Calling a Spade a Spade - The Continuing Sime Darby Fiasco

So in the late 90s and early 2000s the owners of Sime Darby Berhad started the process of taking public listed entities within the group private. Some suggested that it was to make sure that income flowed totally to the holding without any dilution (by way of minority payments).

Then in the mid 2000s there was the merger with other plantation companies within the PNB group, the saying was that big was beautiful, synergies, economies of scale etc etc etc.

Now since the new Chairman of PNB has come in, its let's re-list property and plantations (I understand the Motor entity was to be included but the numbers are not so good) to unlock value.

Wow within 15 years we are back to another round of list, delist and re-list, (of course the thought did occur to me whether it has equally to do with generating income for the Maybank group).

Now lets be realistic, its time for brutal honesty;

1. Is this really for unlocking value or to hide the fact that the group is a non performing group.

2. Fact remains that the current CEO is a non performing chap, every where he has been too, FELDA, Bank Islam, TH etc etc, he has never enhanced the value, many argue that in fact he left the entity worse off.

3. Reality is that after the Sime/Qatar debacle they have never been able to recover. At that time there was a light weight CEO, he was removed another lightweight was appointed, nothing has changed. Why when almost all the management left/was replaced from the time of the Sime/Qatar but the  CFO still remains puzzles many. Does the CFO not play an important and pivotal part, is the CFO not the check and balance to the CEO, could the CFO not have been more effective then and now, or was the package more alluring that the right thing to do was to be silent and hold on to dear job.

4. Ignoring the fact that the current CEO is really not a toughie, what really happened was Sime went and over geared itself in purchasing NBPOL, and what that means is if you are not an efficient company, eventually you will not be able to meet your obligations.

So Sime was forced to par down its debts by selling prime assets. Lucky for them their PR department was able to sell to the media as a monetisation program.  So now we got this poor performing CEO and lepak CFO being made to look like heros. One must also ask what happened to the much vaunted Risk Management system, they should have spotted red flags.

So cutting the story short, PNB Chairman and CEO, lets face reality, its not a case of unlocking value, its a case of hiding the incompetency of the Board, its CEO, CFO, Risk Management division, oops it looks like maybe the whole group.

You guys don't believe me that the whole system is broken, ask the CEO whether he tried to appoint his buddy as Chief Internal Auditor and when Audit Committee said maybe not, he continued with current one till now, maybe its some new management philosophy!  

So Tan Sri Chairman, to generate real value please put the group right, ring out the inefficiencies and ineffectiveness, it might take some time, you might be surprised that the group will be far more profitable then you imagined.

Maybe to start of you may want to ask why not only the CEO has a BMW 7 series but all his direct reports, why when they travel they travel in entourages etc etc.

Remember nice people do not run performing companies, they run charities! Doing the delist, re-list, delist etc is not addressing the real issues, it only delays the inevitable.