose.

by swapping his shares and putting himself in mas, he is going to get new routes and stop firefly. only Idiots cant see this. but then, thats malaysia now. who cares about the country. lets plunder it the UMNO way. No, it should not be UMNO. the UMNO that I know and love has died. Mind you, I am no Malay. That plunderer is UMNO Baru with the panache of a Keralaman.
This country is going to the dogs unless the plunderers are kicked out. Anything But UMNO, AK47. ABU truly.

Anonymous,  13 September 2011 at 00:36  

the plundering has now started with MAS sponsorship deal for TF's new crown jewel QPR for its home jerseys while Air Asia will be featured for its away and 3rd team jerseys. Package deal, it appears to me. No?

el especial,  13 September 2011 at 01:18  

Expect more of such deals in the pipeline. The MAS-AA, the said PDA - Kencana-Sapura, etc etc.

Budget 2012, flashed as the 2nd 'liberalization' phase will be the precursor of things to come.

So don't get too irritated by this MAS-AA deal. More is lining up.

My sensei, the great one, the thinker, once told me that creative destruction might be the only and effective recourse in times such as these.

Namu Amida Butsu..

Anonymous,  13 September 2011 at 09:58  

Dear Datuk,

Is so depressing to know all these abuses, mismanagement and blundering through all your writings.

So are we doomed if if there is no change of federal government in the next GE ???

Anonymous,  13 September 2011 at 16:44  

The "story" of MAS for as long as I can remember is an unending story of plunder- from Tajuddin Ramli until now. In fact the same can be said about the other GLC's. The only difference is the "actors" involved at different time. Will it end? Not likely as all these characters share the same DNA's.

Anonymous,  13 September 2011 at 16:48  


Other than writing this English article, what are you going to do about the MAS-AirAsia deal?

Are you going to kick up a ruckus in UMNO about this?

Are you going to publish this in Malays so that your Malay brethrens in the UMNO strongholds can read and understand this?

Are you going to 'turun padang' and share with with your Malay brethrens in the UMNO strongholds and the villages?

Don't lah just write, write and write! Be a MAN! Go convince your fellow Malays who are blindly supporting their corrupted leaders in UMNO

Anonymous,  13 September 2011 at 17:57  


I've gotten used to UMNO and its cronies sucking the country dry under the disguise of improving the country's economy. I'm just waiting for the day when Malaysia's whole economy collapses and we will see where UMNO and its cronies will flee to with their ill gotten wealth. It's not a matter of IF but WHEN Malaysia will collapse.

Anonymous,  13 September 2011 at 18:21  


I received an article about Robert Kuok influence on Chinese import of Malaysia palm oil. Below is the link of the article:

Could you please provide us your view about this article?

Anak Malaysia

budak mat cah,  13 September 2011 at 20:39  

salam dato',

Rushdan bukan budak MCKK.


Anonymous,  13 September 2011 at 20:49  

Dear Datuk

What we fear has already begun!

Tony has forced his way through by forcing MAS to sponsor the jersey his newly acquired toy, QPR.

Can anybody figure out why MAS need to be sponsoring any EPL team, let alone QPR? If so why QPR? Why not other teams which has more passionate supporters world wide.

The experts says QPR would not survive the premier league and is certain bet for relegation candidates. If this happen, will it epitomize the fate of MAS?

Concern Citizen

Quiet Despair,  13 September 2011 at 22:20  

So MAS is now the major sponsor for TF's newly acquired QPR. Both MAS and Air Asia signed a 2-year sponsorship deaal on Monday allowing MAS logo to adorn the QPR jersey on home game while AA logo is for the team's away game.
The deal is believed to cost British Pound 10 million.
Haha, the cash-strapped MAS got taken for a ride by the mercenary Fernandes. It is not shocking really.
Worse is Fernandes did not honor the gentlemen agreement with Azman Mohktar on the share swap deal.
Please read the Guardian UK article on Aug. 18 headlined Tony Fernandes looking to build bridges as well as his fortune.

Anon 21.18

What's with you? Itching for a fight?
Just scoot and get your fat arse out of Malaysia.
Hit the road Jack and don't come back no more, no more. Good riddance to bad rubbish. One more less waste to pander to. Can save my puke.
So you are another one of those who will enter London illegally to become chefs. Good, good. David Cameron is on the look-out to eject people like you.
Tell your boss who is sponsoring you, why not open a Malaysian Chinese restaurant in Chicago instead.
The one Malaysian restaurant there already closed down some time back.

Alan Ho,  13 September 2011 at 22:31  

Dear Sakmongkol,

Rashdan Mohamad Yusof was from Victoria Institution and not MCKK. I know because we were classmate. He was one of the top student in school and then further his studies in UK.


Alan Ho

Ariff Sabri 13 September 2011 at 23:09  

alan ho,
many thanks for clarification. not central to this article- i said we can guess; either hes from mckk or a friend to AM.
good for him. his first official duty to announce mas's sponsorship of jerseys. spend baby spend- as in burn baby burn- Black Panther motto.

Anonymous,  14 September 2011 at 09:14  


Just a diversion from MAS.

Something is simmering lately in TNB. This fiscal storm has a very likelihood of turning category 5 financial hurricane for M'sia.

TNB is bleeding baddly financially. & the award-winning CEO has zilch trick, short of crying baby publicly, to resolve the problem.

Some simple questions - Why must a 40% over-reserved business entity needs to buy distilled fuel from open market, to keep its generators running? Why no programming shut-downs of spare-running generators to reduce duel requirement? Why was the Petronas maintenance not been forecasted?

Operational planning? Zero! Business management? Zilch!

Just to prove that TNB survives till now JUST bcoz it's a subsidized monopoly!

Look like the only quick way out is to twist Petronas arm again!

Pls do investigate before nasi jadi bubur. Bcoz by then MAS's fiasco will be chicken feed in comparison.

Anonymous,  14 September 2011 at 12:08  

Dear Sir,
Talking about MAS, can you enlighten us about the performance of Mr. Idris Jala when he was doing the turnaround process and now being one in the Pemandu. also a non political person to be in the cabinet.
Thank you

Orang laut,  14 September 2011 at 12:37  

If our government is not corrupt, we could just eliminate all local taxes and some federal taxes to spread the wealth n still come out better than we are now with the financial system intact!

Charge different sales tax from all the zillions of things people will buy.

True what! If you have money you'll be gatal to spend and gatal to borrow.

It's not the best solution but it's better than what we have now!

You won't have to be afraid of the rich, if you tax them so right to produce more for themselves and everyone else.

Now? It's slavery on the poor!!!

In any case we'll be selling people to Australia! Bloody ozzy dingoes!

Anonymous,  14 September 2011 at 14:54  

Bodoh lah budak tenaga.Why use diesel/fuel oil?Use coal lah...cheaper than gas.Capacity cukup.I can get as much coal they need at usd80 per ton.Tenaga takut buat precedent.Coal gomen tak subsidise.
Tengok STAR today.YTL smiling.TNB dying.Another swop lak khazanah.Bagi TNB cheaply to YTL.
Ha3 country run by dumb accountants who hv zero biz n common sense.

Anonymous,  14 September 2011 at 15:08  

Prabo Dato,

Of late I have noticed that your article written with fireworks and full of anger.I guess it must have been bowing down to the truth instead of bowing to the crooks and the lust for money and power. How can the economy be safe and sounds when it is managed by bunch of robbers and perverted thieves.

Badut Nasional,  14 September 2011 at 16:18  

ummmNO band of robbers, Naturally!

Anonymous,  14 September 2011 at 22:37  

What's the story abt the RM70m awarded to a logging company which the Pahang state govt refused to pay? Being from Pekan, you should know what was going on as the logging area is in Pekan.

Unrepentant Klepto,  15 September 2011 at 00:31  

MAS – SIME DARBY – E & O – Part One
Management buy-outs, strategic mergers and willing seller-willing buyer deals are taking place in such indecent haste as to give the impression to the lay public that corporate Malaysia is not playing ‘with clean hands’ thanks to the expertise it commands from its financial and legal advisers. No matter how much a corporate entity tries to deflect accusations of less-than-fair deliberations through self-gratuitous pompous proclamations that everything was done above-board it just can’t shake off the accusation of ‘insider trading’ not if there are thousands upon thousands of investors who smell a smelly rat around. Corporate greed is not a new phenomenon in Malaysia. It is all the more apparent now simply because financial, merger and corporate laws have become so complex that only the very wealthy are able to marshal a whole team of legal experts to make use of every loop hole in the law books. This to me is the reason why multi-billion deals today are just not only possible and practicable but eminently justified to be done with a flourish and to come out smelling good because they, the super wealthy, know the laws can’t touch them. So allow me to give some background information to put recent events in the right perspective, financially, ethically and morally.

On 14th January 1997 the News Straits Times reported that Independent Director of UMW Holdings, Mr Md Yusof Hussin, urged the Government not to approve a proposal by Sapura Holdings Sdn Bhd to buy Permodalan Nasional Bhd’s stake in the company. “..if the proposal was approved, the bigger implication would be that other lucrative investments held by PNB were also up for grabs.” Mr. Md Yusof, a qualified accountant who was also Island & Peninsular Bhd Managing Director said that much had been done by PNB and UMW to turn around the company which was on the brink of bankruptcy in 1986. He also said that it would not be an easy task for PNB to replace such a profitable investment if it were disposed of.

He said, “I am concerned because if companies like UMW are available for bidding, then there will be other Bumiputra companies eyeing Maybank, Sime Darby and I & P and so on.” He further pleaded passionately for ASB and ASB unitholders, “I would like to make an appeal to the rich and famous influential Bumiputras not to be greedy. Do not make PNB companies a target for corporate takeover. I think the PNB companies belong to the rakyat who, by and large, do not have big investments, not having much money nor influence. All they have is the ASN and ASB schemes, so don’t take that away from them.” That’s one good man!

Next entry, Part Two

Unrepentant Klepto,  15 September 2011 at 00:36  

MAS – SIME DARBY – E & O – Part Two

Let me now be advocatus diaboli for the 15000 MAS workers and all minority shareholders of public listed companies in the KL Bursa.

Writing in Fortune 11 Nov 1985, on why Going Private is Unethical Benjamin J Stein has this to say: “The great genius of the system of public corporations is the ability to raise vast sums for economic development. Its great curse, from bubbles to watered stock to Ponzi schemes, has been the temptation it offers managers and other insiders to abuse the trust of stockholders and steal from them in a seemingly endless variety of ways.”

“A particularly troublesome form of insider abuse has developed in the past decade without anything approaching full public discussion of its ethics or legality. Known as insider leveraged buyouts, management buyouts, and going private, deals of this type have totaled billions of dollars and involved major invest banks and law firms. On their face, independent of the specifics of each deal, they seem to me to raise the most basic questions of whether stockholders are getting the legal aid and ethical protection they need and by law should have.”

“I have been on the short end of several of these deals as a very small stockholder. Seem up close, as I have seen of them lately, they work like this: a group of insiders – officers and directors – works with an investment banker and a law firm to carefully analyze the assets of the company. If the insiders perceive a large difference between the going stock price and what they can get by breaking up the company, liquidating it, or redeploying the assets, they cook up an offer to buy back the company from the stockholders and “take it private.” Their offer is more than the stock market price. But it is – by definition – substantially below what the insiders believe the value of the company will be once that have it as a private fief.”

“As far as I have been able to tell, no insiders have ever put these words, or words to this effect, in prospectus:”Notice – we the management and our pals in the investment committee believe we can put up a small amount of our own money, take all the cash out of your company, borrow the rest, and rapidly make many times the amount we put in. It is altogether likely our return on investment will be exponentially greater than yours. That dear stockholders, is the only reason we would do such a deal.”

“Though these words never appear in going-private prospectus, they( or their equivalent in legalese) should. By any business or economic definition, an insider buyout can make sense if, and only if, the insiders are confident they can rearrange the assets of the company for their own large benefit and make those assets worth more than they paid for. Theren lie at least three, and possibly more, very large rubs:
Managers and directors are, by law and custom, fiduciaries for the stockholders. Fiduciary care, as a matter of unvarying law from the Middle Ages to the present, requires that the fiduciary place the interests of the stockholder ahead of, prior to, and superior to his own interests at all times and in all cases.”

Next entry Final Part

Unrepentant Klepto,  15 September 2011 at 00:38  

MAS – SIME DARBY – E & O – Final Part

“ Query (as we used to say in law school): How can an insider conceivably be exercising his fiduciary care to a stockholder if he plans to buy that stockholder out at a low price and then resell or hold the stockholder’s former assets at a high price? If the insider knows a way to realign corporate assets to realize more value, is he not legally and ethically bound to do that for the benefit of his cestius, his wards, the stockholders? How can he justify buying from the stockholders something cheap he knows is worth more, often far more, than he paid for it? Returns to insiders in some leveraged buyouts have been 40 to 1 and better, while stockholders got a few percent on their money. How can fiduciary do that?”

“Query: When insiders do a leveraged buyout, are they not inevitably acting on inside information? Won’t they always, in every case, know the true value of this real estate or that invention or this pending contract or that competitor’s problems far better than stockholders to whom they make their leveraged-buyuout offer? If that is so, as it inevitably is, are not insiders just as inevitably acting for profit on inside information? Why is this allowed?” ...

“Query: Why are insiders not required to disclose – under Rule...., the going-private rule, which also requires full disclosure – the very basic fact that they plan to make far more out of the corporations assets than they are paying stockholders for them?”

“To lump all of this into one mound of legal and ethical sorrow: How, under fiduciary standards, insider trading restrictions, and full-disclosure requirements, can insiders get away with transactions that unavoidably call for insiders to treat themselves vastly better than their ward-stockholders, on inside information, without full disclosure?............

“We might ask the investment bankers a few questions as well. Investment bankers are required to certify in all going-private deals that the purchase price is fair. But the same investment banker or a closely connected firm may already be at work reselling corporate assets and may know that the stockholder is receiving far less than the insiders will get. How then can the “outsiders’ price” possible be fair? How, for that matter, can the investment bankers possibly represent the stockholders as a large, anonymous mob while their very large fees are paid by the insiders, whose interests by definition are substantially divergent from the stock holders’? Aren’t they also fiduciaries?

Anonymous,  15 September 2011 at 12:32  

Anon 14 September 2011 12:08,

My 50 sen worth of view;

Minus the sales of assets, I believe Idris Jala did a good job by shaking MAS employees to be innovative about bringing in revenue and cut costs. In addition, he managed to a "certain extent" to convince the government not to meddle in MAS' business.

In selling MAS assets, I think Idris was greedy to show quick results within the first 2 years of his stewardship. Remember MAS profit was RM700 million in the second year? The sale of MAS building at Jalan Sultan Ismail was only RM300 million. Today MAS is left with no assets except its employees.

I still believe the bigger issue for MAS is the Government intervention at policy level. Decisions like privatising MAS to Tajudin Ramli, the sale of Inflight Catering to Pak Lah's brother and not allowing MAS to withdraw unprofitable routes are the major issues that cost MAS millions and billions of RM. And I wonder how the share swap with Air Asia could help.

As for his current position at Pemandu, I doubt Idris can do much. He has to succumb to his political bosses who do not have the willpower to make things right.

Pok Li

Tinta Hitam 15 September 2011 at 22:42  


Itu sbb mengap kit aperlu mencampakkan UMNO to "history dutbin"..Lagi lama UMNO berada diatas selagi itu lah kes kes sebegini berterusan..

Anonymous,  16 September 2011 at 00:43  

Why TF cannot involve himself with MAS? To rebuild MAS brand value and maintain its position as a "premium" airline, sponsoring a football team is a means of constructing communities around the MAS product. But the team that it should be involved with must in turn help MAS “improve its perceived value” and hence has to be a quality “premium” team which today can only be either Manchester United or Manchester City or Chelsea. QPR is definitely the wrong team for MAS to be associated with! It is more AAX.

Pro Bena Publico 20 September 2011 at 22:32  

Let us forecast what will happen in the near future.

1. MAS will buy over Team Lotus.

2. Sapura will take over UMW.

3. Air Asia will take over the profitable routes from MAS.

4. Qantas is looking for an investment in Asia, and MAS will be conveniently available and will be taken over by Qantas.

5. The alternative will be yet another bail out of MAS by the Government.

6. Khazanah will privatise CIMB in yet another golden handshake exercise.

I could go on and on, but the above will should be enough to tickle the imagination for now.

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