So we are expected to believe!

All day long friends and the curious have been messaging me with regards to the Battersea Power Redevelopment Project, that the EPF and PNB are buying into the next phase, or so we are expected to believe!

My response to all was the same,

1. Is not PNB the major shareholder of Sime Darby and SP Setia, hence are they not buying what they already own save for the minority.

2. Is the EPF not an original consortium partner?

3. If 1 and 2 are correct than would there not be questions asked with regards to the ethical and moral persuasions to this deal. Have directors of companies not been charged for criminal breach of trust for these types of deals.

4. Now one of the issues that was mentioned for cost escalation were the fact that the four chimmenys need rebuilding and the asbestos issue. For such an old property and taking into consideration that the power station had to be maintained and its age, was not a technical due diligence underaken? What happened to the smart people in Sime and SP Setia, did they not know what they were buying?

5. Who are the lead managers and have they been updating the board?

6. If 5 above is a yes was this information disclosed when Sime was being restructed, if not would not the parties to the restructing have committed an offence under the CMSA?

I can understand that PNB has alot of face saving to do and therefore had to sell what effectively is a bale out disguised as a purchase, but what is the EPF doing, bailing out itself? 

To me its yet again nothing more than another example of incompetency. Maybe we have a long way to go to being a developed nation!

Who is Accountable?

We all read that The Group wanted to do a group restructuring that involved merging their engineering and their energy vehicles into their holding company. The result was that the engineering company, mired with all sorts of problems voted yes, whilst the energy company which is the healthier of the two said no. 

In corporate exercises of this nature there are a host of advisors, from financial reporting accountants to the independent advisors that vet the data, drawn up the various documentation for submission to the regulators and finally present them to the shareholders to be voted on. 

The curiousity is why were the shareholders of the energy entity, only armed with information presented  to them, astute enough to reject the proposal, was it as the actual the offical line suggest, that oil prices were moving north and as such they did not want the deal, or was it simply that the shareholders thought that they were not willing to use their money to bail out the non performing engineering company, lets not forget that the auditors of the enginerring company issued their last report with a "going concern" reservation, the engineering company has issues with their contracts both locally and abroad, etc, etc.

To me this is a classic case for a governance case study,

1. Did the directors of the energy company discharge their duties and reponsibilities as required by law and in the best interest of the comapny on which they sit?

2. Did all the advisors similarly fulfill their responsibilities as professionals, or were they naive enough to believe if the offer was attractive enough shareholders were bodoh enough to approve the scheme.

3. Did the regulators do their own due d and question the deal in depth. The talk was that all that was happening was using good money to try and cover a sink hole. Are our regulators not pandai enough?

4. What was the single largest shareholder doing, why did they let it happen, were they just interested in letting things go by, its not our problem approach. Since becoming the single largest shareholder they don't seem to have done anything, the same management team that was the cause of the problems are still there. Says much about this corporate shareholder and their perceived reputation for good management.

5. The MSWG too chooses to remain silent. This is a case for them to defend the minorities, who else is there? 

On the surface it seems that from the directors to the advisors to the regulators have questions to answer, but I suppose silence will prevail and nothing happens!

So much for the regulators, the exchange and all those that actually want is to believe that cg in Malaysia is improving!