Thinking Aloud - Can We trust what the CEO's say?

In 2012 when a large well regarded construction company bought into a diversified group in transport solutions and oil and gas industries, the shares of the acquirer went down, the shares of the acquiree went up. The original investment of 10% has since grown to 25%, by way of the convertible loan stock, the "well regarded" construction company has now become the biggest/single largest shareholders.

In a 2012 interview, the then CEO/MD of the construction company said (refer to Star Online 27th September 2012 article), "that it gave the construction company an easy entry point into the o&g sector and that they could tap into the group's transport engineering business." This year when the construction group became the single largest shareholder there was a similar interview with the current CEO/MD, and these are some of his quotes:

1. "We need to look at the various possibilities of how best to enhance the group, we will definitely share with them with our shareholders once we have come to a conclusion", 

meaning that since the investment in 2012, the "well regarded" construction company has done nothing?

2. "More board representation in the group doesn't necessarily mean its business will improve overnight". 

Mr CEO/MD this was quoted in the same interview you gave, "Sceptics will point to the group's track record and share performance. Even when oil was trading north of US100/barrel in the middle of 2014, its market capitalisation shrank by half from RM1.44b in December 2003. Today its market value is RM279.76m. An investor who held the group's shares since 25.9.2012 would have lost 52.64%, there has been no dividend since 2008".

Mr CEO/MD, are you still sure that more Board representation is not needed, is it not the responsibility of the board to lead and control and to oversee the conduct of the company's business! In fact Mr CEO/MD should you not follow the case of Sime, when they lost billions in their Qatar project the Board took responsibility and stepped down and a new management team was put in. Should you not be looking at similar action?

3. You went on to say, "Looking on the bright side, the group has an order book of RM5.3b in its order book, (I presume that it includes the o&g sector), if that be the case, can you do a quick review and inform/clarify to your investors how much of this is has a true possibility of being realised into profits. Additionally have you taken into account the current problems that the company is having with the Land Transport Authority, and have you taken into consideration that your own company has been divesting out of India over the last few years and whether there are no skeletons left there for this investment of yours?

In the Edge (Feb 22, 2016) you were quoted as saying, "Instead of cash redemption, we opted to convert the bonds into 348.80 million shares, worth RM62.8m. Now bearing in mind that your original investment was RM149.00m(as per Star online Sept 2012), would it not have been better to cut the losses and move on, I am sure that the possibility of you recovering "anything" is probably slim considering the many comments by the different research houses that the management in your investment has shown a consistent capability for not delivering!

Mr CEO/MD I am sure the investing public will be very curious in your responses in putting your investment right, if not the investor's would hold you responsible for such a glaring failure to recognise the true situation, painting a more than optimistic picture similarly to your predecessor, unless of course you have fully provided for this investment and the interview was nothing more than a opportunity to profile yourself in the business press!