10 MARCH 2012
SC Chairman (under fire) retires as expected
The Securities Commission (SC) announced that Tan Sri Zarinah will retire when her term as Chairman is completed on 31 March 2012.
It does not come as a surprise and was widely speculated. Tan Sri Zarinah came under fire for the Sime Darby / E&O case when it was revealed that her husband, the Chairman of E&O, had bought shares in E&O just before Sime Darby acquired a large chunk of the company.
Malaysian newspapers didn't write about this issue (worrisome) although surely some journalists must have known it, but The Straits Times (Singapore) did publish an article about it, after which the Malaysian papers more or less had to follow suit since the news was also all over the internet.
Another issue was if Sime Darby had to make a MGO for the remaining shares. The SC concluded that it didn't need to, but it didn't give any arguments, and later on it was revealed that the SC taskforce was of the view that a new "concert party" had been created between Sime Darby and E&O's managing director and thus that a general offer obligation had been triggered.
The perceived conflict of interest between Tan Sri Zarinah, as the Chairman of the Securities Commission, and her husband Datuk Azizan Abdul Rahman, Chairman of E&O, looked outright bad and was directly opposite the SC's own Principles and Standards:
"Conflicts of Interests
An integral part of ethics and integrity is the avoidance of conflict of interest. In this regard, all SC staff and their immediate family members have the obligation to avoid putting themselves in situations of conflict where their personal interest is conflicted with the interest of the SC."
"The SC must demonstrate the highest level of honesty and integrity in all our dealings with stakeholders and ensure exemplary conduct of our staff. The Statement of Principles and Standards applies to all business transactions entered into by the SC. All staff as well as those who do business with us, need to fully understand the requirements of the Statement and ensure its application in all dealings and engagements with the SC."
The above statement was signed by Tan Sri Zarinah herself.
Datuk Azizan Abdul Rahman was actively involved in many other listed companies, both through his chairmanship of the investment panel of Lembaga Tabung Haji (one of their investments is Silver Bird which recently ran into severe problems), and directly:
Apex Equity Holdings Bhd
Bina Darulaman Bhd
Gefung Holdings Bhd
Isyoda Corporation Bhd
MBF Holdings Bhd
Nagamas International Bhd
Ramunia Holdings Bhd
TH Plantations Bhd
Tongkah Holdings Bhd
Isyoda was taken private after a General offer with "delisting threat" at 0.6 times book value. It was involved in the construction of the controversial Shah Alam hospital:
"On winning the contract in 2007, Sunshine Fleet has first sub-contracted the project to ailing construction firm Isyoda. Isyoda was unable to complete the project after it was delisted from Bursa Malaysia, and is in the process of being declared bankrupt. The project was later sub-contracted to GMH. GMH claimed that when it took over last year from Isyoda, it had to fork out RM10 million to repay the ailing construction company for the bond the latter placed with the Public Works Department (PWD) on Sunshine Fleet's behalf."
Blogger Where is Ze Moola wrote about Ramunia. Interesting is the following paragraph:
"According to a filing with Bursa by Ramunia, Oilcorp’s 51% indirectly owned subsidiary Oilfab Sdn Bhd had accepted a letter of offer from Ramunia to acquire its Pulau Indah fabrication yard assets located on it for RM83.8 million on Jan 25. According to Ramunia, RM80 million of the purchase price would be satisfied via the issuance of 156.86 million new Ramunia shares to Oilfab at an issue price of 51 sen each while RM3.8 million would be paid for in cash. What is interesting about the deal is that Oilcorp was also delisted from Bursa on the same day. This certainly raised questions on the timing of the deal. Could the deal have saved Oilcorp from delisting had it sold the asset earlier?"
In my opinion, it was a huge mistake of the "powers that be" to appoint Tan Sri Zarinah as Chairman of the Securities Commission while her husband was actively involved in so many listed companies. It was not a question if conflict of interest situations would happen, but when.
The new appointments for the Securities Commission are:
Datuk Ranjit Ajit Singh as Chairman
Dato Dr Nik Ramlah as Deputy
The Star describes them as follows:
"Ranjit is a leading expert in the field of securities regulation and is widely recognised internationally for his expertise in the regulation and development of emerging and developing markets”.
“Nik Ramlah is internationally recognised for her work in the area of corporate governance, having been actively involved in the preparation of a high level finance committee report on corporate governance which was released in 2001 and the corporate governance blueprint which was released last year”
The Securities Commission (and Bursa Malaysia for that matter) have been criticized by the IIF:
"Despite its operational independence, the SC is perceived as being influenced by the MoF by a cross-section of market participants and is considered to be a weak regulator."
"The E&O deal had triggered unease over the widely perceived coddling by the SC of large state-controlled companies at the expense of minority shareholders when exercising its authority on corporate takeovers."
Both the SC and BM have tried to increase much needed Corporate Governance by using the "soft" approach: education, brochures, increased documentation etc. However, this approach is rather limited and a "hard" approach is needed to complement its effort by increasing much needed enforcement.
Ranjit and Nik Ramlah have their work cut out for them.
ACTIONS MUST BE TAKEN
SPECIAL TASK FORCE AND macc MUST BEGIN INVESTIGATION ON SC HEAD.....
AND MORE INSPECTIONS MUST CARRIED ON HER HUBBY, TOO.....
PEOPLE LOST FAITHS......................................
HARAPKAN PAGAR, TAPI PAGAR BUKAN SAHAJA MAKAN PADI, MALAH SAPU DAN GASAK PADI HABIS-HABISAN....................SHAME, SHAME, SHAME!!!!!!!!!!!!!
WILL YOU HAVE FAITH TO MALAYSIA SHARE MARKET??????????????????????????