Openness the best policy
It is disappointing that former Selangor menteri besar Datuk Seri Dr Mohamad Khir Toyo stayed away from the Selangor Select Committee on Competence, Accountability and Transparency (Selcat) hearing on the financial conduct of the Welfare Association of the Wives of Selangor Elected Representatives (Balkis), which Khir’s wife Datin Seri Zaharah Kechik led during his tenure as head of the Selangor government.
A news report last week said Khir and Zaharah considered the hearing illegal although it was set up by the Selangor State Legislative Assembly.
The Selcat hearing was told by a Selangor government firm that it spent RM1.7 million on trips made by Khir, his family members and officials to the Disney theme parks in Paris and Florida. The question now is, were public funds misused?
According to the details provided by Permodalan Negeri Selangor Bhd’s CEO Datin Khairiyah Abu Hassan on the trips in 2004 and 2007, no concrete outcome or official reports emerged from these and other trips, which were described as technical.
As a public official, Khir has a clear duty to submit to an official investigation so that the people can be satisfied that there was no wrongdoing. The best regulations and institutions to safeguard against abuse of power would be useless if those who need to clear their name choose to ignore these at will.
But by daring his detractors to act against him instead of coming forward to cooperate with the inquiry, Khir is only damaging the image of the institutions he is associated with.
His case proves yet again that there is nothing better than openness to establish one’s innocence.
Timely and better disclosures, please
Public listed companies are duty-bound to make timely disclosures on material developments that shareholders can use to make informed decisions.
Recent announcements that have fallen short of this standard include those made by Trans-Asia Shipping Corp Bhd (Tasco) on the change in its major shareholder as well as disclosures by Dreamgate Corp Bhd on its Cambodian operations.
A filing dated March 26 showed that Tasco’s second largest shareholder, Nippon Yusen Kabushiki Kaisha (NYK), increased its deemed stake on March 23 after buying Kombinasi Restu Sdn Bhd which owns 33.58% of Tasco. NYK already owns 23.36% of Tasco and the new block exceeds the 33.3% mandatory general offer (MGO) trigger. Tasco’s share price jumped 13 sen or 23% to 69.5 sen the next day.
It was only when it was queried that Tasco said NYK had obtained a MGO waiver from the Securities Commission (SC), without saying when a waiver was sought and granted. The company cited Practice Note 2.9.7 of the takeover code without giving details as to why the SC granted the waiver.
Could Dreamgate have warned its shareholders better on the possibility of its Cambodian operations dragging the company’s earnings into the red? On March 31, or just over a month after the company announced its unaudited 4Q2008 results on Feb 27 this year, Dreamgate said it needed to make RM13.3 million worth of impairment and write-offs that would result in a RM22.8 million net loss (from a RM9.5 million net loss) for 4Q2008 and an unaudited RM2.9 million net loss for the whole year (from a RM10.4 million net profit).
The impairment was the result of a directive by the Cambodian government that the company received on Feb 26, “that all sports betting and electronic gambling machine businesses in Cambodia cease operations immediately”.
However, in its note to accounts on Feb 27, Dreamgate said the cessation order for all slot machine clubs was “temporary, pending a review of the directive” and added that the directive “does not affect” its concession operations in casinos in Cambodia.
Management may not have meant to mislead its shareholders. However, management could have better highlighted the roadblock they encountered in Cambodia by issuing a clearer statement.
More facts and details should have been given when the company first received the directive, not just its interpretation. Wouldn’t a separate announcement have been better instead of a terse statement in the notes accompanying its accounts?
Frozen property value
The market cannot be that bad that the value of properties in Jalan Sultan Ismail, the Golden Triangle of Kuala Lumpur, has seen zero appreciation in 12 years.
But that is what happened to a property belonging to Syarikat Takaful Malaysia Bhd.
Takaful last week proposed to dispose of seven pieces of land in Jalan Sultan Ismail, together with an 18-storey office building erected thereon, to Export-Import Bank of Malaysia Bhd (EXIM Bank) for RM63 million cash.
Interestingly, the selling price of the property is RM2 million below Takaful’s original investment cost of RM65 million when it purchased the property in 1997.
Takaful said there are no liabilities, including contingent liabilities and guarantees, to be assumed by EXIM as a result of the transaction.
In an announcement, Takaful explained that the disposal consideration of RM63 million was arrived at on a willing buyer willing seller basis after taking into consideration the market value of the property of RM60 million ascribed by IM Global Property Consultants, a firm of professional valuers, on June 30, 2008, based on the comparison method of valuation.
The company added that the net book value of the property was RM60 million as at June 30, 2008.
Still, it is puzzling that the property has not appreciated in value over the last 12 years, given its choice location. Could Takaful have purchased the property at a high price or has there been major wear and tear of the property that it has affected its value over the years?
This article appeared in The Edge Malaysia, Issue 749, April 6-12, 2009