ganesh

The Auditor-General DID report on NFCorp, and investigated it coincident to the "Fidlot" audit

2012-01-26T07:07:00.000-08:00

by Ganesh Sahathevan

The Auditor-General Malaysia DID report on NFCorp, and investigated it coincident to the "Fidlot" audit. The 25 October 2011 report from Malaysian Insider titled
"Audit finds minister’s family made mess of national cattle farming project"; is a reasonably accurate translation of the Auditor-General's report, which mentions National Feedlot Corporation and NFCorp in at least 30 instances

The Malaysian Insider report states:

“An audit check found production in 2010 was only at 3,289 heads of cattle or 41.1 per cent,” the report said.
The audit was conducted between January and March this year.

Among the reasons cited were the NFC corporation’s poor management including its failure to train 130 farmers for the project, the 5,000-acre farmland in Gemas being overgrown with thorny acacia shrubs, and poor use and maintenance of its facilities.
The audit report also found NFCorp did not finalise the standard operating procedure or implementation agreement in 2010.

It noted NFCorp claimed it could not do so because the government has yet to build an abattoir capable of slaughtering 350 heads of cattle a day.

The audit report said the Treasury completed a study on the slaughterhouse on April 5 this year to be presented to Prime Minister Datuk Seri Najib Razak.

The audit report noted that two factories related to the project have yet to be built, namely the livestock feed factory that was part of the pilot project under the entrepreneur development programme, and a bio-gas factory to process waste from the abattoir and the feedlot into fuel for the farm.

The report stressed infrastructure upkeep as the most important factor for the project’s success and recommended the MoA devise a “Blue Ocean” strategy to boost its cattle breeding production to meet the original 60,000 target by 2015.

END

Tan Sri CB vs MAHB: Its really about a gushing stream disappearing

2011-12-02T02:31:00.000-08:00

The Star , 19 Aug 2010 reported Tan Sri Choirboy (CB) saying:

“We have actually reached our target of RM40 spending per pax that we set for the last quarter. We have unearthed a gushing revenue stream that can boost the bottom line and also serve as a buffer to rising fuel prices.”

He said baggage fees and AirAsia Cargo were significant contributors to ancillary income for the group.

http://biz.thestar.com.my/news/story.asp?file=/2010/8/19/business/6881852&sec=business

I then said:

This writer challenges Tony to find this "gushing stream " in any place where there are laws against misleading and deceptive conduct in the carrying out of a commercial enterprise.

Now however Tan Sri Choirboy faces a problem even in Malaysia. Malaysian Airports Holdings Bhd wants part of that "gushing stream". Choirboy can see that each cent added to "his" "gushing stream" means an additional burden on passengers who are then likely to revolt against all charges.

This could in turn lead to a forced scaling back of charges, causing the "gushing stream" to weaken, possibly to a point where AirAsia cashflows will be adversely affected.

END

Archana Gallery, a division of Ananda's Astro?

2011-10-12T00:48:00.000-07:00

Archana Gallery is owned and operated by Archana Marshall,

wife of Astro CEO Ralph Marshall.

The records below show that the gallery's website is registered to one Ashok Kumar, whose email address , ashok_velpula@astro.com.my,

suggests that he is an Astro employee.

The records also show that the website was first registered in 2007,

and some 3-4 years

before Astro was taken private.

(http://biz.thestar.com.my/news/story.asp?file=/2010/3/18/business/20100318084004&sec=business)

There does not appear to have been any disclosure to the investing

public of what at minimum, appears to be related party transaction.

END

http://www.archanagallery.com/

Created: 2007-12-13 04:06:44

Expires: 2011-12-13 04:06:44

Last Modified: 2010-11-29 17:44:56

Registrant Contact:

Ashok Kumar

Ashok Kumar (ashok_velpula@astro.com.my)

Endah Villah Condominium

Sri Petaling, Kuala Lumpur, my 57000

P: +603.95436688 F: +0.0

Administrative Contact:

Ashok Kumar

Ashok Kumar (ashok_velpula@astro.com.my)

Endah Villah Condominium

Sri Petaling, Kuala Lumpur, my 57000

P: +603.95436688 F: +0.0

Technical Contact:

Net Onboard Sdn Bhd

Net Onboard (support@netonboard.com)

No. 31 & 33, Jalan Utama 2/18 Tmn Perindustrian Puchong Utama

Puchong, Selangor, my 47140

P: +603.80625088 F: +603.80624955

Billing Contact:

Net Onboard Sdn Bhd

Net Onboard (support@netonboard.com)

No. 31 & 33, Jalan Utama 2/18 Tmn Perindustrian Puchong Utama

Puchong, Selangor, my 47140

P: +603.80625088 F: +603.80624955

SIA Board's Foreign Talent (FT) Problem-UNSW Singapore Revisited

2011-09-26T23:31:00.000-07:00

David Michael Gonski, an Australian, is a member of the Board of Directors, Singapore Airlines Ltd. He is also a member of the Board's Audit Committee.

As Chancellor of the University of New South Wales he is responsible for UNSW's financial statements, which he signs off together with the Vice-Chancellor, Fred Hilmer.

UNSW's accounts are audited by the Auditor General, State of New South Wales. His most recent audit opinion contains the following qualification:

Audit Opinions

The audits of the University and its controlled entities’ financial statements for the year ended 31 December 2010 resulted in unqualified Independent Auditor’s Reports for 12 entities (including the parent) and a qualified Independent Auditor’s Report for one entity.

I was unable to express an opinion as to whether the University of New South Wales Foundation Trust had recorded all revenues received from donations and fundraising sources in its financial statements. This is common for entities with these sources of revenue, as it is impracticable for them to maintain effective systems of internal control over the receipt of such revenues until their initial entry in the financial records. My audit report for 2009 was similarly qualified.

At the time of finalising this report, the audits of nine controlled entities in the group were incomplete.

http://www.audit.nsw.gov.au/publications/reports/financial/2011/

Vol02/pdfs/10_university_of_new_south_wales.pdf

While the Auditor General's audit opinion may not seem damning, it should be kept in mind that the UNSW would be to Singapore Airlines what a HDB provision shop is to a NTUC Fairprice.

If UNSW is considered so complex that incomplete records are acceptable, then Gonski cannot be said to have the skills required to oversee the financial statements of something as complex as Singapore Airlines.

This is not the first time that the Auditor General has raised questions about the state of UNSW's financial controls. In 2010 The Australian newspaper reported:

THE University of NSW has written off $5.35 million in debts owed by students, reflecting a history of poor financial control.

The 2009 annual report, tabled in NSW Parliament yesterday, shows a $2.9m write-off, following a $2.45m write-off the previous year.

The NSW Auditor-General raised concerns about the student money issue in five consecutive annual reports, the most recent being last year's.

(THE AUSTRALIAN, 5 JUNE 2010)

Gonski was queried about the report in THE AUSTRALIAN . His response:

........ you will be aware from the report in The Australian to which you refer that the monies which were written off arose over a lengthy period indeed between 1990 – 2006. My appointment in late 2005 as Chancellor coincided with the implementation of new and more focused accounting procedures which culminated in a decision to write off these amounts. I’m not aware of any adverse reports against me and indeed believe that one of the things that I and the present Vice Chancellor Professor Fred Hilmer have achieved since coming into office is an improvement in the financial management of the University.

SIA shareholders, Singapore taxpayers and contributors to the CPF can decide for themselves if the response is an acceptable explanation from yet another FT.

END

NOTE:

Fred Hilmer was the man the EDB accused of being "misleading" with the truth about the failed UNSW Singapore venture.It was Gonski and he who decided to end that venture:

UNSW Vice Chancellor comments to Australian paper misleading
By Foo Siew Shyan and Suzanne Ho, Channel NewsAsia | Posted: 05 July 2007 2132 hrs

Photos

1 of 1

Professor Fred Hilmer, Vice-Chancellor of UNSW

SINGAPORE : The Economic Development Board (EDB) has written to the University of New South Wales (UNSW) to clarify comments published in The Australian newspaper.

In a letter to UNSW's Vice Chancellor, Professor Fred Hilmer, EDB said his comments were misleading.

EDB added that Professor Hilmer had laid blame for the closure of its Asia campus on EDB, rather than acknowledge that it was a business decision taken by UNSW.

The UNSW announced its decision to close its campus on May 23.

Its Vice Chancellor told The Australian newspaper that he believed he had "a workable plan for the campus' future but was rejected "at the 11th hour by the EDB".

But EDB pointed out that UNSW had concluded it would not be able to meet the deliverables expected under the EDB's support package.

In a detailed letter, the EDB's Assistant Managing Director Aw Kah Peng wrote that after one and a half years of negotiations, EDB agreed on a support package for UNSW in 2004 to set up a permanent campus in Singapore.

The student enrolment was targeted at 10,000 to 15,000 in the long term.

The deal was signed in February 2005 by the previous Vice-Chancellor.

But when Professor Hilmer came in June 2006, he requested that EDB increase the support package. EDB did so in August 2006.

Based on a revised plan, the student enrolment targets remained largely unchanged but the Changi campus was to be accelerated and there were to be additional R&D activities in Singapore.

But student intake fell short. In March 2007, 150 students enrolled, which was half of what UNSW had expected.

So Professor Hilmer asked EDB to reconsider its support package.

There were extensive discussions between EDB and UNSW between March and May.

The revised plan envisaged a considerably scaled-down operation - just 2,000 students by 2016.

That was less than half of the university's commitment agreed earlier.

EDB said it rejected the proposal since there was no assurance of the development of the new campus.

But EDB was prepared to give the university till April 2009 to decide whether to develop a new campus at Changi.

It was also prepared to continue the support given, but not to increase it.

EDB also went as far as to consider fresh funds if it received UNSW's proposal to develop the new campus.

But UNSW decided to close its venture here and EDB respects its business decision. - CNA /ls

How it was: Guinness ad in Malay,with Malay actors,

2011-08-18T09:26:00.000-07:00

This was sent me with the following note:

Someone found this in the library at Ohio University. It is in a program booklet of KGMMB (Kesatuan Guru-Guru Melayu Malaysia Barat)'s AGM 1968, and this advertisement appeared on p.2, side by side with the message from the then Deputy Prime Minister. How different it was in those days.

Tony Fernandes has dumped AirAsia: Time for fans to face misplaced devotion

2011-08-12T23:08:00.000-07:00

In all of the reporting and fashion magazine like chatter about the AirAsia-MAS share swap there seems to have been a willful ignorance of one facet of the deal: That Tony Fernandes, CEO, major shareholder and founder of AirAsia, has sold 10% of his 26% shareholding in AirAsia for a stake in AirAsia's competitor , MAS.
This is a sale by an insiders insider, but it seems that local and foreign media as well as a number of analysts, like jilted lovers unable to face rejection, are doing all they can to skirt around the issue, clinging to the hope that Tony still loves them and AirAsia. Fortunately for Tony these are the types who would actually believe it when told "Of course I will still respect you in the morning".

According to THE STAR:
Put differently Tony's investment in MAS has grown while that of Khazanah's in the LCC, to date, is unfortunately in the red. The deal's backers staunchly dismiss such short-sightedness: “We are talking about loose change here. What's the point of arguing over that when there's so much more money to be made down the road.”
http://biz.thestar.com.my/news/story.asp?file=/2011/8/13/business/9276350&sec=business

So, if about RM 260 million in gains realized so far on the share swap (see calculations below) is "small change", and " there's so much more money to be made down the road”; then why is not Tony keeping his AirAsia stock?

The so-called multi-billionaire could easily borrow against his AirAsia shareholding and the MAS stock to pay for the latter.That way he gets to keep all the benefit of
"so much more money to be made down the road.”
There may also be tax benefits in using debt, an issue that surely a multi-billionaire would be concerned with.

Indeed, taking on debt is exactly hat he appears to be doing in regards to his investments in his Lotus Team and other related companies,and more recently in his reported purchase of the Queens Park Rangers football team,at a price tag rumoured to be STG 100 million( about RM 488 million).
(see http://billionaires.forbes.com/article/01iO3Qh6hq6Ec?q=Lakshmi+Mittal)
Clearly, Tony believes more in Lotus and QPR than he does AirAsia.
`````````````````````````````````````````````````````````````````````````````````````

By Thursday 10 August 2011 the spread between MAS and AirAsia share prices had widened giving Tony a gain of RM RM 261 971 170!
Calculations were based on the pre-suspension closing price of RM 3.95 for AirAsia and RM 1.60 for MAS.The closing prices on Thursday 10 August 2011 were RM 3.50 and RM 1.80 respectively,
The workings are as follows:

AirAsia shares sold by Tony to Khazanah =277,650,600
Loss on shares to Khazanah, and gain to Tony =RM 124 942 770

MAS shares sold by Khazanah to Tony= 685,142,000

Gain on shares to Tony, and loss to Khazanah= RM 137 028 400

NET GAIN TO TONY: RM 261 971 170

Where art thou Zarinah;You're action needed in the matter of the MAS -AirAsia share swap

2011-08-09T03:10:00.000-07:00

Prima facie, the transaction reported below is a promise by the CEO of AirAsia, Tony Fernandes, to not compete with AirAsia's rival, MAS, in exchange for him being granted 20.5% of MAS.
The exchange of his AirAsia stock for that in MAS is , prima facie, recognition that as a result of his agreement, MAS will gain at AirAsia's expense.
Simply put, Tony has breached his duty to as AirAsia CEO , and thus to AirAsia shareholders, for his personal gain.
If Zarinah Anwar wants to even pretend that she is some sort of regulator, she needs to initiate a transparent investigation into the transaction,and provide the investing public with some sensible answers.

Associated Press
AirAsia, Malaysia Airlines form partnership
By EILEEN NG , 08.09.11, 05:41 AM EDT

KUALA LUMPUR, Malaysia -- Budget carrier AirAsia and state-owned Malaysia Airlines formed an alliance Tuesday under a share swap deal to end their long rivalry and boost business.

Tune Air, the parent of AirAsia, and government investment arm Khazanah signed an agreement to exchange shares. This will see Tune hold a 20.5 percent stake in Malaysia Airlines, while Khazanah gets a 10 percent stake in AirAsia.

Analysts say the deal will curtail competition and help turn around the struggling state carrier and improve AirAsia's access to lucrative international routes.

However, some opposition lawmakers fear it will create a monopoly.

AirAsia Chief Executive Tony Fernandes defended the deal, saying it would improve services.

"I don't think there is anything to worry about for the Malaysian public. This is driven by low cost. Be positive about it," Fernandes said.

Media reports have estimated the deal would be worth 2 billion ringgit ($657 million). Khazanah currently owns a nearly 70 percent stake in Malaysia's flagship carrier.

Analysts believe the partnership will enable Malaysia Airlines to focus on premium routes while AirAsia can expect to get more access to international air routes with Khazanah as its shareholder. AirAsia has long complained that the state carrier monopolizes profitable routes.

HwangDBS Vickers Research said the deal would help reposition Malaysia Airlines as a premier long-haul carrier. Some observers said this was akin to bailing out the national carrier, which suffered a first-quarter loss due to high fuel prices.

Malaysia Airlines Chairman Md Nor Yusof said the agreement marked "a new era of cooperation," with both airlines complementing each other and bolstering Malaysia's ambition of becoming a regional travel hub.

Md Nor said Malaysia Airlines will focus on being a full-service carrier, while its budget unit, Firefly, would be relaunched as a new regional full-service airline.

In contrast, AirAsia, which started in 2001 with just two planes, has expanded phenomenally across the region with a fleet of nearly 100 aircraft. It now offers long-haul flights through affiliate AirAsia X.

In June, AirAsia ordered 200 Airbus SAS A320 airplanes, raising its total orders for A320 aircraft to 375 as it aims to become one of the world's largest airlines by 2020. It posted a record profit of 1.07 billion ringgit in the 2010 financial year.

Other analysts said the alliance would help cut costs with better bargains for aircraft purchases and allow Malaysia Airlines to compete with regional rival Singapore Airlines ( SGPJF.PK -news - people ), which plans to set up a budget airline next year to operate medium and long-haul routes.

Dzulkefly Ahmad, lawmaker from the opposition Pan-Islamic Malaysian Party, expressed concerns the partnership would hurt the aviation sector. He said the tie-up comes ahead of a Competition Act that will be implemented next year to restrict monopolistic practices in Malaysia.

"Monopolies are the single largest stumbling block in the process to reform the Malaysian economy," he said.

"It can only result in the consumers losing out," said Tony Pua of the opposition Democratic Action Party.

Khazanah has also proposed to acquire 10 percent of shares in long-haul carrier AirAsia X at a later date. Malaysia Airlines and AirAsia will also issue free warrants to each other's shareholders.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Is Tony signalling investors sell Airasia and buy MAS

2011-08-08T02:55:00.000-07:00

If the story below is true, then it should be viewed for what it is , first and foremost a sale or a large chunk of AirAsia stock.
Regardless of the spin and bleating that are sure to follow the announcement about this being a national service, in the national interest, and no doubt a great sacrifice on the part of Choirboy Tony, and regardless of how the Malaysian public who are shareholders of the company react to that spin, fact remains that some 15% of AirAsia stock is held by foreign institutions who may not see things the Malaysian way( see list at http://www.airasia.com/my/en/corporate/irmajorshareholders.html)

AirAsia Parent Said to Near Malaysian Airline Share Swap; Stocks Suspended
http://www.bloomberg.com/news/2011-08-08/malaysian-air-airasia-parents-said-to-near-share-swap-deal-stock-halted.html
By Elffie Chew and Chong Pooi Koon - Aug 8, 2011 2:53 PM GMT+0800

AirAsia Bhd. (AIRA)’s biggest shareholder may agree to exchange a 10 percent stake in the low-cost carrier for stock of Malaysian Airline System Bhd. (MAS) as soon as tomorrow, according to a person involved in the discussions.
Malaysian Air’s government-controlled parent, Khazanah Nasional Bhd., will give Tune Air Sdn. stock worth as much as the AirAsia stake, said the person who declined to be identified as the discussions are private. Sepang, Malaysia-based AirAsia, the region’s biggest low-carrier, has a market value of $3.6 billion, about double Malaysian Air’s.
Cooperation between the two airlines, which both halted their shares from trading today, could pare competition as global economic concerns threaten to damp air travel. Malaysian Air could be able to focus on challenging Singapore Airlines Ltd. (SIA) for premium travelers on long-haul routes, while ceding shorter services to AirAsia, according to AmResearch Sdn., which upgraded Malaysian Air to “buy” today.
“They should focus on cooperation instead of fighting each other,” said Ang Kok Heng, who oversees $292 million as chief investment officer at Phillip Capital Management Sdn. An alliance could give the carriers improved bargaining power in negotiating new routes and plane orders, while Malaysian Air could also get help with fuel-hedging, he said.
Tony Fernandes, the chief executive officer of Sepang, Malaysia-based AirAsia and the biggest shareholder in Tune Air, declined to comment by text message. Khazanah spokesman Mohd Asuki Abas declined to comment when phoned by Bloomberg News.
AirAsia Growth
AirAsia has surpassed Malaysian Air in market value as Fernandes expands its low-cost operations across the region. In June, the carrier ordered 200 Airbus SAS A320neo airplanes. That raised its total orders for A320 aircraft to 375, including 89 that had already been delivered, the planemaker said at the time.
The airline and Malaysian Air both halted their shares pending announcements related to material transactions, according to separate Kuala Lumpur stock exchange statements today. CIMB Investment Bank Bhd. made announcements on behalf of both carriers.
AirAsia has surged 56 percent this year in Kuala Lumpur trading, making it the only one of the 18 stocks in the Bloomberg Asia Pacific Airlines Index to have risen in the period. It dropped 3.7 percent to 3.95 ringgit on Aug. 5.
Malaysian Air, based in Subang near Kuala Lumpur, jumped 8.1 percent last week, closing at 1.60 ringgit on Aug. 5. Khazanah, Malaysia’s state investment company, owns 69 percent of the carrier.
AirAsia flies to more than 20 countries, according to its website. It has ventures in Thailand andIndonesia, and it’s setting up operations in the Philippines, Vietnam and Japan. It offers long-haul flights through affiliate AirAsia X Sdn.
Malaysian Air flies to more than 100 destinations worldwide, according to its website. The airline in June announced an agreement to join the Oneworld alliance, led by British Airways andAmerican Airlines.
To contact the reporters on this story: Elffie Chew in Kuala Lumpur atechew16@bloomberg.net; Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net
To contact the editors responsible for this story: Barry Porter at bporter10@bloomberg.net; Neil Denslow at ndenslow@bloomberg.net

Will EADS-AIRBUS be the next target of a Malaysian initiated French judicial investigation

2011-08-08T00:24:00.000-07:00

In December 2009 the Malaysian human rights group Suaram initiated an investigation under French law into alleged irregularities,including the payments of bribes,connected to the sale of submarines to the Malaysian Navy by DCNS of France(http://suaram.net/scorpene/scorpene-qa).
The investigation is ongoing and the court hearings promise to be explosive and likely to cause damage to DCNS and a number of political personalities(http://www.freemalaysiatoday.com/2011/07/23/bourdon-deported-because-he-knew-too-much/).

DCNS's Malaysian deals however are relatively small compared to the business that EADS and its subsidiary Airbus have been doing in Malaysia, particularly with low cost airline Air Asia Bhd.Indeed in June this year AirAsia "sealed" a record-breaking $18 billion order for 200 aircraft from EADS-Airbus.
(http://www.reuters.com/article/2011/07/21/ana-idUSL3E7IL0MY20110721)

The recently reported merger of AirAsia with Malaysian flag carrier Malaysian Airlines has caused the Opposition MP Wee Choo Keong to raise the following issues:

Everyone should now be asking:

Who is or was the agent for Airbus in Malaysia when AirAsia or Datuk Tony Fernandes, as he then was, when signed the agreement to purchase the 200 Airbus aircraft a few years ago?

Why AirAsia had to delay the deliveries of the Airbus when AirAsia was supposed to take delivery of it on a monthly basis?

Now according to the The Star report, Airasia has purchased 200 aircraft and MAS was to make a decision on replacement aircraft. I thought that MAS has already ordered several Boeing A380 and the delivery of them earlier next year. A380 aircraft will be in operation in April 2012.
http://weechookeong.wordpress.com/2011/08/07/yb-datuk-idris-jala-is-this-airasiamas-share-swab-an-indirect-bailout/

Wee's questions, particularly about the agent for the purchase,imply that there is now some suspicion whether bribery was involved in the Airbus-AirAsia deals,of which the above-mentioned is only one of many going back over the past five to six years.
Given the success Suaram has had in launching an investigation in France into suspicions of irregularities in the conduct of DCNS business in Malaysia, it would not be beyond imagination to expect that the same might be initiated against EADS-Airbus.The reported Airasia-MAS merger is already stirring up a storm of controversy in Malaysia and Wee's queries are probably one in a string of many to follow. Looking to Suaram for inspiration it is not unlikely that some Malaysian activists might seek an investigation into EADS-Airbus dealings in Malaysia as a means of scuttling that deal.
END

Airasia-MAS merger: Predicted on Sahathevan Blog in 2008

2011-08-06T07:19:00.000-07:00

This morning, 6 August 2011, the Malaysian Insider reported:

State-owned Malaysia Airlines (MAS) will swap shares with Asia’s largest budget carrier AirAsia this week in a deal that will see Tan Sri Tony Fernandes help stop the ailing flag carrier from plunging any further into red ink, said industry sources.

The Malaysian Insiderunderstands that the share swap that could see Fernandes getting a 20 per cent stake in the national carrier, will allow both Malaysian carriers to rationalise their fleet, frequencies and destinations within the country and abroad while ensuring MAS returns to becoming a premier airline.

“The deal is on and it should be signed Monday at the earliest,” a source told The Malaysian Insider.

AirAsia’s main shareholders Tune Air Sdn Bhd, owned by Fernandes (picture) and Datuk Kamarudin Meranun, is expected to benefit most from the share swap with MAS as it hold 26.28 per cent of the budget carrier as of July 6, 2011.
(http://www.themalaysianinsider.com/business/article/mas-airasia-in-share-swap-to-rescue-ailing-flag-carrier/)

In 2008,I wrote the following.While in that article I describe a transaction differently structured, the net effect remains the same: Choirboy and backers get MAS.

```````````````````````````````````````````````````````````````````````````
Monday, October 06, 2008
Privatise AirAsia, take-over Malaysian Airlines; Another Avenue Assets-ECM Libra in the making?
http://sahathevan.blogspot.com/2008/10/privatise-airasia-take-over-malaysian.html

The following has been recently reported:

Southeast Asia's largest discount airline, rose for the first time in three days on the Kuala

Lumpur stock exchange after the Edge newspaper said the carrier's biggest shareholders

are considering a buyout.

(http://www.bloomberg.com/apps/news?pid=20601213&sid=a88FsGpZNzk8&refer=home)

AIRASIA Bhd's major shareholders may have to pay some RM1.25 billion to take the

budget carrier private, analysts say.
(http://www.btimes.com.my/Current_News/BTIMES/Monday/Frontpage/jasia05-2.xml/Article/index_html)

Readers are reminded that Fernandes and Co, AirAsia's major shareholders, are not what

one might consider cash-rich. Hence the question to ask here is how such a deal might be

made doable. One option, which this writer thinks is probable, might involve the following:

a) Tune Air ie Fernandes and Co borrow the required sum , say RM 1.25 billion as reported, and take AirAsia private, AirAsia stock serving as collateral for a bridging facility

b)The loans are then transferred to AirAsia, and/or charged against AirAsia's assets,instead of AirAsia stock

c)The entire company with its new borrowing is then injected into a listed company, freeing Tune Air of any debt obligation and instead providing it unencumbered , tradeable, liquid stock.

Readers get no prizes for guessing that the listed company is likely to be Malaysian Airlines

Bhd. Subsequently, Tune Air gets a substantial if not the majority stake in MAS and

probably the right to manage the merged AirAsia-MAS. After all, Tony and Co have proven that they have undoubted skills in airline management (see story below).

The above bears similarity to the Avenue Assets-ECM LIbra transaction (http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_2aa8cb03-cb73c03a-b113c700-cc9e648c).

Readers will recall that Tony & Co and Kalimullah Hassan and Lim Kian Onn of ECM Libra are now associated via AirAsia X and other ventures. (http://www.airasia.com/site/my/EN/pressRelease.jsp?id=17e1b7ba-ac1e00ae-39281400-a8ef3d01 & http://www.smidec.gov.my/pdf/3)AirAsia%20X.pdf)

posted by ganesh sahathevan @ 3:45 PM

How to start your own AirAsia-A re-post in light of recent comments

2011-06-19T08:58:00.000-07:00

Tony Fernandes , as reported on 18 June 2011:

"Tun Dr Mahathir is the father of modern Malaysia and he has been one of Malaysia's greatest visionary leaders. He gave me, Datuk Kamarudin Meranun, Datuk Aziz Bakar and Datuk Pahamin Rejab the chance to start AirAsia.

"To hear him say such great things about us, I've to say that it's one of my and AirAsia staff proudest days," said AirAsia group chief executive officer Tan Sri Tony Fernandes.
(http://thestar.com.my/news/story.asp?file=/2011/6/18/nation/20110618193048&sec=nation)

And now , my post from 2007:

Air Asia Bhd ( or the Company) is the first and at present only LCC in Malaysia. It was also the first LCC in southeast asia.
The Company’s life as an airline may be described as being in two phases, first as a Malaysian Government owned national carrier, and then in its present incarnation, as a LCC.

AirAsia as a full service carrier

Air Asia Bhd began life in 1993 as a subsidiary of the Malaysian Government owned HICOM Bhd. HICOM Bhd was a company brought into existence at the behest of the then prime minister Mahathir Mohamad ,who continued to take an active role in its development, overseeing its ventures. The Malaysian Government sold its majority stake in HICOM in 1996 to a local entrepreneur , Yahya Ismail[1].Nevertheless, Mahathir continued to exert managerial control over the Company. This is evident from accounts given by the current owners of Air Asia about how they purchased the Company. These accounts are looked at more closely later in this article.
It was then known as Air Asia Sdn Bhd ,and was the operator of Malaysia’s second national carrier, commercially known as Pacific Eagle.
Its launch was delayed by two years, until 1995, when Malaysia Airlines , which was then, as it is today the country’s original national carrier, refused to share its regional routes with AirAsia[2].
Malaysia Airlines had, however , in 1994 been privatized by to another entrepreneur Tajuddin Ramli[3],and this could explain the differences between the two national carriers.
Nevertheless, even in 1997, AirAsia’s then director Datuk Tik Mustaffa said the company had made known to the Malaysian Transport Ministry its desire to have additional flight destinations, especially to China, India and Indonesia.[4]
However, none of these routes were granted to it. It appears to have obtained the right to land in Croatia, but nothing seems to have come of the negotiations[5].
There was also talk in 1997 of the company being allocated landing rights in Japan which the Malaysian Government had just won, but here also the Company appears not to have gained.[6]
Despite these obstacles, by 2000, the Company was reported to have landing rights to “several regional destinations, including Taipei, Jakarta, Kaoshiung in Taiwan, Hong Kong and Pattaya in Thailand.”[7]

The onset of the Asian Crisis in 1998 appears to have affected the Company, as it did the majority of Malaysian companies. In that year the airline laid off 100 staff and suspended service to the Malaysian destinations of Penang and Kota Baru as well as to Jakarta and Kaoshiung in Taiwan . Then chairman Salleh Sulong blamed poor passenger loads for the retrenchment from Jakarta and Kaoshiung and said the Penang and Kota Baru flights were affected by the opening of an expressway[8].

These problems were exacerbated by a decision of the Malaysian Government in 1999,which in light of current developments, raises questions about the freedom Air Asia had under its previous management to execute competitive strategies.

A report on that decision is reproduced here in part given its importance in demonstrating the importance of Government support even when a competitive advantage has been gained:

The government of Malaysia has turned down an application by Air Asia, the country's second designated national carrier, to operate international flights from Sultan Abdul Aziz Shah Airport in Kuala Lumpur. Failure to get approval prompted the airline to drop its Kaohsiung, Jakarta, Pattaya and Taipei routes…….. The government's decision frustrates Air Asia's hopes to expand and become a full-fledged international carrier. The government fears that granting Air Asia the approval would mean further losses for ailing national carrier Malaysia Airlines (MAS) because passengers prefer to fly from Abdul Aziz, which is 25 kilometers from the city, rather than Kuala Lumpur International, which is 60 km away. Air Asia already is eating into MAS revenue, reporting 100% passenger loads on its domestic flights. ……….The government said initially that international landing rights would be shared between Air Asia and MAS but later minced its words, indicating that Air Asia would have to negotiate on its own[9].

Yahya Ismail who had taken over HICOM and oversaw the development of Air Asia in its early years was killed in 1996 when the helicopter he was in exploded in mid-air. Government intervention in HICOM,and in Air Asia, following Yahya’s death and the Asian Crisis in 1997 seems to have increased ,as is evident from the sale of the Company to Tune Air Sdn Bhd.
Air Asia as a LCC
On December 8 2001, the current major shareholder Tune Air Sdn Bhd took over AirAsia from HICOM (by then renamed DRB-HICOM)[10].
The deal was done for a consideration of just USD 25 cents, and the assumption of about USD 10 million , or a third of Air Asia ‘s debt.[11]
On 22 November 2004 the Company listed on the Kuala Lumpur Stock Exchange, with a
market capitalization of about USD 750 million.

Considering that the current owners who are also its management bought the Company for just USD 0.25 cents in late 2001, management appeared to have added value to a magnitude of some three billion times in under 3 years.

The obvious question that arises is ; how and why were the new group of managers able to create a competitive advantage and create value in the firm when e the previous ones could not?

As the history of Air Asia as a full cost carrier shows, the company did successfully compete with Malaysian Airlines, and was even wanting to expand its network.
It was not attempting to be a low cost carrier, but it was presenting itself as an alternative to the incumbent. Therefore it could be said to have successfully executed a strategy of differentiation.

Yet, previous management was frustrated in its attempts to compete by the same Government who sold Air Asia to Tune Air for USD 25 cents. As will be shown in the following part, current management would not have been able to implement a strategy of cost leadership without the backing of the Malaysian Government, primarily its then prime minister Mahahtir Mohamad.

Air Asia and political patronage-the facts of the case

The story of its beginning as a LCC has been told by the company’s chief executive officer Tony Fernandes in a number of interviews which provide considerable insight into how important patronage can be as a tool of strategy.
According to one his first interviews after taking control of Air Asia :

Fernandes said the idea of starting an airline came from him. “I had this desire to start an airline and I thought a low-fare airline would work very well in Malaysia. So I went around and started putting the plans together. I roped in three partners — Datuk Pahamin, Aziz and Kamarudin, for starters. Datuk Pahamin helped arrange a meeting with then Prime Minister Tun Dr Mahathir Mohamad.
“It was Dr Mahathir who said that he would rather us buy an existing airline than to start a new one. I think Dr Mahathir’s vision was all about turning companies around as opposed to starting new ones. And it was the greatest thing that could ever have happened because one, AirAsia has a strong brand. Two, it was a good airline that DRB-HICOM had started. Operationally, the airline is a safe airline, with good pilots and good staff.
“So, we didn’t have to go through the painful process of recruiting and training people. We had a working model from day one. We just had to change the strategy a bit,” said Fernandes."[12]

Disclosed in this report is the fact that Pahamin, the former civil servant, was instrumental in arranging a meeting with Mahathir to enable Fernandes to sell his idea. One recalls that Pahamin was , until he joined Air Asia, a civil servant.
This suggests that in the case of Air Asia, Mahathir appears to have gifted Air Asia to a civil servant and his partners.
This conclusion is further supported by a fact undisclosed in all stories concerning Air Asia’s success as a LLC.

This is the fact that Fernandes and his partners were allowed to take over an airline, that was no doubt in debt, but nevertheless which earned revenues of about USD 25 million a year generated from chartered flights ,ferrying pilgrims to and from Mecca[13].
That contract was lost in September 2003, when the Pilgrims Board decided to hand the job of ferrying pilgrims back to Malaysian Airlines, who had in fact been doing so since 1974.[14] Nevertheless, the Pilgrims Board is an arm of Government and it in turn reports to the minister for religious affairs, who is a special minister within the Prime Minister’s Department.

The value of those contracts was only disclosed in the Prospectus issued by the company in conjunction with its initial public offering of shares to the public[15].

A sale of a company for a nominal amount of just USD 25 cents implies that it has zero or negative net present value.

However , as Fernandes himself admits, “ AirAsia has a strong brand.”
The fact that Air Asia already had a strong brand, coupled with a guaranteed cash flow of USD 25 million a year , and with its debt reduced by almost a third , was clearly an advantage that allowed the new management the leeway to implement cost saving strategies that it might not otherwise have been able to implement.

Again as Fernandes himself admits, “we didn’t have to go through the painful process of recruiting and training people. We had a working model from day one. We just had tochange the strategy a bit”.

In a subsequent story in Business Week Mahathir’s role was affirmed, the facts above confirmed and further elaborated on:

When Tony Fernandes wanted to start Malaysia's first discount airline a few years ago, he couldn't get a license. Then he heard bankrupt Air Asia, with two Boeing jets and $11 million in debt, could be bought from the government. All he had to do was sell then-Prime Minister Mahathir Mohamad on the idea. The two met in October, 2001, with Fernandes, a British-trained accountant, telling Mahathir a discount carrier could revolutionize Southeast Asian air travel and boost tourism at a time when airlines worldwide were struggling from the impact of the September 11 terrorist attacks.[16]

According to the same report ,Mahathir was also instrumental in the Air Asia’s expansion:

Fernandes' biggest achievement has been to turn Air Asia into an international carrier. Before he arrived on the scene, countries in the region never had any kind of open-skies agreement. In mid-2003, Fernandes' lobbying pushed Mahathir to raise the idea with the leaders of neighboring Thailand, Indonesia, and Singapore. As a result, those nations have granted landing rights to Air Asia and other discount carriers."

On the matter of landing rights, it is clear that Air Asia had already under its previous management obtained landing right in at least Indonesia, Thailand and Taiwan . These were lost only when the Malaysian Government refused to grant Air Asia use of the airport closer to Kuala Lumpur ,thus causing it to terminate its services to those countries[17].
As mentioned in the report cited, it was the competition that Air Asia as a full service carrier posed the national carrier, Malaysian Airlines ,which caused the Government to act against Air Asia.
Subsequently, it was the very same Government that enabled Tony Fernandes to take over Air Asia for next to nothing-and then gave it the room to become what it is today.

References

[1] For a history of HICOM see the HICOM’s website at http://www.drb-hicom.com/aboutus/history/corp.htm
[2] “Second aircraft for AirAsia”, New Straits Times (Malaysia) 3 February 1997
[3] MICHAEL BOCIURKIW, Malaysia Airlines - At 50, still suffering from growing pains, Asia Times, 25 April 1997
[4] see Note 4
[5] Croatian PM seeks stronger ties in Malaysia visit, Reuters News, 3 March 1997
[6] See New Straits Times report, “Malaysia wins extra landing rights to Japan””
A week before the Prime Minister's official visit to Japan, Malaysia has won extra landing rights to Osaka, Nagoya and Fukuoka, allowing an additional 900 passengers to travel weekly to the Land Of The Rising SunHowever, Dr Ling was non-committal when asked whether the new landing rights would be given exclusively to Malaysia Airlines. "This," he said, "would be discussed by ministry officials and airline operators." Besides Malaysia Airlines, two other local airlines Air Asia or Transmile, which fly regionally, also have a shot at the new landing rights. "What is important now is to ensure that the new landing rights would be fully utilised by these three airlines," he said.
By Alex Yoong, 20 March 1997,The New Straits Times

[7] WILLIAM DENNIS,” Massive Restructuring For Malaysia Airlines”, Aviation Week & Space Technology ,page 49, Vol. 153, No. 19
[8] Air Asia Cuts Flights, Lays Off Workers, Aviation Daily ,page 515 Vol. 332, No. 60
[9] Air Asia Fails To Get Approval For International Flights From Kuala Lumpur, Aviation Daily , 23 February 1999
[10] extracted from Air Asia website http://www.airasia.com/aboutus/timeline.php?language=en
[11] NICHOLAS IONIDES , Man of The Moment, Airline Business ,April 2004 http://www.airasia.com/news.php?f=aboutus/papers&p=080404
[12] Kang Siew Li,” Fernandes pilots AirAsia to greater heights.”Business Times, (distributed with the New Straits Times) Saturday, December 20, 2003
[13] Thomas Soon., “DRB-Hicom in talks with Tabung Haji over sale of Air Asia stake.”, 19 March 2001
The Edge (Malaysia)
[14] Mohd Faizal Zakariah. MAS secures contract from Tabung Haji, 25 September 2003The Edge Malaysia
[15]Air Asia Prospectus ,at page 167
[16] Businessweek Online , SPECIAL REPORT -- STARS OF ASIA -- ENTREPRENEURSJULY 12, 2004
http://www.businessweek.com/magazine/content/04_28/b3891409.htm
[17] see Note 11

ASX leadership & LKY: Both agree that Australia is home to “poor white trash of Asia"

2011-04-06T09:42:00.000-07:00

Australians have already it seems become the poor white trash of Asia, just as Lee Kuan Yew of Singapore predicted in the 80s’. This at least seems to be the opinion of the ASX ‘s leadership, led by its chairman David Gonski who, if believed, must lead Australians to the conclusion that they lack what it takes to build wealth.

In promoting the SGX Ltd takeover of ASX Ltd, Gonski and his team at the ASX argued that unless ASX got taken over by SGX and led by its management, Australia would become an investment backwater. Meanwhile , ASX management has not seem to have done anything to integrate the Australian stock exchange into Asia’s capital markets. Apart from the cursory roadshows which tell market participants what they already know, little appears to have been done to improve ties with the very Asians ASX wants to join. For example, while much has been said about the need to integrate into Asian trading platforms, ASX appears not to have been interested in the ASEAN Exchange Link.

Gonski justified the SGX -ASX takeover saying:
"The step we are making is very logical," he said. "The concept that this will be very bad for Australia as a financial hub is the other way around."If we don't realise that we must embrace Southeast Asia as part of what we are doing, and be involved with them, if we don't take that step, we take the risk of being marginalised."
(http://m.theaustralian.com.au/AustralianFinancialMarkets/pg/1/fi224802.htm)
However, Gonski and ASX management seem to have completely ignored current efforts by South East Asian exchanges to integrate their systems with the objective of forming a single ASEAN Stock Exchange. Malaysia,Singapore and Thailand have already announced that they will commence the process of linkage by the second half of 2011.The Philippines Stock Exchange is expected to join in the first half of 2012.
(http://tinyurl.com/3dlrpjm)
It does appear as if Gonski and his team at the ASX were uninterested if not unable to participate in the discussions that took place between ASEAN stock exchange CEOs and their respective finance ministers. This is surprising given the extent and history of Australian economic,political and defence engagement in the ASEAN region. Contrary to Gonski’s assertions that “we don't realise that we must embrace Southeast Asia”, there has been plenty going on between Australia and South East Asia at personal , business and governmental levels for a very long time. It does appear that Gonski and ASX are unaware of this fact.

Accessing Asia’s savings was another argument trotted out by Team Gonski to justify the takeover. Here again ASX management seemed ignorant of the fact that Australia is already a destination of choice of Asia’s private and institutional investors. There is no evidence that the flow of these funds will accelerate simply because the ASX becomes a subsidiary of the SGX. Even Singapore’s savings, held mainly in its Central Provident Fund, cannot be more readily accessed. These are lent the Singapore Government via the issuance of Singapore Government Securities and are invested by Singapore’s sovereign funds or government linked companies. Gonski becoming deputy chairman of the merged SGX-ASX will not change that fact.

While Gonski is highly regarded in Australia, north of Darwin his name counts for nothing. If as he says " we take the risk of being marginalised" , then clearly he is the wrong man to lead the ASX. It is time for him and the team he leads to go.
END

And will Michelle Yeoh be wearing Burmese junta jade to the Oscars

2010-06-28T21:41:00.000-07:00

Attention grabbing: Yeoh wearing Mandalay’s RM6.8mil
imperial green jadeite necklace with diamonds at the
Cannes Film Festival

International superstar Michelle Yeoh hopes her upcoming film The Lady, based on the life of Myanmar democracy icon Aung San Suu Kyi, will be nominated for several Academy Awards next year.
"If the media continues to give the film good publicity and reviews, it could become a reality," Yeoh told reporters during a press conference on the International Ipoh Run 2011 in Malaysia. She is the ambassador for the event.
The Malaysia-born Yeoh, who was in award-winning films like Crouching Tiger, Hidden Dragon and Memoirs of the Geisha, said she also hoped to be nominated for Best Actress for her role in the movie.
She said the shooting for The Lady wrapped up early this year, adding that the film was a great honour and tribute to the Nobel Peace Prize winner, who celebrated her 66th birthday on Sunday.
"I would like to wish her good health and stability for her country and fellow citizens. I will be actively promoting the film around the world until its premiere screening," she said.

A)
According to the U.S. State Department, the mining of rubies, as well as jade, not only helps fund the Burmese military junta, but is also at the centre of innumerable and well-documented crimes against humanity that include the implementation of forced labour in mines, the systematic rape of women and young girls, and the ethnic cleansing of opposition minority groups living near sources of mineral wealth.
http://www.dailymail.co.uk/home/moslive/article-1312382/The-curse-blood-rubies-Inside-Burmas-brutal-gem-trade.html
Myanmar's (Burma) jade and heroin trades now overlap.
http://www1.american.edu/ted/jade.htm

B)FORMER-Bond Girl and current star of Reign of Assassins, Datuk Michelle Yeoh has the pick of any global jeweller from Cartier, Chaumet, Piaget, Mauboussin, Mouwad, Harry Winston or Tiffany. Since this year, Ipoh-born Datuk Michelle Yeoh, Miss Malaysia 1983, has opted for bling from local jeweller Winnie Sin of Rafflesia and Mandalay.

Rafflesia is the last word for pearls while Mandalay, like its name suggests, is the first place connoisseurs congregate to pick the crop of Myanmar’s rubies and jade

.http://www.thestar.com.my/metro/story.asp?sec=central&file=/2010/11/1/central/7326819

C)

Hong Kong-based superstar Michelle Yeoh met with Aung San Suu Kyi in Myanmar on Monday and again on Tuesday at the airport in Yangon as part of research for Yeoh's possible role in a biopic about the democracy leader.

During their meeting, Yeoh showed Suu Kyi "some production stills on her camera from the movie in which she had dressed like Aung San Suu Kyi. The two of them look very much alike and have a similar build," said Nyan Win, spokesman for Suu Kyi's National League for Democracy opposition party.

According to the Bangkok Post, the movie is titled "Dans la Lumiere" and will be directed by Luc Besson. A French production team is already wrapping up location shooting in Thailand, which will stand for Myanmar in the movie.

http://www.cnngo.com/hong-kong/play/michelle-yeoh-might-become-aung-sang-suu-kyi-848472

The Ascot license has been re-issued,said Vincent Tan,contrary to BCorp

2010-06-12T20:03:00.000-07:00

According to BCorp on 11 June 2010:

We note that there had been many conflicting discussions about the actual status of the approval given to Ascot to operate sports betting in the country. .....
......... it is evident from the above statements that Ascot has the approval from the Minister of Finance to conduct a sports betting operations and that the formal licence was first issued in 1987 is pending re-issuance.
We hope this clarifies the matter

(See full statement below)

So accroding to BCorp-we have all got confused-the license has only been approved but not re-issued.What then to make of the statements made by none other than the BCorp Executive Chairman himself,reported in his and BCorp's very own paper THE SUN:

a)
"One particular person, who is a wanted fugitive, claimed that some government officials and political parties have benefited from the licence being re-issued to Ascot Sport Sdn Bhd," he said....Tan said the system for bets collection will not be ready in time for the Fifa World Cup season which starts on June 11, as the licence re-issue came late.
(http://www.sun2surf.com/article.cfm?id=47568)

b)

Following the government's decision to legalise sports betting, Ascot Sports Sdn Bhd has recently been re-issued its sports betting license which was suspended in 2004.

In view of the rampant illegal sports betting activities which represents a huge loss of gaming tax revenue for the government, Ascot Sports which is wholly-owned by Tan Sri Vincent Tan , who is also chairman and chief executive officer of Berjaya Corporation Berhad (BCorp), was recently re-issued the licence.“I am glad the current government under Prime Minister Datuk Seri Najib Tun Razak is economically sound like Tun Dr Mahathir Mohamad who understands that revenue is important to the government,” said Tan.

“Why should the government forgo this revenue and benefit the illegal bookies so much?" he asked, adding that illegal sports betting is rampantly available in Malaysia.

"Why should non-Muslim Malaysians who enjoy betting as a hobby and as light entertainment be deprived of this pastime?” asked Tan“I believe those who are vocal and so strongly against sports betting must be the illegal bookies or their supporters,” he added.
http://www.thesundaily.com/article.cfm?id=46720

c)

The recent reissue of a sports betting licence to Berjaya Corp will not open the floodgates for the issuance of similar licences to others.

In an interview with Sin Chew Daily on Friday, Deputy Finance Minister Datuk Chor Chee Heung said the government will not be issuing similar licences to other companies
“Now, the government has discovered that people are interested in sports betting regardless of whether the activities are legal or not.

Therefore, a sports gaming licence has to be reissued to fight illegal sports gaming activities,” Chor said.

"I emphasise that this is not a new licence but a reissuance of an old licence awarded in 1990," he said, adding that in so doing, the government would get tax revenue amounting to RM400 million a year.

Generally, the sports betting licence allows all forms of sport conducted outside Malaysia. The licence reissued to Ascot Sports will be renewed annually.http://www.sun2surf.com/article.cfm?id=46857

d)
I would like to say that none of this is true. The licence was re-issued to Ascot Sports because the government felt that the time was right to do so in the light of the rampant growth of illegal betting operations and also because Ascot Sports had the first right of refusal to this licence if it was re-issued."
http://www.thesundaily.com/article.cfm?id=47560

END

General Announcement
Reference No BC-100611-A60A6
Company Name:BERJAYA CORPORATION BERHAD
Stock Name:BJCORP
Date Announced:11/06/2010

Type:Announcement
Subject:BERJAYA CORPORATION BERHAD
PROPOSED ACQUISITION OF 70% EQUITY INTEREST IN ASCOT SPORTS SDN BHD (“Ascot ”) FOR A TOTAL CASH CONSIDERATION OF RM525 MILLION

Contents:.
hich
Announcement Details :

We note that there had been many conflicting discussions about the actual status of the approval given to Ascot to operate sports betting in the country. In compliance with the directive from Bursa Malaysia Securities Berhad (“Bursa Malaysia”), we wish to reiterate certain parts of the announcement (dated 12 May 2010) to Bursa Malaysia by AmInvestment Bank Berhad on our behalf as follows:
1. In paragraph 2.2, it was stated inter-alia that “The Minister of Finance has given its approval for the re-issuance to Ascot of the licence to carry out sports betting operations upon certain terms and conditions”.
2. In paragraph 8 which listed out the Approvals Required, sub-paragraph (d) stated “The Minister of Finance for the re-issuance of the sports betting licence and the changes in shareholders and directors in Ascot, if required;”
As such it is evident from the above statements that Ascot has the approval from the Minister of Finance to conduct a sports betting operations and that the formal licence
was first issued in 1987 is pending re-issuance.
We hope this clarifies the matter

Accenture Earnings - Problems With The Financial Records

2010-03-22T21:37:00.000-07:00

Accenture Plc, a major supplier of accounting and transaction services to the financial services industry worldwide has misstated its interest in its businesses in Malaysia. Consequently Accenture’s reported earnings may well have been overstated.

Accenture has consolidated the earnings of the Malaysian incorporated Accenture Sdn Bhd claiming it to be a wholly-owned subsidiary. However the records of the Malaysian Government's Companies Commission reveal that Accenture Malaysia is owned by three Malaysian nationals who own all of that company's stock. The company is the main entity via which Accenture conducts its business in Malaysia.Accenture has been in business in Malaysia for well over 30 years and the Malaysian operation would be considered a lucrative one.

Accenture has been presented with the Malaysian records, but maintains that "Accenture Sdn Bhd has been and continues to be a wholly owned subsidiary of Accenture plc."
Accenture is maintaining that its financial statements are accurate even in light of the fact that the records of the Companies Commission are considered conclusive.

Accenture was once known as Andersen Consulting, and was part of Arthur Andersen (AA), once one of the largest audit and financial consulting partnerships in the world. AA lost most of its business after it was discovered that it had helped Enron Inc conceal the financial obligations which led to Enron's demise.

Accenture stock is traded on the New York Stock Exchange to which it has reporting obligations. Accenture maintains that its Form 10-K annual earnings reports filed with the US Securities and Exchange Commission are accurate regardless of what the Malaysian records reveal about the ownership of the Malaysian subsidiary.

The discrepancy raises questions as to Accenture's internal systems of accounting. It raises questions as to how many other subsidiaries and associated companies might be incorrectly consolidated, and hence the extent to which earnings have been overstated.

The company is a major provider of services to financial institutions wanting to outsource their operational processes and hence any overstatement of its earnings raises questions about its ability to provide the capital intensive resources required for high-end processing.
For example in 2004 Accenture entered into an agreement with Deutsche Bank AG which requires Accenture to provide resources such as a “ state-of-the-art systems, tools and processes” to manage Deutsche Bank’s entire procure-to-pay process world-wide.
In early 2009 the NAB were forced to review and then discontinue outsourcing contracts with India’s Satyam Ltd after it was revealed that Satyam had overstated its earnings. The ANZ was forced to review its relationship with Satyam even while it maintained that its exposure to Satyam was “modest”.
Accenture’s problems with its internal accounting systems raises further questions about the systems and processes that Accenture sells its clients. One of these, Centrica Plc, is suing Accenture for damages of about $ 300 million , alleging that a failure of an IT system which Accenture built and installed for Centrica's British Gas division was the source of problems in its customer services division which led to a loss of about 1 million customers. The matter is scheduled to be heard in 2011.

ABC Australia's "soft diplomacy" aspirations at odds with prior Labor policy

2009-11-05T16:43:00.000-08:00

As reported in THE AUSTRALIAN:
ABC managing director Mark Scott last night proposed a dramatic expansion of his organisation's services into Africa, Latin America and Asia, saying it would lift Australia's profile.
"We have an important role to play and we have to use all the tools at our disposal to continue to do so," Mr Scott said in a speech in Sydney.
"One of these tools is soft diplomacy -- using the media to put our nation's culture, views and policies on show."

http://www.theaustralian.com.au/pm-propaganda-not-abc-role-nick-minchin/story-e6frgczf-1225794871714

But what of this inconvenient truth:

By mid-1991, after Senator Evans had acknowledged the insensitive actions of a "number of different groups in Australia - some in the media, some in Parliament, and some in pressure groups in the wider community," Mahathir agreed that the Australian Government should not necessarily be blamed for the failings of the media. According to Mahathir, "They fabricate stories...I think they have breached the limit of press freedom...I am talking about the Australian Press, not the Government...Mahathir felt nevertheless that the Australian Government could not absolve itself completely ofresponsibility for the media....

As the price for restoring normal relations, Mahathir believed he had extracted from the Australian Government " a guarantee to distance itself from what was done by several bodies in that country, and to take a disinterested attitude in various matters." This understanding was put to the test in early 1992 with the release of the Australian film Turtle Reach, which depicted a massacre of Vietnamese refugees...

Senator Evans announced that the Australian Government would dissociate itself from the film. The scenes depicted were "simply not accurate historicalrepresentations." Australia's Chief of the Air Staff, Air Marshall Funnel, said this statement saved the Malaysia-Australia relationship: "I believe the ties between the two Governments have been preserved due to this action" .
( See http://ses.library.usyd.edu.au/handle/2123/391 & http://ses.library.usyd.edu.au/bitstream/2123/391/1/adt-NU1999.0024prince03.pdf)

The Vincent Tan -Malaysiakini deal: Who says money cannot buy everything...

2009-11-01T21:38:00.000-08:00

According to THE EDGE:
Popular Internet news website Malaysiakini.com is in talks on a tie-up with payment systems operator MOL AccessPortal Bhd, a company under the stable of Tan Sri Dat Seri (x9) Vincent Tan Chee Yioun.

Sources said the discussions did not discount the possibility of an exchange of equity and both parties were currently negotiating a deal that would be of mutual benefit.
(http://www.theedgemalaysia.com/business-news/152223-mol-malaysiakini-in-talks.html)

Meanwhile, Malaysiakini continues to solicit donations (http://www.manage4me.com/donation/mkini/).It is unclear how donors will benefit from a share swap or any other deal involving the shareholders.

Malaysiakini.com is owned and operated by Mkini Dotcom Sdn Bhd, a private limited company incorporated in July 1999.

Mkini is a digital media company, focusing on Internet and other interactive media technology and information services.

The Directors of the company are the founders of Malaysiakini.com Steven Gan and Premesh Chandran.

Mkini's paid up capital is RM 4,514,939. The directors each hold 30.1% equity in the company. Venture fund Media Development Loan Fund holds 29.1%, whereas the balance 10.6% equity is held by individuals, staff, former staff or retained in the Employee Share Incentive Scheme.
http://www.malaysiakini.com/pages/general/corporate.htm

It is important to note, as is explained below, that the founder directors, Steven Gan and Premesh Cahndran were journalist at THE SUN, which was then, as it is now, owned by that doyen of free speech, Tan Sri Dato Seri(x9) Vincent Tan Chee Yioun.
Given their 30.1% stakes, the founding directors would have contributed RM 1.3544817 MILLION , or RM 677,240.85 each-an outstanding effort given what journalist were paid then at THE SUN.

Industry sources said although Malaysiakini has done well to establish itself, after 10 years it barely makes money (http://www.theedgemalaysia.com/business-news/152223-mol-malaysiakini-in-talks.html).

In any case, putting, money, that tainted thing, aside, the following raises questions as to what this deal entails:

Steven Gan, as quoted by PBS, had this to say of the Malaysian Establishment, and THE SUN:
The mainstream media is either completely or directly owned by political parties in Malaysia," Gan told the CPJ in October, "so in that sense, there is very little room for editors to … [criticize] the governing political parties."
For years, as a print journalist, Gan butted against Malaysia's tough press restrictions with investigative reports detailing alleged government abuses of power.
As a reporter for Malaysian daily newspaper The Sun, Gan wrote a series of reports in 1995 on the deaths of 59 inmates in a migrant worker detention camp. When Sun editors refused to print his stories for fear of arousing government anger, Gan turned his articles over to a human rights group for publication.
In 1996, Gan was one of several journalists arrested while covering the Second Asia Pacific Conference on East Timor -- a meeting in Malaysia of activists from Asian nations to discuss the growing unrest in the Indonesian territory, which gained its independence in 1999.
Gan attempted to chronicle his five days in captivity for The Sun, but its editors refused to publish his reports. Gan resigned in protest.

In November 1999, he started Malaysiakini.com with $100,000 and a staff of four journalists. Now, a year later, Gan's staff has increased to 14 and his site claims nearly 100,000 visitors a day.
Throughout its first year, Malaysiakini.com reported on deception in local newspapers as well as misconduct in the Malaysian judicial system. It also provided in-depth coverage of the November 1999 elections that extended Mahathir's nearly 20-year rule as prime minister.
The Web site's controversial reports have been noted by the BBC, The Washington Post and the International Herald Tribune.
Based just outside Kuala Lumpur, Malaysiakini.com's staff resides in Malaysia, but its computer server is based in the U.S. -- placing it far away from future government restriction. The site is funded by grants from the Southeast Asia Press Alliance and advertising revenue.
Although his publication has, so far, survived government intervention, Gan said he is still in a risky business.
"I think the government can shut us down anytime," he said. "They can come into our office and take all our computers. We are prepared for that eventuality."

http://www.pbs.org/newshour/media/ipf/gan.html

As one former Malaysian journalist asked, "what of all that talk about the corrupt Establishment and its crooked judges, politicians and cronies?"

Malaysian Government's F1 fantasy a winner in Norfolk;Najib contradicted;Needs to explain gift to Tony Fernandes

2009-09-17T17:15:00.000-07:00

Readers can decide for themselves from the reports below if it is wrong to conclude that the Malaysian taxpayer has and will for time to come, pay for Tony Fernandes's F1 Team. Readers should note that the team's "Sepang HQ" is still in its "planning stages", a euphemism , readers will agree , for money that is unlikely (and God willing will never have) to be spent.

Malaysian taxpayers and others who might dispute the fact that it is Tony Fernandes's team are simply referred to this entry on the official Formula One website and the publicity that it has generated:

Company Name: 1Malaysia F1 Team Sdn Bhd
Team Name: Lotus F1 Team
Country: Malaysia
Team Principal: Tony Fernandes
http://www.formula1.com/news/headlines/2009/9/9934.html

According to Malaysian PM Najib:

This is the Malaysian team. The car was designed at the SIC, manufactured at the SIC, tested at the SIC and the car is Malaysian-made. Even the pit-stop team consists of Malaysians,” he said.

Asked on the budget and the total investment by the Government, Najib said: “The Malaysian government’s investment is through Proton.”

http://thestar.com.my/news/story.asp?file=/2009/9/15/nation/20090915181208&sec=nation
According to reports out of
Norfolk:
NEWS that the iconic Lotus name will be returning to the Formula 1 starting grid next year is not only welcome news for British motorsport but also for the Norfolk economy. Adam Gretton assesses the impact on the local supply chain and advanced engineering companies.

....with Malaysian-based financial backers and the future design, research and development set to take place at Malaysia's Sepang circuit, the resurrected Lotus team will have a more international feel when it returns to the pinnacle of motor racing in March.

Officials from the newly formed Lotus F1 Team yesterday said that the car would still have strong Norfolk connections, despite the Asian influence and a need to bring in expertise from across the UK.

Adverts are set to appear in the motoring and local press in the coming days for a range of jobs at the 50,000sq ft centre, which was built by Toyota, but was never used for F1 development.

Ten miles away, the Hethel Engineering Centre, which is a hub of start-up companies, has also submitted a list of 10 East Anglian businesses which would benefit from joining the Lotus F1 Team supply chain.
“It is nothing but good news and it is positive in every respect and will create jobs and sustain jobs. It is building on all of the motorsport heritage, the Lotus name, and skills. We have to accept that we are in a global market and the main investment is coming from Malaysia, but there is a strong link with Norfolk and the best of Norfolk will be utilised,” he said.

Norfolk-born technical director Mike Gascoyne said he was keen to employ local people at the team's base at the Racing Technologies Norfolk (RTN) centre at Hingham. He added that the new car would also feature Norfolk-made components and parts by making use of the wealth of expertise from the county's advanced engineering companies.

http://www.dissmercury.co.uk/content/dissmercury/news/story.aspx?brand=DMAOnline&category=news&tBrand=DMAOnline&tCategory=news&itemid=NOED17%20Sep%202009%2008%3A53%3A58%3A163

The Lotus F1 Team has been set up under the holding company 1Malaysia F1 Team, a joint venture between the government and Malaysian businesses, with support from the Motorsports Association of Malaysia, Naza Motor and

Air Asia, plus Malaysian universities.

The team has agreed an engine supply deal with UK-based Cosworth and a wide variety of technical partnerships, including those with Berkshire-based Xtrac
http://www.edp24.co.uk/content/edp24/news/story.aspx?brand=EDPOnline&category=News&tBrand=EDPOnline&tCategory=xDefault&itemid=NOED16%20Sep%202009%2007%3A36%3A15%3A583

Was Godwin Grech pressured to create an email record to contradict his statements of 4 June 2009?

2009-06-19T20:00:00.000-07:00

As reported on 4 June 2009 by the ABC :
Treasury official Godwin Grech told a parliamentary hearing the Prime Minister's Office and the Treasurer's Office made representations to him on behalf of a car dealer about the Government's multi-million dollar trust set up to support dealerships.

The trust, known as OzCar, offers finance to car dealerships that have been affected by the global credit crunch.

Mr Grech would not confirm if the calls were about Mr Grant, but said they were straightforward inquiries.

"Both offices became aware of a situation facing a particular car dealer and they simply wanted - as you would expect a normal ministerial office to do - refer it to the relevant part of the bureaucracy to help the ... car dealer," he said.

http://www.abc.net.au/news/stories/2009/06/04/2589652.htm

As reported by THE AUSTRALIAN on 20 June 2009:

When Senator Abetz asked Mr Grech whether Dr Charlton, whom the government claims Mr Turnbull threatened at Wednesday night's Midwinter Ball, was the source of the key email, the more senior Treasury official, David Martine, replied.

"Mr Grech has indicated that he is unsure about any correspondence from the PM's office and, as I've indicated a number of times, we've conducted thorough searches, including Mr Grech himself, and we have not located any correspondence or emails," Mr Martine said.

He said he couldn't find any such documents after the event, and was certain there were no oral communications.

An extensive search by Treasury officials has failed to unearth an email from Mr Rudd's office to Treasury and Mr Grech could tell the inquiry only that it was his "recollection".

The Prime Minister's office last night produced an email from Mr Grech to various senior officials in both Treasury and the Treasurer's office, in which he denied that there was "correspondence" and "communication" between the Prime Minister's office and Treasury on Mr Grant's application.
Mr Grech said in his email to Treasury heads sent yesterday morning that News Limited reporter Steve Lewis contacted him four times on Thursday about the story and he denied any communication with the Prime Minister's office over the matter.

"When Lewis called the fourth time at around 8pm, he again asked about the PMO communication; I again denied it," Mr Grech wrote in the email.

http://www.theaustralian.news.com.au/story/0,25197,25663216-5013871,00.html

Australian Defence Recruitment,Chandler MacLeod,& Paul Keating

2009-06-14T18:22:00.000-07:00

As previously reported the Australian Defence Recruitment contract has been awarded to Chandler Mcleod,a company that has recently reported both operating cash flow and cash balance deficits. (see story below).

On 9 September 2008, just 2 months after the award of the contract Chandler sought and obtained an injection of funds from Lazard Carnegie Wylie, who are now Chandler's largest shareholder. As stated by Chandler:

SYDNEY: 9 September 2008 - Chandler Macleod Limited (“Chandler Macleod” or the
“Company”) today welcomed Lazard Carnegie Wylie Investment Management Pty Ltd (including it’s affiliates) (“LCWIM”) as a new cornerstone investor as part of a broader recapitalisation of the Company.
“We are pleased that an investor of Lazard Carnegie Wylie’s calibre recognises Chandler Macleod’s strengths and opportunities and the confidence it has shown in the Company and its management team,” said Managing Director Ian Basser. “We believe the stability of Chandler Macleod’s business model, centring around an increasingly important contribution from the Company’s strategic focus on multi-year outsourced workforce management service contracts, and growth prospects like the Defence Force Recruitment contract make the Company an attractive proposition for investors.”
http://www.aspectfinancial.com.au/asxdata/20080909/pdf/00878422.pdf

Lazard Carnegie Wylie was formed on 31 July 2007 as a result of the acquisition of Carnegie, Wylie & Company by Lazard, the global financial advisory and asset management firm.

Lazard Carnegie Wylie's principal activities are focused in:

-advisory, comprising M&A and equity capital markets transactions
-private equity

Paul Keating is Chairman Corporate Advisory International

www.lazardcarnegiewylie.com/about-lcw.aspx

Australian Defence Recruitment contract awarded to company with cash flow , cash balance deficit.

2009-06-11T17:39:00.000-07:00

On 2 July 2008 The Minister for Defence Science and Personnel, Warren Snowdon MP, witnessed the signing of the new Australian Defence Force (ADF) Recruiting Services Contract with the ASX listed Chandler Macleod. The contract is valued at up to $405 million over the next five years.
Mr Snowdon said that Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines.
Chandler replaced the much larger and better established Manpower Services Australia (http://www.manpower.com.au/about-manpower/about-manpower.aspx).

Mr Snowdon’s assertion that “Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines” needs to be seen in light of the following:

In March this year Chandler announced that it had suffered a pre-tax loss of AUD 2,731,000 but a profit after tax of AUD 267,000 for the half-year ended December 31 2008.
For the same period in 2007 it reported a pre-tax profit of AUD 6,994,000 but loss after tax of AUD 2,291,000 .

For the year ended 31 December 2008 the company reported a consolidated profit of AUD 2,744,000 but negative operating cash flow of AUD 99,000. Cash and cash equivalents at the end of the 2008 financial year were in deficit to the sum of AUD 1,408,000.

(see http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ric=CMG.AX)

Not surprising then that in September 2008 , just 2 months after Snowdon's glowing endorsement, Samrtmoney described Chandler McLeod as a “struggling recruitment firm” that had been "thrown a rope" by investment bankers Mark Carnegie and John Wylie who had offered to buy a 19.9% share of the business.
http://www.smartcompany.com.au/leadership/chandler-macleod-gets-10.9-million-from-lazard-carnegie-wylie.html

CSIRO contractor on US Govt Entity List; List's objective is to curtail diversion of technology to WMD programs

2009-05-04T18:01:00.000-07:00

CSIRO has placed the contract for the design and build of 36 ASKAP antennas with the 54th Research Institute of China Electronics Technology Group Corporation (known as CETC54). CETC54 is a state-owned institution, established in 1952. It has undertaken thousands of government and commercial projects in satellite communication, tracking, telemetry and control, and has designed and built the 50-m Miyun radio telescope for receiving data from China's Chang'E1 satellite. The institute is headquartered in Shijiazhuang, in Hebei province, about 200 km south of Beijing.

ASKAP requires low-cost, low-power and low-manpower build antennas on a scale not previously realised. ASKAP will be a survey telescope and its antennas must therefore provide a wide field-of-view - 30 square degrees - achieved by using a focal plane array that creates 30 separate, simultaneous beams. The image illustrates the design of the ASKAP antennas as they will appear at the MRO site.

(Source: http://www.atnf.csiro.au/projects/askap/antennas.html)

The 54th Research Institute of China, a.k.a. Communication, Telemetry and Telecontrol Research Institute (CTI) is on the US Government's Entity List.(http://www.access.gpo.gov/bis/ear/pdf/744spir.pdf)

About the Entity List
The Export Administration Regulations (EAR) contain a list of names of certain foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – that are subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items. These persons comprise the Entity List, which is found in Supplement No. 4 to Part 744 of the EAR. On an individual basis, the persons on the Entity List are subject to licensing requirements and policies supplemental to those found elsewhere in the EAR.

Background and Purpose of the Entity List

BIS first published the Entity List in February 1997 as part of its efforts to inform the public of entities who have engaged in activities that could result in an increased risk of the diversion of exported, reexported and transferred (in-country) items to weapons of mass destruction (WMD) programs. Since its initial publication, grounds for inclusion on the Entity List have expanded to activities sanctioned by the State Department and activities contrary to U.S. national security and/or foreign policy interests.

http://www.bis.doc.gov/entities/default.htm

Defence-Optus C1 satellite vulnerable to interefence by Singtel, and China's Huawei

2009-04-01T19:42:00.000-07:00

Readers can decide for themselves if the claim made in the title is exaggerated. For reference readers should first read my earlier article on the issue at http://sahathevan.blogspot.com/2008/05/will-plas-huawei-have-access-via-optus.html

Some additional material on the day to day management of the satellite and related systems in Defence's own words:

Joint Project 2008 Phase 3D was established in 1997 following an invitation from Optus for Defence to share Australia’s next generation commercial communications satellite. The project provides for supply and support of a Defence owned payload operating on the shared C1 communications satellite, together with Defence owned fixed terrestrial infrastructure for control and management of the Defence payload and the new communications network.

The network, otherwise known as the Australian Defence Satellite Communications Capability, will provide Defence with satellite communications across Australia and throughout the Asia Pacific region in the X, Ka and UHF radio frequency bands. Contracts with Optus were signed in October 1999.

“Information Systems Division will be responsible for control and management of the new communications network. Optus has been contracted by Defence to supply payload operators, to maintain and support the fixed terrestrial infrastructure and to undertake telemetry, tracking and command of the satellite. A satellite management agreement has also been established to guide Defence and Optus in the management and operation of the shared satellite asset."
http://www.defence.gov.au/news/raafnews/editions/4506/features/feature02.htm

Some additional material on the same from another website:

The Optus and Defence C1 relay platform will operate in four different frequency bands: commercial services in Ku-band for Singtel Optus; and military communications at UHF, X and Ka-bands for the Australian Department of Defence.
Singtel Optus has the prime contractor role to the Australian Department of Defence for the military communications payload. The military Ka-band payload has four 33-MHz active transponders and one spare. It will provide medium to high data rate defense theatre coverage and duplex video, along with voice and data communications. This Ka-band communications service is a new capability for the Australian Department of Defence.

X-band telecommunications links provided via the satellite will be used by the military for medium to high data rate one- and two-way video, as well as voice and data communications. Service will be provided by four 60-MHz active transponders, with an additional transponder serving as a spare. The X-band communications links also are new for the country's defense network.

UHF links via the relay satellite will enhance UHF capabilities already employed by the Australian Department of Defence, and will be used for low data rate two-way voice and data communications. There are five 5-kHz channels and one 25-kHz channel provided via the satellite.

(http://space.skyrocket.de/index_frame.htm?http://www.skyrocket.de/space/doc_sdat/optus-c.htm)

Singapore's CPF and the GSIC losses: Is there a shorfall in the amount due CPF members?

2009-03-14T17:45:00.000-07:00

According to the CPF Annual Report 2007:

As at 31 Dec 2007 members contributions of $S 136,586,858,000 were applied primarily to special issues of Singapore Government securities of $S 111,520,180,000.
(http://mycpf.cpf.gov.sg/CPF/About-Us/Ann-Rpt/Ann_Report)

According to the International Monetary Fund:

Gross debt is issued to the Central Provident Fund (CPF) and as part of the Singapore Government Securities (SGS) program. The government invests
the proceeds raised through this issuance in foreign assets through the Government of Singapore Investment Corporation.
http://www.imf.org/external/pubs/ft/scr/2006/cr06150.pdf

The GSIC manages all reserves(defined to include the CPF and Government surpluses; see story below). Therefore, the GSIC's funds under management would include funds from the CPF as well as the "official" foreign reserves, which at January 2009 amounted to $S 251 770 600 000 (http://www.mas.gov.sg/data_room/reserves_statistics/Official_Foreign_Reserves.html)

The "official reserves are primarily funded by deposits of the Singapore Government (see MAS Annual Report 2007-08 at http://www.mas.gov.sg/about_us/annual_reports/annual20072008/71.html AND http://www.mas.gov.sg/about_us/annual_reports/annual20072008/masar_08.pdf)

Adding the amount due to CPF members and adding the "official" reserves of the MAS ; the GSIC should have funds under management of at least $S 360 billion (ie $S 111,520,180,000 in CPF contributions invested in SGS and $S 251 770 600 000 in "official" reserves.

Meanwhile, according to reports from Singapore:

Government of Singapore Investment Corp, which has helped bail out troubled global financial institutions, suffered an investment loss of about 50 billion Singapore dollars (33 billion US) last year, sources told Dow Jones Newswires on Tuesday.

(http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20090217-122672.html)ALSO SEE http://www.bloomberg.com/apps/news?pid=20601080&sid=adldZ5kLXljw&refer=asia

Hence, the sums under management would now amount to S$ 310 billion. The MAS has not made any changes to its estimates of official reserves. Therefore, assuming official reserves have remained at about $ 250 billion, the remainder of $ 60 billion would be what is left of funds provided by the CPF.
This is approximately half of the amount due to CPF members provided via the SGS scheme: $S 111,520,180,000.

The unknown here is the GSIC's retained profits. That, to paraphrase Donald Rumsfeld, will remain an unknown unknown until and unless the GSIC provides detailed financial statements.

Singapore GIC and Temasek losses; Consequences for CPF members

2009-03-01T14:49:00.000-08:00

It has been recently reported that Singapore's GIC has lost about $S 50 billion in value, while Temasek’s assets “shrunk “ by about $S 38 billion. The losses are thought to be unrealised.
How might these losses affect Central Provident Fund (CPF) members in need of liquidity, whose demands may require liquidation of these impaired assets?
The connection between the CPF, Temasek and GIC is best explained by these excerpts from articles published in the Business Times Singapore:

The Republic's foreign reserves rose again in May to reach S$60.5 billion, up from S$59.3 billion in April. Though the May rise was marginal, the reserves of S$60.5 billion represent a creditable 19.6 per cent expansion over May last year……The bulging reserves stem from accumulated CPF savings, the annual budgetary surpluses, surpluses from statutory bodies and the yearly balance of payments surpluses attributable to inflows of monetary capital and foreign investment. The nation, particularly through the Government of Singapore Investment Corporation (GIC), invests these assets in foreign equities, bonds, fixed deposits of banks, gold and properties.
(Business Times Singapore,14 August 1992,, Foreign reserves up 19.6pc over 12 months)

AND

Creating the GIC
(By January 1981), Singapore's reserves had been estimated at around the figure of $15.84 billion and MAS was finding itself under fire by PM Lee for allowing Singapore's reserves to accumulate beyond what was necessary to meet its legal obligations. PM Lee had said: 'As our financial reserves grew with increased Central Provident Fund (CPF) savings (Singapore's pension scheme) and yearly public sector surpluses, the MAS was not investing these funds long term for best returns.'
Dr Goh soon found himself to be a very busy man. In the months that followed, he tried to bring in foreign experts to review the investment portfolios of the MAS and the Currency Board. He eventually settled on NM Rothschild & Sons, a British investment bank, which was invited to undertake the job.
Barely a month after the commencement of the Rothschild consultancy, the Government of Singapore Investment Corporation(GIC) was established under the Companies Act, in May 1981: its main responsibility was to manage the Singapore government's long-term foreign reserves, a task previously handled by the MAS.
(Business Times Singapore, 9 July 2007)

There is also this note from the IMF:
Gross debt is issued to the Central Provident Fund (CPF) and as part of the Singapore Government Securities (SGS) program. The government invests the proceeds raised through this issuance in foreign assets through the GIC. The SGS is a program started in 1998 to encourage the development of a corporate debt market by providing a liquid government bond market that could be used to benchmark the prices of other assets.
(Source: http://www.imf.org/external/pubs/ft/scr/2006/cr06150.pdf)

Therefore, it could well be that there is a situation now present where CPF liabilities are in excess of the assets from which they are meant to be satisfied.
END

Jesus would have wanted taxpayers to subsidise YTL?

2009-02-24T18:44:00.000-08:00

According to the Malaysian Insider, 25 Feb 2009:
Malaysians have been subsidising the Express Rail Link (ERL) service since last April, it was revealed in Parliament today

Transport Minister Datuk Seri Ong Tee Keat said that YTL Corporation’s ERL Sdn Bhd, the operator of the high-speed rail service from here to the Kuala Lumpur International Airport, had been indirectly subsidised since last April because the company is unable to cover costs due to poor sales.

Ong justified the allocation to ERL by pointing out that there had been a massive capital outlay to operate the rail line but that ticket sales “cannot cover the cost of the outlay and maintenance.”

http://www.themalaysianinsider.com/index.php/malaysia/19086-fly-ride-or-neither-taxpayers-still-pay-erl-

And who made the most money on the "cost of the outlay"?
According to the YTL website, 2001:

1. Ideal order book. Over 90%, or RM800m, of order book is for the ERL project. We value the core ERL project at RM0.25 sen DCF per YTL share.

2. Additionally, YTL is likely to benefit from ERL-related construction projects.

http://www.ytlcommunity.com/analyst/shownews.asp?proc=1&page=3&maxrec=10&newsid=11922&vtype=1&langID=2

YTL Corp: Premium for governance, paying for growth potential

Company Focus (Mayban Securities), 14 August 2001
YTL Corporation Bhd
BUY
12-month target price: RM4.50

We like: (1) YTL Power’s ability to invest, (2) its partnership with CLP in venturing into Asian markets, (3) construction business led by a massive RM800m order for Express Rail Link (ERL) and (4) the revival of the Sentul Project. The YTL Group has been able to adapt with time, evolving from pure construction play, to power and even e-commerce – a testament to management acumen and deal-clinching ability. BUY.

Power generation remains the most convincing potential growth segment. With RM3.3b in cash, and a recently-clinched 49% joint venture in a 1,400MW plant, the options for YTL Corp. are not particularly limited, Hong Kong-based shareholder CLP Power International can potentially offer reciprocal investment avenues into Asian power.

Spinning capacity utilised wisely, and at a fantastic rate, in our opinion. YTL Power International secured RM152.6m revenue for 3 years at 45% gross margins. We are also pleased that (1) spinning capacity is now nearly fully utilised, and more importantly (2) a rate of 10.9 sen/kWh was secured with the current backdrop of plummeting PPA rates.

Jimah increases YTL Power’s generation capacity by 686MW by 2003. We note that although YTL Power has a 49% stake in the plant, it has managed to secure a 70% share in the lucrative O&M contract. With CLP’s proven expertise in coal-fired plants, we like Jimah.

ERL construction and Sentul Raya Project keeping order books filled. The massive RM2.4b ERL project is expected to keep Syarikat Pembinaan Yeoh Tiong Lay Sdn Bhd busy until April 2003. Meanwhile Sentul is in the pipelines.

Outlook positive. Over the last 5 years, management has, averaged returns of 12.4% to shareholders, 8.6% to capital, and kept pre-tax margins above 30%, PE of 15.6X, P/B of 1.4X and historical 20% premium to RNAV. In our opinion, valuations are justified by management stewardship and expansion potential.

Power Generation

1. Generates incremental income of RM152.6m for the next 3 years despite being 33% into 21-year PPA term via SPPA with Tenaga. Gross margins – circa 45%. The plants technically do not need to meet availability and dependability requirements – the original PPA stipulates a Minimum Quantity of electricity of 7,450MW p.a. rather than separate Capacity and Energy payments. Plants are currently at above 90% availability, and YTL Power is selling spinning capacity (above the minimum equivalent of 70%) for incremental revenue.

2. Has RM3.3 billion in cash equals 1,400MWs instantly – the key to capacity growth. Assuming a debt-equity funding ratio of 70:30, YTL Power, together with CLPPI can potentially build up to 10,000MW of generation capacity in Malaysia.

3. Partners CLP – an ambassador to Asia? CLP has RM27b in assets, RM1b in cash, owns 17,600MW generation assets in Hong Kong and China, supplies 75% of Hong Kong’s electricity. YTL’s expansions in power will be focussed on developed Australasian markets, in our opinion. Despite the 60:40 JDA to invest in power in Malaysia, we believe CLP Power International, 5% shareholder, may still be a partner to YTL Power’s regional plan.

4. Brews new deals in Negeri Sembilan and Singapore. While Jimah is awaiting PPA pricing, YTL Power with CLPPI has jointly bidded for stakes in PowerSenoko, PowerSeraya and Tuas Power. YTL Power is to potentially spend RM570m, from its strongly subscribed US$150m Exchangeable Guaranteed Bond issue, offered at 200bps spread above US Treasuries.

Construction – ERL for the next couple of years. Sentul Raya Project redesigned.

1. Ideal order book. Over 90%, or RM800m, of order book is for the ERL project. We value the core ERL project at RM0.25 sen DCF per YTL share.

2. Additionally, YTL is likely to benefit from ERL-related construction projects.

3. Pricing and ridership risks remain for the long-term project. Although we have incorporated reduced ridership and fares, actualisation risk remains.

4. Meanwhile, the Sentul Raya project will be revived. Gross developmental value –RM1.6b, RM2.5b in total proceeds over 10 years, target market now to medium to low cost property market.

Cement and Hotel Business. Decidedly still in doldrums.

Cement industry lacks pricing power due to gross excess supply, at above 40%. However, YTL Cement is partially protected thanks to YTL construction’s in-house demand of up to 70%. Contribution to FY01 pre-tax profit is deemed small.

Hotel & Malls in same dilemma. Near term lease renewal and occupancy the key. Despite continued room oversupply especially in Kuala Lumpur, Marriott registered occupancy circa rate 60%. Occupancy, lease expiry and rental collection remain significant risks for Lot 10 and Star Hill.

Phillip Lee
+603-2297 8689
phillip@maybansec.com.my

The Monthly article : A case of Rudd speaking for Beijing?

2009-02-04T17:29:00.000-08:00

"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed; that the emperor has no clothes....Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy.....Minor tweakings of long established orthodoxies will not do,"

Lu Kewen, aka Kevin Rudd, Prime Minister of Australia ; The Monthly, February 2009, No. 42 (http://www.themonthly.com.au/tm/node/1417)

"....it is necessary to reassess the existing US dollar-dominated international financial system. It is a speculation-rife, supervision-lacking system.
After the collapse of the Bretton Woods System in the early 1970s, the US rushed to introduce the Jamaica System, which is still in effect, in an attempt to carry forward its financial dominance. The Jamaica System, strictly speaking, is not new, and it has elements of Bretton Woods.

Under this financial structure, the US has excessively indulged itself in the benefits, but has tried to shrink from its responsibility as the world's largest economy. The superpower's unrestrained issuance of dollars to bolster its unrestrained domestic credit consumption and its efforts to maximize its national interests by adopting policies, such as transferring financial risk and crisis to other countries, has added vulnerability to the international financial system.

An absolute authority always leads to corruption. The unchallenged hegemony of the US has contributed to its abuse of power and conduct...As an important prop of the Bretton Woods System, the International Monetary Fund (IMF), has long been utilized by the US as a tool to push for neo-liberalism worldwide."
Jiang Yong , China Institute of Contemporary International Relations;
China Daily;15 November 2008

Coming soon: AirAsia's billion ringgit crash

2009-01-20T16:13:00.000-08:00

As reported in Forbes Asia, 12 Jan 2009:

And in the third quarter, ended Sept. 30, the airline suffered its first net loss since it went public in 2004--a total of $136 million, much of that because the airline hedged against higher oil prices before they fell dramatically. More losses are coming because it thought oil prices would remain at $70, but now they've fallen below $40. Even at $50 the airline projected it would lose some $481 million on its soured hedges, though Fernandes says the lower fuel prices will allow him to make up the losses in three months. Some analysts have downgraded the stock from neutral to sell.The Group seeks to hedge this fuel price risk by entering into jet fuel derivatives contracts.

( Hit By Turbulence; Fewer people are flying, but AirAsia is deploying more planes. Tony Fernandes bet wrong on fuel prices, but his play for discount travelers may pay off. Ioannis Gatsiounis and staff ;12 January 2009, Forbes Asia .http://www.forbes.com/global/2009/0112/070.html)

Readers should note the following:
a) Even if losses are limited to USD 481 million, that loss translates at current exchange rates (approximately USD1=RM3.6) into a Ringgit loss off approximately RM 1.73 billion.
Yes, there could be savings on the lower oil price, but that is still a cash outflow.
The question here is-can AirAsia afford any kind of cash outflow after suffering such a massive loss ; put in another way, can AirAsia last 3 months?

Tony has said ""I really don't think most analysts in this part of the world know what they're talking about,... "All I'm seeing is a very strong load."
(http://www.forbes.com/global/2009/0112/070.html)
The problem is-this strong load comes at a cost to revenues, especially given AirAsia's never-ending specials, reminiscent of shops that seem to perennially offer "closing" sales.

b) AirAsia appears in the medium term to be reliant on commodity deals to even finance its new planes. The financing of its SPV that will be used to borrow and purchase its new Airbuses is reliant on commodity deals between itself and Bank Rakyat-see http://www.bernama.com/finance/news.php?id=372896

To complicate matters AirAsia does not hedge jet fuel with jet fuel derivatives but with crude oil derivatives, introducing a further element of risk into its hedging contracts. This change in its hedging policy can be seen from the following statements:

In its prospectus issued in late 2004 AirAsia said:
AirAsia has entered into jet fuel derivatives contracts to hedge against increases in jet fuel prices for the year ending 30 June 2005.
(see page 31 of the Prospectus archived at www.airasia.com)

However by 2006:
Of the total volume, 75% of the requirement was hedged based on WTI crude oil within the pricing band of USD40 to USD52 per barrel. The pricing band for the remaining 25% is between USD48 and USD60 per barrel.

(www.airasia.com/storage/bo/aaportal.model.ContentFileUpload/847d15fb-ac1e00ae.../AA_3Q06%20Bursa%20Announcement.pdf)

This change in hedging policy may have occurred earlier, but the issue here is the policy of hedging jet fuel with crude oil contracts, therefore introducing the risk of a price mismatch.

As HSBC put it, commenting on AirAsia's overall hedging strategies:

We maintain our long-held view that Air Asia create rather than eliminate risk via its derivatives positions, especially where they are off balance sheet and poorly disclosed...We continue to value the company using asset replacement value, add non-aircraft assets less liabilities and obtain a revised target price of MYR0.60 based on our revised earnings. Risks include Air Asia providing limited disclosure about its derivative positions, making it difficult to assess its gains or losses.
(http://www.forbes.com/afxnewslimited/feeds/afx/2008/11/30/afx5757427.html)

I have previously noted that AirAsia may be in breach of its loan covenants, due to its losses which are should be higher than reported, and to the fact that it has suffered a loss in operating cash flow-see http://sahathevan.blogspot.com/2008/12/is-airasia-in-breach-of-any-of-its-loan.html

Sime Darby's proposed Low-Cost Terminal -Musa Hitam And The Board Have Much To Explain

2009-01-11T17:53:00.000-08:00

Malaysian plantation-to-property conglomerate Sime Darby (SIME.KL: Quote, Profile, Research, Stock Buzz) said on Monday it had obtained the government's approval to build a private low-cost carrier terminal (LCCT).

The terminal will be built on Sime Darby's land in the southern state of Negeri Sembilan.

"The proposed LCCT project is an integral part of the company's development plan for its Negeri Sembilan Vision City," Sime Darby said in a filing to the stock exchange
(http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSKLR37928920090105)

The terminal will service AirAsia only:

The key thing is that we cannot slow down our growth because we have bought aircraft and we need a bigger terminal. We are building for 30 million passengers and we should be supported,” he said.

By having a dedicated terminal, (Tony) Fernandes said the airline could bring down its cost by 20% and this would be translated to lower fares.

Asked if other airlines would be able to use the KLIA East airport, Fernandes said “the idea is not to go into (the) airport business but to serve our business.’’
(http://biz.thestar.com.my/news/story.asp?file=/2009/1/9/business/2976639&sec=business)

So, in short Sime Darby is going to build an airport for AirAsia.
Now, how would Sime Darby make money out of this?

First and foremost, airport operators/owners make money on landing charges. Hence the need to entice as many airlines as possible to use one’s airport. Here however, that is not to be the case. Sime Darby will wholly and solely rely on AirAsia as it source of revenue.

This raises a basic question (not an imponderable, like Sime chairman Tun Musa Hitam) , ie how does any business justify spending billions of dollars on the promise of an income stream form just one customer?

Airport operators also seek revenue from the rental of retail space and parking and the provision of services to incoming and outbound passengers . However the question here for anyone wanting to provide any sort of service (including Sime ) is again ; would anyone want to risk capital on a business dependent on one customer? Put another way, why bet your shop on customers from just AirAsia, when you could set-up shop at KLIA and rely on passengers from many different airlines?

There is of course the usual “plopety develepment” (Malaysian slang for property development) argument. But honestly, why would anyone want to live under a flight path? Is an airport really the best way to attract people to any property development?

Then, one comes to the numbers.
Sime’s return on average assets for in 2008 was 10.85% , while Malaysian Airport’s return on average assets for the same period was only 6.58%
Sime return on equity for the same period was 18%, while Malaysian Airport’s was only 9.94%.
(See http://finance.google.com/finance?q=KUL:SIME AND http://finance.google.com/finance?q=KUL:AIRPORT)

So how does Sime justify entering a business that is likely to see its returns dragged down?

Readers should note here that given the far greater risk of running a single customer business, Sime will have to show a return in excess of MAHB’s 6.58% if it is to justify getting into the airport ownership and management business. Note also that AirAsia has indicated that it will manage the airport, thus depriving Sime of that revenue stream , or alternatively adding to the ongoing cost of the investment.

Bank Islam's exposure to AirAsia

2008-12-30T17:56:00.000-08:00

Air Asia Sukuk Ijarah of RM500 mil (Joint Arranger & Primary Subscriber)
http://www.bankislam.com.my/bimb_pdf/84743MediaBriefingFYEJune2008.pdf

ARAS SEJAGAT/AIRASIA Issuance: May 5
PRICED: MYR420M
Size: MYR420M Tenor: 5 Yr
Type: Ijarah
Leads: Bank Islam Malaysia, Kuwait Finance House

Readers should note that Bank Islam was the Primary Subscriber to the loan.How much of that loan Bank Islam has been able to off-load, given the problems in the credit market, remains unclear. It is likely that Bank Islam continues to be holder of a substantial amount of that loan.

AirAsia-Further questions regarding its balance sheet

2008-12-28T18:37:00.000-08:00

According to Wee Choo Keong MP:
Wee Choo Keong [Wangsa Maju] challenged the Minister of Transport and stated that AirAsia actually owed MAB more than RM80 million, Petronas for fuel RM20 million and the Government for RM35 million for the repairs of 7 aeroplanes, which MAS took over from AirAsia when AirAsia gave up Rural Air Services (RAS). What actions will the Minister of Transport take pertaining to the said debts?

The Minister of Transport replied that MP for Wangsa Maju got the figures wrong. The Minister of Transport has confirmed in Parliament this evening that from 2002 until 31 March 2008 AirAsia owed about RM110 million to MAB for all services at all airports. The Minister went further to state that AirAsia is disputing its debt of RM110 million to MAB and this matter has been sent to the Ministry of Finance to resolve.
(http://weechookeong.wordpress.com/2008/05/20/minister-of-transport-confirms-in-parliament-airasia-owes-mab-rm110-million/)

According to Tony Fernandes:

We owe MAB nothing, they owe us.
(http://rockybru.com.my/2008/12/happy-new-year-from-boss-of-malaysian.html)

The question then is whether the above debt of RM 110 million is reflected in AirAsia's balance sheet as a liability, if at all.

On the issue of its associates, I have already noted that earnings, and retained profits, are overstated due to the exclusion from consolidated earnings of AirAsia's interest in the losses of its associates, PT AirAsia and Thai AirAsia. (see http://sahathevan.blogspot.com/2008/09/airasias-rm-24483-million-loss-for-june.html)

Given the current interest in AirAsia's balance sheet, readers should note that AirAsia's balance sheet discloses investments in its associates to be only RM 29,000.
The amount due from associates at 30 June 2008 however is RM 128,089,000; up from RM 84,407,000 at 31 December 2007.
What justifies this accounting treatment, as well as other matters raised here , are issues that one hopes Tony Fernandes would make clear in a press release, given his recent assertion of openness (http://rockybru.com.my/2008/12/happy-new-year-from-boss-of-malaysian.html)

Is AirAsia in breach of any of its loan covenants?

2008-12-02T19:32:00.000-08:00

AirAsia's financial results for the quarter ended 30 September 2008 included disclosure that net cash flow from operating activities was -RM 202,198,000.

According to Tony Fernandes AirAsia has been cashflow positive from the day he took control.

AirAsia reported a loss after tax of RM466 million, but this did not include, as it should have, losses from its associates that ought to have been equity accounted. For the quarter ended 30 September 2008, AirAsia's share of losses from its 2 associates, Thai AirAsia and Indonesia AirAsia totalled RM 165.3 million.
Therefore AirAsia's pre-tax loss should have read RM 669.62800 million NOT RM 504.328 million.

The deferred tax asset has grown from RM 479.705 million to RM 627.971 million. This item has been booked as a current asset. Only in some fantasy can this item be regarded as an asset that can be liquidated quickly to meet current debt and obligations. It is worth noting that this item comprises 9.06% of current assets.
If that "asset" , realisable only if the Company makes future profits, and even then only available as a deduction against tax expense, is excluded from Current Assets, AirAsia's would be in a negative current asset position, suffering a deficit of RM 272,835,000.

If not for borrowings of RM 2,682,141,000, AirAsia would have shown a fall, and possibly , a deficit in its cash position.

Given all of the above, and in particular the deficit in operating cash flow, it is hard to see that AirAsia's bankers would not be concerned. Indeed it is hard to see that they would have advanced AirAsia any money without covenants requiring that its operations be cash flow positive.

Al Gore denies any investment in Vinod Sekhar's companies

2008-11-24T15:05:00.000-08:00

In response to the article below , Al Gore and his Generation Investment Management(generationim.com) have advised via email that neither he individually, nor any entitiy in which he has an interest, including Generation Investment Management , have any equity or any other form of investment in any of the companies reported to be controlled by Vinod Sekher.

Gore, Clinton green investment was once a write-off-New investor Bruce Willis sues for return of investment

2008-11-23T16:30:00.000-08:00

As reported by Bloomberg:

Actor Bruce Willis sued Malaysia's Petra Group and its chairman, Prince Imran Ibni Tuanku Ja'afar, saying $900,000 of the $2 million he invested in a ``green rubber'' venture wasn't returned to him.
Petra's chief executive officer, Datuk Vinod B. Sekhar, and Ja'afar induced Willis in 2007 to invest in a company that was developing a nontoxic and recyclable rubber, the actor said in a complaint filed today in federal court in Los Angeles. Willis accuses Petra and the executives of breach of contract and unjust enrichment.
Willis was told that former U.S. Vice President Al Gore and actor Mel Gibsonalso had invested in the company, Elastomer Technologies Ltd., according to the complaint. Willis had a put option, whereby for a specified period time he could get a full refund of his investment, according to the complaint. He exercised the option on March 17, Willis said.
``Despite defendants' obligation to immediately refund Willis' investment, in April 2008, defendants continued to provide different specious excuses for the retaining of Willis' funds,'' the actor said in the complaint.
(http://www.bloomberg.com/apps/news?pid=20601130&sid=a5aSpyjV.4E0#)

According to Malaysia's THE STAR:

Vinod’s family and Tunku Imran control Petra Trust, which in turn holds 84% of Elastomer. “Gibson and Bruce Davey (a director of Green Rubber) jointly hold 7% in Elastomer and the Clinton Foundation, 2%.http://biz.thestar.com.my/news/story.asp?file=/2008/11/22/business/2614856&sec=business

Bill Clinton is to receive the BC Sekhar Medal for transformational leadership from Vinod Sekhar's Sekhar Foundation on December 6 2008 in Kuala Lumpur, Malaysia.

Elastomer's main asset is its interest in Green Rubber Global, a company that was meant to be listed on the AIM this year. Green Rubber's main asset is supposed to be a patent or license to use a rubber recycling technology named D-Link.

In 1998 Imran's family company Antah Holdings Bhd wrote-off its then 20% investment worth about USD 10 million in STI-K Polymers Sdn Bhd, the first holder of the D-Link patent.

The board of Antah "had agreed with its partners to cease operations of the company due to the considerable investment needed".

Accroding to "Waste News":

STI-K PolymersAmerica Inc., purveyor of the much-ballyhooed De-Link rubber recycling process, has folded.
Why did the U.S. arm of Malaysia's Antah Holdings go belly up in October? Several possibilities stand out:
No U.S. tire maker bought into the theory that De-Link and the DeVulc rubber it generates are worth using

(HOPES FOR DEVULC RUBBER FALL FLAT: STI-K POLYMERS AMERICA CLOSES AFTER CHEMICAL REACTANT FAILS TO CATCH ON
Miles Moore ,16 November 1998
Waste News)

On the fall in Malaysia's Forex Reserves -Why is Zeti not worried?

2008-11-12T16:58:00.000-08:00

Zeti , governor Bank Negara has told THE STAR:

“The decline in reserves is mainly due to a reversal of short-term capital flows. That was the result of the deleveraging process by investors following the financial distress experienced in the United States and in Europe,”
“In October, we had the international meltdown. Are we concerned (about the fall in reserves)? No, because this is part of the deleveraging process and immense demand for US dollars by the international investment banks and other entities that are deleveraging,”
(http://biz.thestar.com.my/news/story.asp?file=/2008/11/13/business/2532269&sec=business)

No need for concern? Perhaps, but here are some numbers which are so large, it is hard to see how anyone would not be concerned.

First, between 15 May 2008 and 31 October 2008, Bank Negara’s total assets in Malaysian Ringgit terms fell 26% from RM 506,986,188,441 to RM 374,372,661,598.

Reserves of foreign exchange and gold alone fell 13.6% , from RM 399 919 106 509 to RM 345 549 644 622. This equated in US dollar terms to a fall of 20%, from USD 125.1 billion to USD 100.2 billion.

I have previously written about the danger of having the “reserves” financed substantially by deposits from financial institutions (see reference below).
Given that the “reserves” are financed significantly by statutory deposits placed at Bank Negara pursuant to the SDR (statutory deposit ratio), a withdrawal of foreign funds requires a draw down on the forex reserves , as well as the statutory deposits as financial institutions cover their funding needs (Recall that banks borrow short term , and lend long-term).
The withdrawal of foreign funds which Zeti says is the cause of the fall in assets caused,as one would expect, a fall in the value of the Ringgit. Bank Negara often acts to stabilise the Ringgit, but the withdrawal of funds creates a shortfall in the financing of the reserves that needs to be financed from some other source.

Bank Negara appears to have financed this fall by simply printing more Ringgit.
Over the same period from 15 May 2008 to 31 October 2008 currency in circulation has increased 9.3%, from RM 42 614 989 793 to RM 46 595 122 319.
However this might not be the whole story.
Federal Govt deposits have increased 130%, from RM 9,434,186,821 to RM 21,622,286,904

This increase raises the question of where the deposits came from. It is possible that these may well be “new” Federal Government funds, recently minted and issued by Bank Negara.
All this would mean a further decline in the value of the Ringgit,and higher inflation as more money circulates in the economy. Only Zet would not be worried.

END

References:
Malaysia's reserves of Gold ,Foreign Exchange and Other Reserves including SDR as at 29 June 2007 stood at MYR 339,774,970,225.
67.4% of this amount was financed by deposits from financial institutions which totalled RM
229,099,593,853.
It was a similar asset-liability position that left Malaysia and the Ringgit vulnerable to speculative attacks in 1997.
As then finance minister, " Dr" Anwar Ibrahim was responsible for financing Malaysia's foreign reserves almost entirely out of statutory deposits -- placed at no interest by financial institutions -- at the Central Bank. (for full story by Sahathevan see http://findarticles.com/p/articles/mi_m0BJT/is_24_6/ai_55143627)

Almost a year later, as of 15 May 2008:
Malaysia's reserves of Gold ,Foreign Exchange and Other Reserves including SDR equals RM 399,919,106,509
The proportion of this amount financed by deposits from financial institutions now totals RM 284,175,898,063 , or 71.06%, compared to 67.4% as at 29 June 2007

http://sahathevan.blogspot.com/2008/06/quality-of-bank-negaras-reserves.html

Are Southern Australian Windfarms Viable If The Roaring Forties Have Moved South?

2008-11-09T15:45:00.000-08:00

Tasmania is said to have ideal conditions for producing electricity through wind power due to its location near the path of the Roaring Forties winds:

Tasmania is located south of the 40th parallel in the path of prevailing westerly winds, the Roaring Forties, which ensure that Tasmania has conditions that are ideal for producing electricity through wind power. Hydro Tasmania’s research shows that 1,000 MW of wind energy could be generated by utilising these winds; enough energy to supply electricity in Tasmania and to mainland Australia. With Basslink, Tasmania could potentially sell excess wind-powered electricity to Victoria and other southern mainland states during their peak-load periods.

At May 2003, there are four wind farm sites or potential sites in Tasmania: Woolnorth, King Island's Huxley Hill, Heemskirk and Musselroe.
Information on all three wind farms, can be found on the Hydro web site-http://www.hydro.com.au/home/
(Source: http://tinyurl.com/3vvp4de)

South Australian Premier Mike Rann is advertising South Australia as the place for wind farm investment, touting the location of the state's "best wind profiles of any Australian State":

When this Government came to power in 2002 there was not one wind turbine operating in the State...South Australia has some of the best wind profiles of any Australian State along and beyond our 3,700 kilometres of coastline.
“But we are not resting on our laurels. Our next challenge will be maintaining this share as demand grows, fuelled by the huge expansion in the State’s mining industry.

(http://www.ministers.sa.gov.au/news.php?id=3881&print=1)

Public companies such as AGL Ltd have invested heavily in wind farms in the south:

AGL Managing Director, Michael Fraser, said that mid-north South Australia was highly
suitable for wind developments and that AGL was delighted to be a vital contributor to both the State, and in particular, the local community.

“AGL is Australia's largest private owner and operator of renewable energy assets and the company has invested significantly in South Australia. With one wind farm now completed, one under construction, and two more currently under investment consideration, the midnorth is confirmed as the hub of Australian wind farm investment,” Mr Fraser said.

“AGL has invested over $2 billion in developing the largest privately held renewable
generation portfolio in Australia..."
(http://www.agl.com.au/about/media/Pages/PremierMikeRannopensHallettStage1windfarm.aspx)

HOWEVER, according the Bureau of Meteorology, The Roaring Forties are moving south away from the coastline:

The Roaring Forties that used to bring Melbourne's cold, wet weather have moved south. Since 1997 Melbourne has been in an extended dry that David Jones, head of climate analysis at the Bureau of Meteorology, describes as exceptional and unprecedented

Jones says the long dry is "broadly consistent with what we expect with the enhanced greenhouse effect and also ozone depletion. If you look at different climatic models, they broadly follow this picture of change. Broadly speaking, the changes that we are seeing in southern Australia at the moment are at the extreme end of what one might expect," he says.

He says the Roaring Forties are shifting towards the South Pole, and there is evidence of similar change in the northern hemisphere. "There are very severe droughts impacts on many of the Mediterranean climates in the south-west US and the Mediterranean regions of Europe. There are currently some very severe droughts, and also substantial rainfall declines.
http://www.theaustralian.news.com.au/story/0,25197,24546510-11949,00.html

Given the changing winds, can the Tasmanian and South Australian windfarms, which are being sold as investments that will harness the Roaring 40s, remain viable? Indeed, if the winds have already changed, are these farms viable at all?

Valuecap Sdn Bhd-History of its RM 15 billion liability, 2/3rds due to mature in February 2009

2008-11-03T22:19:00.000-08:00

Value Cap Sdn Bhd commenced operations in January 2003.Its capital base comprised RM 50 million in equity , provided equally by Khazanah Nasional Berhad,Permodalan Nasional Berhad and Majlis Kumpulan Wang Amanah Pencen and RM 9.95 billion in debt provided by the same shareholders in almost equal proportion.

Debt was in the form of bonds with a maturity of 3 years-for details of that issue see http://www.sc.com.my/SC/search_issuer.asp?stype=S&skey=V
The bonds were issued on 28-02-03.
They have a coupon rate of 3.5% per annum.

Readers will note from the documents that "Upon maturity, the Bonds shall
be renewable for up to three (3) years at the discretion of the Bondholders."

In February 2006, bondholders agreed to extend the term by another three years. As reported by Business Times Malaysia:

VALUECAP Sdn Bhd, the government-backed asset management company, had the maturity of its RM10 billion bonds extended, indicating that its operations may be continued for three more years.

The initial maturity date of the bonds is February 28 this year, with an option to extend for three years, according to an announcement filed by the arranger, AmMerchant Bank Bhd, on Bank Negara Malaysia's website.

"Bondholders have unanimously agreed to extend the tenure to February 28 2009," the announcement said.

The proposed variation to the terms and conditions of the bonds is now pending the Securities Commission's approval. Valuecap was set up by the Government in January 2003 to buy undervalued stocks on the domestic stock exchange to help restore investor confidence at a time when sentiment was low. Equally owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd and Kumpulan Wang Amanah Pencen, Valuecap was tasked with providing volume and liquidity to the stock market besides creating a vibrant and active market. Amid a looming war in Iraq at that time, the fund was essentially set up to buffer the stock market against any sharp falls due to any possible widespread fallout from the situation.

In 2003 and 2004, Valuecap generated returns of 27.7 per cent and 17.7 per cent respectively, doing better than the Kuala Lumpur Composite Index, which gained 22.8 per cent and 14.2 per cent respectively during both years.

(Maturity of ValueCap bonds extended
25 February 2006
Business Times)

The additional loan from the EPF will therefore increase Valuecap's total liability to RM 15 billion (http://malaysia.news.yahoo.com/bnm/20081021/tbs-normohamed-epf-ceeeaba.html)

It is therefor unclear what Nor Mohamad meant when he said recently: "The RM5 billion is a reasonable sum which is an addition to RM5 billion that Valuecap already has." (http://www.bernama.com.my/bernama/v3/news_lite.php?id=366337)

Readers will recall that Valuecap's paid-up capital is only RM 50 million. Given the recent market meltdown, it is difficult to see that Valuecap would have built-up its equity position to RM 5 billion.

The Muhyiddin-Stamford Land Conspiracy Matter

2008-10-30T15:38:00.000-07:00

The following are excerpts from various reports about a matter heard in the mid-90s, in which Tan Sri Muhyiddin Yassin and others were sued by property developer Stamford Holdings S/B:

Stamford Holdings Sdn. Bhd. has sued Muhyiddin Yassin, chief minister of the Johor state, and businessmen Yahya Talib and Syed Mokhtar Albukhary for damages for alleged conspiracy in acquiring land in Johor through the Land Acquisition Act, the Bernama national news agency reported Friday.

According to Bernama, Stamford Holdings claimed the three had abused provisions of the Act to acquire its 6,600 acres of land through the Johor State Islamic Economic Development Corporation.

The suit was filed at the Kuala Lumpur High Court early this month but was transferred Friday to the Johor Baru High Court, Bernama said.

Stamford Holdings also named the Johor state government as a defendant in the suit, alleging that Muhyiddin and the two businessmen conspired to use the state government's authority to acquire the land.

According to the news report, Stamford Holdings wants the court to declare that the Johor State Islamic Economic Development Corporation was not entitled to invoke provisions of the Land Acquisition Act to acquire a private landed property.
(Malaysia's Stamford Sues Minister, Businessmen - Report
17 February 1995)

The facts of the matter as reported by Murray Hiebert , FEER:

Stamford's court documents insist that the company's relationship with the former chief minister dates back to 1988. Four years earlier, the firm had tried to develop some of its huge land holdings near the state capital of Johor Baru. But Stamford couldn't get approval for its project until its directors met two men who were allegedly Muhyiddin's business partners, Syed Mokhtar Albukhary and Datuk Yahaya Tabib.

The two arranged a meeting in Singapore between the firm's representatives and the former chief minister, the firm's documents allege. Within a year, Stamford and the three men had formed a 70-30 joint venture to develop some 724 hectares of land. When the property was sold in 1994, the Muhyiddin group's initial investment of M$1.8 million ($735,000) had soared to M$83 million.

In the meantime, Muhyiddin's group had become "very avaricious," according to the documents Stamford filed in court, and wanted to form a second joint venture in which they would control 70% of the shares but would pay Stamford only M$74,100 per hectare for its remaining 2,672 hectares, company officials charge.

When Stamford insisted on retaining its original 70% and on being paid M$185,250 per hectare for its property, one of Muhyiddin's associates allegedly warned the company that the land-acquisition papers were on the former chief minister's desk and could be "signed at any time." Muhyiddin himself allegedly threatened Stamford in December 1992 by telling one of its directors that "time is getting short." In July 1994, the state government acquired the land on behalf of the Johor Islamic Economic Development Corp.

(MALAYSIA --- The Privileged Few
By Murray Hiebert in Kuala Lumpur
6 July 1995,Far Eastern Economic Review)

The facts of the matter as reported by Raphael Pura , AWSJ :

In 1984, Stamford -- which is 90% owned by three families, the Singapore-based Seet family, and the Gan and Wang families from Malaysia -- applied to the Johor government for permission to develop a light industrial estate on part of the land. Stamford, in its suit, claims nothing happened until 1988. Then, Stamford directors met businessmen Syed Mokhtar and Datuk Yahaya, who said they were Tan Sri Muhyiddin's "close friends and business associates," according to the Stamford suit.

According to Stamford's court submission, the company in late 1989 agreed with Syed Mokhtar and Datuk Yahaya, "acting for themselves and [Tan Sri Muhyiddin]," to create a joint-venture company to develop 1,766 acres of Stamford's property. The Johor trio, led by Syed Mokhtar, invested 1.8 million ringgit in the joint venture, taking 30% of its equity; Stamford held the remainder. The joint-venture company acquired the property from Stamford and submitted a fresh application to convert it to industrial use. The Johor government then approved the conversion "speedily," Stamford says in its suit in which it also alleges that the Mokhtar group "made a clean profit of 83.2 million."

According to Stamford, the Mokhtar group in 1992 approached Stamford's directors, proposing to develop the remaining 6,520 acres of Stamford's Johor property. This time, Stamford alleges, the group insisted on taking a 70% equity stake in a new joint venture and proposed that Stamford's land be sold to the venture at 30,000 ringgit an acre. Stamford protested that it wanted to hold 70% of the venture and should be paid more than twice that price for the land.

(Malaysian Company Continues Suit Challenging State Acquisition of Land
By Raphael Pura
Staff Reporter of The Wall Street Journal
16 June 1995,The Wall Street Journal)

The case concluded in an out of court settlement

The land acquisition civil suit filed by a firm against the Johor government and several other parties was settled today for a total of RM405 million.

The High Court ordered Stamford Holdings Sdn Bhd to be paid the amount for the acquisition of 6,544 acres of land belonging to it.

The consent order was given by Justice Zainun Ali in chambers.

Under the settlement, the Johor government is to pay the plaintiff RM313.25 million while Kelana Ventures Sdn Bhd was ordered to pay RM92.12 million.

Datuk V. Sivaparanjothi and Manjit Singh appeared for the plaintiff while Datuk Abdul Aziz Abdul Rahim appeared for the Johor State Government, Johor Baru Land Administrator and former Mentri Besar Tan Sri Muhyiddin Yassin.

Roger Tan Kor Mee appeared for Perbadanan Kemajuan Ekonomi Islam Negeri Johor.

The judge further ordered that all the civil suits, civil appeals and miscellaneous civil applications by the plaintiff be settled and disposed of.

The compensation sum of RM313.25 million is to be deposited in the High Court by or on behalf of the Land Administrator to be paid out to Stamford.

The additional sum of RM92.11 million is to be paid to Stamford by Kelana Ventures, which is one of the interveners/defendants in the case.

The payment is to be made in settlement of the compulsory acquisition of the Stamford properties by the Land Administrator on behalf of Kelana Ventures before the expiry of 18 months from the date of the consent order.

The dispute between Stamford and the defendants involved the whole of the Stamford properties in the mukim of Tebrau, Johor Baru District and involved a total of 6,544.4172 acres which were compulsorily acquired.

Johor govt, parties to pay the sum for land compulsorily acquired.

(Land case settled for RM405m.
By JOTHI JEYASINGAM ,7 October 1999
The Sun)

Will Rudd act against Westpac for that AUD 120 million facility to a company with little in assets or business activity

2008-10-15T15:58:00.000-07:00

Rudd has said that he would instruct regulators to consider clear incentives to promote responsible behaviour - . ....“As we contemplate the impact of this financial crisis on real economies, real people and real lives, it must also galvanise us to act in the future that we never allow greed and lax regulation to put us in this position again,” Mr Rudd told the National Press Club. ..“At that time, I said that financial institutions needed to have clear incentives to promote responsible behaviour rather than unrestrained greed.
“The champions of extreme capitalism have been found to have feet of clay,” he said.
(http://www.theaustralian.news.com.au/story/0,25197,24500657-5013871,00.html)

Is not Westpac's AUD 120 million facility to a company with little in assets, and which is "inactive" , irresponsible behaviour?

.

O 28 April 2008, Glen Milne of the Sunday Telegraph reported:
A COMPANY controlled by Kevin Rudd's wife Therese Rein took out a AUD 75million overdraft while the Prime Minister's office claimed the business was inactive.
It emerged two weeks ago that Mr Rudd had not declared the activities of one of his wife's companies -- Invisage Australia -- on a Parliamentary pecuniary interests register....The documents show that on March 30 of that year the company co-signed a bank loan facility -- essentially an overdraft -- with the HSBC bank for AUD 75 million.

This was in addition to an earlier loan taken out with Westpac on May 15, 2003 for AUD 120 million. The first loan was discharged on March 29, 2007.
The PM claimed that the company, which was in receipt of Federal Government funding over four years worth AUD 160,000, had been ``inactive'' since 2006.

But documents obtained by The Sunday Telegraph show that Invisage Australia, owned by the holding company Ingeus that is controlled by Mr Rudd's wife, was still active in 2007.

(Rudd, Rein and $75m
GLENN MILNE,27 April 2008
Sunday Telegraph)

I have previously written on Invisage on this blog:
http://sahathevan.blogspot.com/2008/04/therese-reins-invisage-throws-light-on.html
I showed from their own website (now in Archives) that the company was a provider of training services. Hence it is not likely to have had assets sufficient to secure an AUD 120 million loan, or an AUD 85 million overdraft facility. In addition, Rudd himself said the company was inactive. If these financing facilities were required for the expansion of Ingeus, the parent company, the facilities would have been in the name of Ingeus which MAY have had the resources on which to secure the above facilities.

The entire Ingeus Group is said to have "global revenue topping $170 million".
(http://www.smh.com.au/news/national/rudds-wife-to-run-the-empire--her-own/2007/04/23/1177180569463.html?page=fullpage#contentSwap1)
Hence, it could be argued that Westpac and HSBC were prepared to advance hundreds of millions in loans against the company's revenue. Service providers such as Ingeus are not likely to have much in assets-hence the company's revenue would have had to be the main source of security for the loans.
However, it is likely that the banks would have required further security, probably in the form of some type of guarantee from a party external to the business. Unless the Rudd's have some other asset base they are not telling us about, the guarantees would have to be provided by some party or parties friendly to the Rudds.

In short; Rein can no longer expect us to believe that has grown her company on the back of AUD 7,800 loan secured on a second mortgage over the family home.

posted by ganesh sahathevan @ 4:40 PM

Privatise AirAsia, take-over Malaysian Airlines; Another Avenue Assets-ECM Libra in the making?

2008-10-06T15:45:00.000-07:00

The following has been recently reported:

Southeast Asia's largest discount airline, rose for the first time in three days on the Kuala Lumpur stock exchange after the Edge newspaper said the carrier's biggest shareholders are considering a buyout.
(http://www.bloomberg.com/apps/news?pid=20601213&sid=a88FsGpZNzk8&refer=home)

AIRASIA Bhd's major shareholders may have to pay some RM1.25 billion to take the budget carrier private, analysts say.
(http://www.btimes.com.my/Current_News/BTIMES/Monday/Frontpage/jasia05-2.xml/Article/index_html)

Readers are reminded that Fernandes and Co, AirAsia's major shareholders, are not what one might consider cash-rich. Hence the question to ask here is how such a deal might be made doable. One option, which this writer thinks is probable, might involve the following:

a) Tune Air ie Fernandes and Co borrow the required sum , say RM 1.25 billion as reported, and take AirAsia private, AirAsia stock serving as collateral for a bridging facility

b)The loans are then transferred to AirAsia, and/or charged against AirAsia's assets,instead of AirAsia stock

c)The entire company with its new borrowing is then injected into a listed company, freeing Tune Air of any debt obligation and instead providing it unencumbered , tradeable, liquid stock.

Readers get no prizes for guessing that the listed company is likely to be Malaysian Airlines Bhd. Subsequently, Tune Air gets a substantial if not the majority stake in MAS and probably the right to manage the merged AirAsia-MAS. After all, Tony and Co have proven that they have undoubted skills in airline management (see story below).

The above bears similarity to the Avenue Assets-ECM LIbra transaction (http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_2aa8cb03-cb73c03a-b113c700-cc9e648c).
Readers will recall that Tony & Co and Kalimullah Hassan and Lim Kian Onn of ECM Libra are now associated via AirAsia X and other ventures-see http://www.airasia.com/site/my/EN/pressRelease.jsp?id=17e1b7ba-ac1e00ae-39281400-a8ef3d01 & http://www.smidec.gov.my/pdf/3)AirAsia%20X.pdf

AirAsia's RM 24.483 million LOSS for the June Quarter 2008.

2008-09-14T17:16:00.000-07:00

It has been widely reported that AirAsia achieved an after tax profit of RM 9.4 million in the quarter ended 30 June 2008 (See for example http://business.smh.com.au/business/budget-carrier-spreads-wings-in-turbulent-skies-20080907-4biz.html).

This figure does not however include losses suffered by AirAsia's associated companies in Thailand and Indonesia. Once these losses,(which are disclosed in AirAsia's recent announcement to the Bursamalaysia as "unrecognised losses") are taken into account ,Loss before tax to rises from RM 46.901 million to RM 80.80100, and Loss after tax from a PROFIT of RM 9.417 million to a loss RM 24.483 million.

In the quater ended 30 June 2008, the two associates, Thai AirAsia and Indonesia AirAsia suffered losses of RM 21.7 and Rm 12.2 million respectively.

Losses for the period to date, which coincides with the end of AirAsia's financial year, were RM 63.5 and RM 87.4 million respectively. Consequently profit before tax for the 2008 financial year should be a lower RM 23 million , rather than the reported RM 173.805 million
AirAsia's interest in both entities is approximately 49%.

The higher after tax figure, which is due to the addition of a deferred tax item, is due to a previous interpretation of accounting standards that only the SC and Bursamalaysia might accept. I have commented on these previously at http://sahathevan.blogspot.com/2007/06/airasias-double-standards.html

AirAsia attempts to explain the exclusion of the losses incurred by its associates from its consolidated accounts in the following manner.

At Note 18 in the announcement to the BursaMalaysia:

18. Jointly Controlled Entity and Associate Company
FRS 128 states that interest in an associate is defined as “the carrying amount of the investment in the associate under the equity method together with any long-term interests that, in substance, form part of the investor’s net investment in the associate”. On this basis, the share of losses of the investment in associate was equity accounted for by the Group and limited to the Group’s investment in the ordinary share capital of the associate.

In other words, AirAsia has decided that it will not account in its Profit and Loss the losses of its associates.It justifies this by an interpretation of FRS 128 that beggars belief in its assertion that accounting for interests in associates can be limited to the investment in the associates share capital.

The genesis of this disingenuous interpretation of FRS 128 appears to be this statement of earnings for the quarter ended 30 June 2007:

FRS 128 states that interest in an associate is defined as “the carrying amount of the investment in the associate under the equity method together with any longterm
interests that, in substance, form part of the investor’s net investment in the
associate”. In the previous quarters, the Group had equity accounted for additional share of losses in the associated company in Indonesia amounting to RM31.3 million. This change in accounting policy has been applied retrospectively with restatement
made to the comparatives.

As readers will note, the interpretation used to justify the accounting treatment appears to be shifting.It should also be noted that this "change in accounting policy" has passed without comment, even from the BursaMalaysia, and the SC.

The above adds to the confusion caused by AirAsia's explanation that earnings for the quarter fell primarily due to a translation loss of RM 77 million.

The matter of the translation loss of RM 77 million is explained in the notes headed Finance (Cost)/Income:
Net Finance Cost
Quarter ended 30/06/08: (130,773,000)
Quarter ended 30/06/07 :(19,903,000)

Increase significantly attributable to:

Foreign exchange loss on FINANCE INCOME: RM 76,885,000

A translation loss or gain would normally be incurred on the holding of an asset or liability denominated in a foreign currency. Therefore it is difficult to understand what this translation loss on finance income might be.

(For a primer on Translation Loss/Gain see cas.uah.edu/schoenn/FIN%20454/Finding%20Translation%20Loss.doc)

Who does Ahmad Ismail of Bukit Bendera act for? Who gains from his acts?

2008-09-09T22:28:00.000-07:00

Readers will see from the articles below that Ahmad Ismail appears to be both an Anwar and Badawi loyalist. Might be stirring tensions in Penang so as to bring to a conclusion a shared, or common agenda?

As reported in The Edge Financial Daily , 10 September 2008:
Wanita Gerakan has urged Prime Minister Datuk Seri Abdullah Ahmad Badawi to sack Bukit Bendera Umno division chief Datuk Ahmad Ismail and detain him under the Internal Security Act (ISA).
The result of non-action by the prime minister could lead to Wanita Gerakan urging the party’s leadership to leave the ruling Barisan Nasional (BN) coalition, Wanita Gerakan chief Datuk Tan Lian Hoe told reporters at Gerakan’s headquarters in Cheras here yesterday.
“We are very angry at the irresponsible act of Datuk Ahmad Ismail, who tore the portrait of Gerakan acting president Tan Sri Dr Koh Tsu Koon in front of the media yesterday afternoon in Penang,” she said.
Showing a portrait of Abdullah, Tan questioned: “How would Umno members feel if a member of the component party in BN tore the picture of Umno’s president?
“Surely, Umno members would feel angry and go berserk. This is how we feel right now,” Tan added.
Ahmad incurred the wrath of the Chinese community by referring to them as “pendatang” and, therefore were squatting in the country at a ceramah during the recent Permatang Pauh by-election. He also blamed Gerakan and its loss of support among the Chinese community as the reason for BN’s dismal showing in Penang.

Ahamd Ismail's history:

A) The crowd of supporters at sacked deputy prime minister Datuk Seri Anwar Ibrahim's residence came alive tonight when his wife, Datin Seri Dr Wan Azizah Ismail, took centre-stage to thank them for their support.
Another speaker was Senator Datuk Ahmad Ismail of Umno Bukit Bendera who said the division fully supports Anwar. Anwar, who addressed the crowd about 10pm, said he was touched by their support
(Anwar's wife thanks gathering for support.
By Toh An Nee
270 words
15 September 1998
The Sun)

B) The Umno Bukit Bendera division, which held a special meeting yesterday, decided to ask that Anwar be given a fair trial in defending himself against the allegations.
"As stated by Dr Mahathir before, we should not pronounce someone guilty until the courts have stated so.
"Anwar should be given a chance to explain his side to the people so that peace can be preserved in the country," the division said in a Press statement today.
The statement was signed by Bukit Bendera division chief Senator Datuk Ahmad Ismail, his deputy Azmi @ Iskandar S.H.O. Merican, its Youth wing leader Mohd Ismail Mohd Othman, deputy Youth chief Ismadi Abu Bakar, assistant secretary Syed Abdul Kadir Aidid, deputy Youth treasurer Azhar Ahmad and the division's Youth information chief Yahaya Ibrahim.
Other signatories were Bukit Bendera Wanita chief Haslinda Mohd Hashim and her deputy Asnah Hussain.
The division said it supported Dr Mahathir as Umno president and Prime Minister.
"We also support Anwar as both are personalities and leaders who are hard to replace," they added.
(All 11 Youth divisions in Penang back Dr Mahathir
9 September 1998
The New Straits Times)

C) The tour kicked off Saturday afternoon at Datuk Seri Anwar's birthplace of Cherok Tok Kun, in the northern Malaysian state of Penang, where more than 8,000 people swarmed the whitewashed wooden house of Datuk Seri Anwar's father. The crowds spilled onto the narrow village roads and into neighbors' gardens in the usually quiet village of wooden huts and coconut trees.
He was joined on stage by several local officials of the United Malays National Organization, the ruling party headed by Dr. Mahathir. "We support Dr. Mahathir," said Ahmad Ismail, an UMNO division chief from Penang island, part of the state of Penang. "But sometimes, even he makes mistakes."
(Malay Crowds Flock to Anwar In Heartland
By Chen May Yee
Staff Reporter
1174 words
14 September 1998
The Asian Wall Street Journal)

D)The state Umno's recent meeting which endorsed the supreme council's decision to expel former deputy party president Datuk Seri Anwar Ibrahim was held in proper manner.
Its deputy liaison committee chairman Datuk Mohd Shariff Omar, in saying this, dismissed Bukit Bendera division chief Datuk Ahmad Ismail's claims that the meeting was not properly held and therefore the decision taken by the nine division leaders present was null and void.
(Meeting on expulsion was proper - Penang Umno. 14 September 1998,The Sun)

E)THE hottest topic at the Umno General Assembly yesterday was the posting of a list of recipients of special shares and Finance Ministry projects allocated during Datuk Seri Anwar Ibrahim's tenure as Finance Minister.

Highway and outer ring-road in Penang to Metroworks Construction Sdn
Bhd. Major shareholders: Datuk Ahmad Ismail, Datuk Annuar Othman and Datuk
Ahmad Fuad Mohd Ali

F) Datuk Ahmad Saad, Datuk Ahmad Ismail and other Penang politicians closely allied with Anwar attended a dinner at Datuk Abdullah's house on Saturday night.
Datuk Ahmad Saad, the acting divisional chief in Anwar's former constituency, said that the former No 2 should have refrained from attacking the party, and put his own interests on the backburner.
"When Pak Lah was dropped from the Cabinet in the 80s, he did not attack the government or anybody. He just kept quiet," he said, referring to the current Deputy Premier.
(Anwar made me raise crony issue, says ex-ally.
583 words
21 June 1999
Straits Time)

G)Umno's leadership will decide the fate of Datuk Ahmad Ismail, who was ordered to relinquish his post as a Penang island municipal councillor because he was bankrupt.
Penang Umno liaison committee secretary Datuk Azhar Ibrahim said it would leave it to Prime Minister Datuk Seri Abdullah Ahmad Badawi, who is the committee chairman, to decide.
He said the matter would be discussed when Abdullah returned from his overseas trip.
It was reported yesterday that Ahmad, who is also a director of a firm linked to the Penang Outer Ring Road, had to relinquish his councillor's position as he was a bankrupt.
(Abdullah to decide Ahmad's fate
139 words
24 May 2006
New Straits Times)

H) Umno Bukit Bendera division chief Datuk Ahmad Ismail is adamant that he will not relinquish any of his posts.
Ahmad, who was declared a bankrupt, had been ordered to give up his Penang Island Municipal Council position and his Umno post.
He said he had obtained a stay of execution order from the High Court and lashed out at Chief Minister Tan Sri Dr Koh Tsu Koon for rushing to announce that he had been stripped of his councillor's post.
"I don't know why a small fry like me has been given such widespread publicity.
"I was declared a bankrupt because of a technicality and I have sorted it out.
"All this could have been avoided if the Chief Minister had checked his facts first," he said
(Defiant Ahmad refuses to quit
477 words
26 May 2006
New Straits Times)

I) Bukit Bendera Umno Chief Datuk Ahmad Ismail is not bankrupt and will continue back as a member of the Pulau Pinang Town Council (MPPP).
Chief Minister Tan Sri Dr Koh Tsu Koon today said that he had received a letter from the Insolvency Department confirming that Ahmad was not bankrupt.
Yesterday, Ahmad had described the actions of the state government and the MPPP in terminating him from his post of a member of MPPP as being hasty and unreasonable.
(MPPP MEMBER AHMAD ISMAIL NOT BANKRUPT, KOH SAYS
186 words
26 May 2006
Bernama Daily Malaysian News)

J)Bukit Bendera Umno Branch chief Datuk Ahmad Ismail will keep his job of councillor in the Penang Island Municipal Council (MPPP).
Ahmad cleared his name today when the Penang High Court nullified a lower court ruling declaring him a bankrupt.
A jubilant Ahmad said he has received a letter from the state government confirming that he will be retained as MPPP councillor.
He said he was a "victim of circumstances". He acted as a guarantor for a RM1.8-million loan taken by a private company which had defaulted on the repayment.
"I thank Allah that it's all over now. I have cleared my name and now I am looking forward to serving the people of Bukit Bendera (and the MPPP)," he said.
(HIGH COURT ANNULS BANKRUPT ORDER ON AHMAD ISMAIL
136 words
27 June 2006
Bernama Daily Malaysian News)

K)Bukit Bendera Umno division head Datuk Ahmad Ismail claimed that Koh and Chia did not honour their election promises, which included introducing a programme to eradicate poverty and inculcating entrepreneurship among the Malays in the city.
Describing the Malays in Penang as the victimised minority, he asked Koh and Chia to fulfill the pledges they made and asked them to hold discussions with Umno leaders to work out the programme for the Malays.
(KOH, CHIA TAKEN TO TASK FOR NOT HONORING ELECTION PROMISES
264 words
27 August 2006
Bernama Daily Malaysian News)

Foran et at, real scientists who attempted to compute the real costs of Australian production

2008-07-11T18:02:00.000-07:00

Four Corners reveals a landmark new study, backed by 10 years of scientific research, which challenges the long held economic wisdom that growth and exports are the pathways to prosperity.

Its key message: Australia undervalues its resources. The foods and other products that Australians consume and export are all part of the envied lifestyle � but are heavily subsidised by the environment.
Each year this arid country effectively exports more water than is used in its cities and its towns - without getting paid for it. Meanwhile rivers and creeks are choking. When a grain shipment is sent overseas, no one pays for the wear and tear on fragile topsoils, let alone their repair.

Foran argues that not only exports, but also the service economy gobbles up physical assets and must be costed.(http://www.abc.net.au/4corners/archives/2002b_Tuesday5November2002.htm)

For full story and transcript-see
http://www.abc.net.au/4corners/stories/s718523.htm

Ross Garnaut: Lessons to be learnt from his last major policy work ?

2008-07-04T18:25:00.000-07:00

The Garnaut Report on Climate Change puts an economist in charge of determining matters best left to climatologist. Be that as it may, this may be a good time to determine the quality and consequences of Ross Garnaut's earlier policy work , the consequences of which Australians are only now beginning to slowly appreciate.

I am of course referring here to his "Australia and the North East Asian Ascendancy", a work which was within his area of competency.

His work was central to the Hawke government economic reforms of the eighties, which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries.
(http://www.abc.net.au/pm/content/2008/s2295098.htm)

Having said that his previous work was within his area of competency, the question to ask is; how competent was he in producing that work?.
Many argue that he has been responsible for directing the attention and resources of Australian businesses to the growing North Asian economies, particularly China, buit this is clearly overstating the case. Garnaut himself should agree that ultimately market forces ( in this case lower production and transportation costs) would have led Chinese clients to Australian resources regardless of whether Garnaut wrote his report and regardless of the Hawke government's economic reforms "which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries".
It may however have occurred without the exposure of Australian industries to Asian competitors who were often state-owned or state controlled corporations able to undercut their Western competitors without making any significant improvements in efficiency.

As Paul Krugman put it:
The newly industrializing countries of the Pacific Rim have received a reward for their extraordinary mobilization of resources that is no more than what the most boringly conventional economic theory would lead us to expect. If there is a secret to Asian growth, it is simply deferred gratification, the willingness to sacrifice current satisfaction for future gain.
http://web.mit.edu/krugman/www/myth.html

There was criticism of Garnaut's findings as early as 1990.
These are not freely available on-line, and hence I will provide here the conclusions of his critics , with references.

Accounting for Northeast Asian growth: Garnaut's limited ledger; J McKay, G Missen - Australian Journal of International Affairs, 1990:

Our basic argument is that Garnaut's account of rapid , sustained growth in North East Asia is fatally flawed, in that it is not based on a coherent theory of development. His free market , accounting theory of development is unable to take account of the specific historical, political and social factors that have been vital to the growth paths of each of the countries of North East Asia. By neglecting the international context in which these developments have taken place, and the central role of the state in managing growth, Garnaut ignores what for us are the most important lessons of the North East Asian experience. Until these questions are adequately addressed, predictions about the future development of the Asia-Pacific region, and Australia's place within the region, remain problematic.

Former Malaysian Finance Minister Daim worth at least RM 1.073 billion....should have been ranked at least 16th richest by Forbes

2008-06-19T21:59:00.000-07:00

The publicity shy Daim Zainuddin, the former finance minister of Malaysia, owns 84.4% of the London AIM listed ICB Financial Group AG ( see AIM announcement at http://www.icbank-gh.com/upload/1211875219_Microsoft%20Word%20-%20080527%20ICB%20announcement%20-%20change%20of%20shareholder%20interests.pdf)

The company has a market capitalisation of STG 198.9 million ; or MYR 1.27705 Billion

( See http://investing.thisismoney.co.uk/companyresearch/225737/ICB_Financial/company_prices.html and use currency converter at http://coinmill.com/GBP_MYR.html#GBP=198.09)

Hence, Daim is worth at least MYR 1.0778302 Billion, or for the purposes of the Forbes rankings, USD 330 million.
That sum would rank him, (had Forbes given him due respect), the 16th richest person in Malaysia, just ahead of Vinod Shekar.
(http://www.forbes.com/lists/2008/84/biz_malaysiarichest08_Malaysias-Richest_Rank.html)

Malaysian Government may already have power to force renegotiation of YTL's and others' PPAs

2008-06-10T17:33:00.000-07:00

The Malaysian Minister "for the time being charged with the responsibility for matters relating to the supply of electricity", may already have the powers to compel The Pencil of God, his YTL, and the other Independent Power Producers to renegotiate and value downwards their power purchase agreements with Tenaga Nasional.
The IPPs and Tenaga are all regulated by the Minister pursuant to the provisions of the ELECTRICITY SUPPLY ACT 1990.

The Act contains the following broad provisions:

4.

The(Energy) Commission shall carry out such functions and duties as
follows:

(c) to promote competition in the generation and supply of
electricity to, inter alia, ensure the optimum supply of
electricity at reasonable prices;

(d) to promote the interests of consumers of electricity supplied
by licensees in respect of—

(i) the prices to be charged and the other conditions
of electricity supply;

(ii) the continuity of electricity supply; and

(iii) the quality of the electricity supply services
provided;

(f) to secure that licensees are able to finance the carrying
on of the activities which they are authorized by their
licences to carry on;

(g) to promote and encourage the generation of electricity
with a view to the economic development of Malaysia;

(m) to carry on all such other activities as may appear to the
Commission requisite, advantageous or convenient for

Tenaga has complained for a long time that the PPAs it has with YTL and others are a financial burden.That burden is now to be passed on to consumers, in quantum never seen before. Tenaga's financial viability depends on this burden being passed-on, but there will be a limit to how much can be passed on. Eventually Tenaga's financial viability will be adversely affected, to a greater degree than it is now. Eventually, "the economic development of Malaysia" will also suffer as a consequence.Hence, the Commission, acting under the direction of the Minister, has sufficient reason to compel a downward revision in the value of the PPAs to the IPPs.

As a matter of fact, the Minister and the Commission ought to have intervened a long time ago pursuant to Section 4(f)of the Act:

to secure that licensees are able to finance the carrying
on of the activities which they are authorized by their
licences to carry on;

when it became evident that Tenaga was experiencing financial difficulties as a consequence of being tied to take-or-pay PPAs like the one granted YTL.

Quality of Bank Negara's reserves continues to deteriorate

2008-06-05T22:36:00.000-07:00

An update to my posting at http://sahathevan.blogspot.com/2007/07/bank-negaras-reserves-at-levels-which.html

Now , almost a year later, as of 15 May 2008:

Malaysia's reserves of Gold ,Foreign Exchange and Other Reserves including SDR equals RM 399,919,106,509

The proportion of this amount financed by deposits from financial institutions now totals RM 284,175,898,063 , or 71.06%, compared to 67.4% as at 29 June 2007.

As explained before:

It was a similar asset-liability position that left Malaysia and the Ringgit vulnerable to speculative attacks in 1997.
As then finance minister, " Dr" Anwar Ibrahim was responsible for financing Malaysia's foreign reserves almost entirely out of statutory deposits -- placed at no interest by financial institutions -- at the Central Bank. (for full story by Sahathevan see http://findarticles.com/p/articles/mi_m0BJT/is_24_6/ai_55143627 )

To illustrate:

At 30 June 1997 , Gold and Foreign Exchange and Other Reserves including SDR totalled RM
70,705,200,558 ; while deposits from financial institutions totalled RM 61,771,338,858; or 87.3% of the reserves.

However, by 31 December 1998, after Mahathir removed and replaced "Dr" Anwar as finance minister , Gold and Foreign Exchange and Other Reserves including SDR totalled RM 9,438,053,960 , while deposits from financial institutions totalled RM 34,650,553,608; or only 34.84% of reserves.

Nevertheless, by 30 October 2003, when Mahathir left office,
Gold and Foreign Exchange and Other Reserves including SDR totalled RM
165,805,782,524, while deposits from financial institutions totalled RM 94,302,076,338, or 56.87% reserves.

As mentioned, that percentage has now risen to 67.4%,despite the massive oil and gas revenue provided by Petronas.

The problem with an over reliance on deposits from financial institutions as a means of financing the reserves is this : what happens if Ringgit deposits are withdrawn suddenly, thus requiring a draw-down of the statutory deposit to meet at least short-term demand, and there is at the same time an increased demand for foreign currency from depositors wanting to repatriate funds off-shore ? Would not Bank Negara be then supplying the demand for both from the same pool?

The collapse of the Ringgit in 1997 shows us that such a scenario is not fantasy, and recent reports that "Bank Negara Malaysia (BNM) is unfazed by the inflow of what is said to be speculative funds into the country as the bond market has reached a size where it can absorb such inflows and outflows"(see http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_b3486968-cb73c03a-d647d800-d2aa7a39 ) sound too much like the explanations then governor Ahmad Don use to provide in 1997-98,when he managed to stop himself laughing.

(See Article at http://sahathevan.blogspot.com/2007/07/bank-negaras-reserves-at-levels-which.html)

Malaysia's windfall tax -Will YTL Power actually pay anything?

2008-06-05T01:46:00.000-07:00

As reported in THE EDGE ,5 June 2008:
Independent power producers (IPPs), which benefited significantly from highly subsidised fuel, have been dealt a major blow following the imposition of a 30% windfall tax on their return on assets (ROA) under the government’s restructured subsidy scheme.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said yesterday the taxes would be implemented under the Windfall Profit Levy Act 1998 and would entail the IPPs contributing towards the higher cost of fuel such as gas for power generation. The tax will take effect from next month.

He said the 30% quantum would be imposed on the audited ROA threshold of 9%.
http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_56ce2976-cb73c03a-18992130-1d3b7060

However YTL Power International's ROA appears to have been consistently below the threshold:
Return on Average Assets
Quarterly
(Mar '08)- Annual-4.40%
(2007) Annual-5.49%
(TTM) -5.13%

http://finance.google.com/finance?q=KUL:YTLPOWR

It would appear that basing the windfall tax on the ROA gives YTL , and probably all other IPPs a convenient way out of paying the tax. IPPs are capital intensive, hence the base (ie the assets) will be high. But given leverage and steady, guaranteed revenue, the return on shareholders' equity can be relatively high: see my earlier post at http://sahathevan.blogspot.com/2007/06/how-god-decreed-that-ytl-power-have.html as well as
http://finance.google.com/finance?q=KUL:YTLPOWR

Petronas paid over 3 times previous benchmark for stake in Santos

2008-05-29T22:06:00.000-07:00

The Petronas-Santos deal values the Australian company's proven and probable reserves at $4.91 a gigajoule (GJ).

Earlier this year, BG Group of the UK paid an average of $1.58 a GJ for a portion of Queensland Gas Ltd's upstream proven and probable reserves.

"This is a new benchmark [price] for eastern Australian gas," said David Knox, the acting chief executive of Santos.

After the transaction was announced, Santos shares surged 10 per cent, or $2.10, higher to $21.08.(http://business.smh.com.au/santos-sells-lng-stake-for-26b-20080529-2jj1.html)

The question is : WHY?
The answer is of course subject to the OSA, a breach of which can lead to being ISAed.

PM Rudd's Beijing AustChina directly linked to the state

2008-05-19T18:48:00.001-07:00

From The ChinaDirectory website:

Beijing Austchina Scientific Technology Co., Ltd.
Link ID 109419
Title Beijing Austchina Scientific Technology Co., Ltd.
Url http://www.ltt.com.cn
Description Software.
Category Computer & Internet > Computer software
Date Dec 3, 2005
(See link at http://www.chinadirectory.com/detail/109419/beijing-austchina-scientific-technology-co-ltd.html)

As previously noted(http://sahathevan.blogspot.com/2008/03/is-lu-kewen-friend-beijing-austchina.html):

Ltt.com.cn is the website of the LTT Textiles Co., Ltd.
The company's address:
310 North Zhongshan Road , Hangzhou , China ,310003;matches that of the Zhejiang Metals and Minerals Exp&Imp Corp (http://www.zjmtd.com.cn/contact.htm)

LTT Textiles phone number: 86 - 571 - 85775641
matches one that has been provided for the ZheJiang metals & minerals Imp. & Exp. Dept.

(see http://worlddirectory.indiaetrade.com/Sellers/z/Z1.html .
See also http://lacob2btrade.org/LAOSB/NewCompanyProfile.aspx?mfgcode=50092173&sInfo=Zhejiang+Metals+&+Minerals+Imp.+&+Exp.+Corporation)

The ZheJiang metals & minerals Imp. & Exp. Dept. has the same address as the Zhejiang Metals and Minerals Exp&Imp Corp, a state-owned enterprise (http://www.agriculture-of-china.com.cn/html/1.html)

Will the PLA's Huawei have access via Optus to 70% of the Australian Defence Department`s secret signals traffic?

2008-05-18T19:26:00.000-07:00

On Huawei:

In January 2003 Cisco Systems Inc. (CSCO ) launched a broad lawsuit that lent credence to a damning, years-old rumor: that Huawei had built parts of its business on technology stolen from the Silicon Valley networking giant.

Since it was founded in 1988 by Ren Zhengfei, a former People's Liberation Army officer, many have assumed the company is secretly controlled by China's military.

(http://www.businessweek.com/magazine/content/03_51/b3863078.htm)

On Optus: See http://news.sbs.com.au/dateline/singtel_plays_the_spying_game_129887- but most important , the following exceprts:

DES BALL, STRATEGIC & DEFENCE CENTRE, ANU: But those same mechanisms are also used to monitor everything that those Singaporeans citizens listen to, and SingTel plays a very central role in that.

FRANCIS SEOW, FORMER SINGAPORE SOLICITOR-GENERAL: You will be providing SingTel and the Singapore Government not only a window of opportunity, but I think the Singapore Government will have a very real say, in more ways than one, in what goes on in Australia.

But the Australian Defence Department has some specific security concerns. One of Optus`s most valued assets is its communications satellite. Through it passes not only international phone calls and internet traffic, but 70% of the Defence Department`s secret signals traffic.
DES BALL: This is of the utmost seriousness. This comes to the heart of the security of Australia`s telecommunications - not just the telephone calls of private citizens, but the most confidential, sensitive communications of Australian government authorities, which are now, potentially at least, at some risk.

On Optus and Huawei:

Optus, Huawei ink R&D pact
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Fran Foo | May 19, 2008

OPTUS and telecommunication networks provider Huawei Technologies have joined forces to launch a multi-million dollar innovation centre in Sydney.

Dubbed the Mobile Innovation Centre, the centre is expected to be fully operational by August.

Exact investment figures were not provided but a Huawei Australia spokesman said it was a 50:50 venture. It is unclear how many people will man the facility.

Huawei and Optus will use the lab to develop commercially viable, next generation mobile and wireless broadband equipment.

"The facility will help in the continued development and training of our engineering research and development teams and help us to address the skills shortages within our industry,” Steve Christian, Optus Networks managing director, said in a statement.

Jerry Wang, Huawei Australia managing director, said the centre would provide "unrivalled opportunities to deliver the latest mobile technologies that take into consideration cost efficiencies and new revenue generating streams".

Mr Wang is currently accompanying NSW Premier Morris Iemma on his tour of China.

Huawei also has several supplier contracts with Optus.

Based in Shenzhen, China, Huawei has several research and development centres globally located in Spain, India, China, Russia and the US.

http://www.australianit.news.com.au/story/0,25197,23721305-15306,00.html

Why Should Not Berjaya Sports Toto's Licence Be Revoked?

2008-05-16T01:03:00.000-07:00

A)In the beginning:
Berjaya Sports Toto Berhad ("BToto") was incorporated in 1969 as Unilite Electrical Industries Berhad. On 17 May 1993, the Company was renamed Berjaya Sports Toto Berhad. The principal activity of the Group is the operation of Toto betting under Section 5 of the Pool Betting Act, 1967.

Sports Toto was privatised in 1985 when its Chief Executive Officer, Tan Sri Dato' Seri Vincent Tan Chee Yioun, through his private company acquired 70% of the paid-up capital.
(http://www.berjayagroup.com/toto.htm)

B)Fast forward to 2008:

Former deputy minister in the Prime Minister's Department Datuk Seri Tengku Adnan Tengku Mansor and tycoon Tan Sri Vincent Tan had direct influence in the appointment and promotion of judges.....The commission also doubted the evidence given by the two in the inquiry as they had made bare denials to penetrating questions posed by lawyers who appeared for interested parties.
(NST , 16 May 2008)

C)The legal basis for the revocation of any licence issued pursuant to the provisions
of the Pool Betting Act Malaysia 1967:

5. (1) Unless there is established a Board under section 6, the
Minister may issue a licence to a person for the collection, operation
or promotion of pool betting.

(3) A licence issued under subsection (1)—
(e) may be revoked by the Minister during the currency of
the licence without assigning any reason.

(http://www.agc.gov.my/agc/oth/Akta/Vol.%208/Act%20384.pdf)

History of the YTL Express Rail Link subsidy: Mahathir's gift to the Pencil of God

2008-04-28T18:37:00.000-07:00

The following excerpts from stories published in Malaysia's main stream media, beginning with the 18 April 2008 story in Vincent Tan's THE SUN , show how ERL came to be recipient of airport taxes, or air passenger services charges:

A) You pay – even if you don't use ERL
Terence Fernandez and R. Nadeswaran

PETALING JAYA (April 21, 2008): Passengers who fly off from Sepang have been paying an additional RM2 to RM6 in airport tax for the last six years – no thanks to a lopsided deal between the government and Express Rail Link Sdn Bhd (ERLSB) which operates the Express Rail Link (ERL).

According to sources, under the terms of agreement for the RM2.8 billion ERL project, a portion of the airport taxes that departing passengers pay goes to the company – RM2 for domestic passengers and RM6 for international travellers from KLIA as well as the Low Cost Carrier Terminal (LCCT).
It is learnt that the rationale behind the concession agreement signed in 1997 is to ensure a return on investment for the service which started in 2002.

KLIA handled about 25 million passengers last year and the LCCT about eight million. "Half of these figures were departing passengers, which means ERL would be receiving in the region of RM80 million a year (from airport tax)," said a source.
( http://www.sun2surf.com/article.cfm?id=21581)

B)Second rise in PSC may be approved before 2004.
By Eirmalasare Bani.
10 May 2002
Business Times

MAHB yesterday said it will revise upward the domestic PSC by RM1 or 20 per cent to RM6 and international PSC by RM5 or 12.5 per cent to RM45 for each passenger.
Another analyst described the increase as "disappointing" considering that MAHB is also required to disburse the additional RM1 and RM5 per pax, respectively, for domestic and international flights collected at KLIA to Express Rail Link Sdn Bhd (ERLSB).

"This is a weird deal. What if the passengers who departed from KLIA did not use the express rail link (ERL) service to get to the airport?" the analyst asked.

Meanwhile, ERLSB assistant vice-president for corporate communications Lily Rozita Abdul Rahman confirmed that the company submitted "several fare options" to the Transport Ministry early this year.

She said the company was notified by MAHB on the RM6 disbursement for KLIA passengers but has yet to receive any confirmation from the Government on the matter.
While the additional revenue will be positive for the company, ERLSB will continue with efforts to promote and advertise its services.

She said after 25 days of operations, the ERL ridership has merely touched about 2,000 daily. "It is below our target of 6,000 daily but the Subang Airport is still operating until July. Hopefully we will have a better impact after the closure," she added.

ERLSB is 60 per cent owned by TH Technologies Sdn Bhd - a wholly-owned subsidiary of Lembaga Tabung Haji - and YTL Corp Bhd.

C) Express Rail in talks with Govt on concession terms. [CORRECTED]
By Eirmalasare Bani.
516 words
14 February 2002
Business Times

EXPRESS Rail Link Sdn Bhd (ERLSB) is still negotiating with the Government on some of the terms in its concession agreement including train fares.

"We are not negotiating with MAHB but with the Government ... the terms in our concession agreement is different than that of MAHB's," he said.
Sources said the proposal, if accepted, will also allow the rail operator to bill airport tax into its train tickets. ERLSB executive chairman Datuk Mohd Nadzmi Mohd Salleh said this was a fair return for a rail operator, considering that a power project normally makes between 18 per cent and 20 per cent return on shareholders' investments.
She said a full disclosure will be made upon receipt of the official reply from the Government.

The group is said to be asking for a 50 per cent increase or RM20 rise in international passenger tax, and a 50 per cent or RM5 increase in domestic airport tax.

MAHB currently charges RM40 per international flight per passenger and RM10 per domestic flight per passenger.

The new charges will be imposed with the closure of Subang International Airport on April 19, which coincides with the commencement of ERL's operations, sources said.

Who guaranteed Therese Rein and Kevin Rudd's loan facilities?

2008-04-27T16:40:00.000-07:00

In May 2007 the Sun Herald reported, in a story about Therese Rein and Kevin Rudd's business interest:

....she borrowed AUD 7800 against their Brisbane home and set up Therese Rein and Associates, trading as WorkDirections Australia.

"Well, we've struggled with our mortgage and this has been a long journey," she says. "What my parents gave me was a good education and the belief that you can do anything. They didn't give me money. When we started the business, we had a mortgage and we borrowed against the equity in the house. That only stopped ... a few years ago now." (Source:Rein & shine,By Peter Wilmoth
27 May 2007,Sun Herald)

However ,an ASIC search obtained at that time showed Rein's company was subject to a charge -fixed and floating -in favour of Westpac since 1990.That loan appears to have been refinanced since then , most recently with HSBC.
In other words, Rudd-Rein's business was not financed by a mere mortgage over the family home-other loans were also required,and these were secured over the business , NOT the family home.

Then, on 28 April 2008, Glen Milne of the Sunday Telegraph reported:
A COMPANY controlled by Kevin Rudd's wife Therese Rein took out a AUD 75million overdraft while the Prime Minister's office claimed the business was inactive.
It emerged two weeks ago that Mr Rudd had not declared the activities of one of his wife's companies -- Invisage Australia -- on a Parliamentary pecuniary interests register....The documents show that on March 30 of that year the company co-signed a bank loan facility -- essentially an overdraft -- with the HSBC bank for AUD 75 million.

This was in addition to an earlier loan taken out with Westpac on May 15, 2003 for AUD 120 million. The first loan was discharged on March 29, 2007.
The PM claimed that the company, which was in receipt of Federal Government funding over four years worth AUD 160,000, had been ``inactive'' since 2006.

But documents obtained by The Sunday Telegraph show that Invisage Australia, owned by the holding company Ingeus that is controlled by Mr Rudd's wife, was still active in 2007.

(Rudd, Rein and $75m
GLENN MILNE,27 April 2008
Sunday Telegraph)

I have previously written on Invisage on this blog:
http://sahathevan.blogspot.com/2008/04/therese-reins-invisage-throws-light-on.html
I showed from their own website (now in Archives) that the company was a provider of training services. Hence it is not likely to have had assets sufficient to secure an AUD 120 million loan, or an AUD 85 million overdraft facility. In addition, Rudd himself said the company was inactive. If these financing facilities were required for the expansion of Ingeus, the parent company, the facilities would have been in the name of Ingeus which MAY have had the resources on which to secure the above facilities.

The entire Ingeus Group is said to have "global revenue topping $170 million".
(http://www.smh.com.au/news/national/rudds-wife-to-run-the-empire--her-own/2007/04/23/1177180569463.html?page=fullpage#contentSwap1)
Hence, it could be argued that Westpac and HSBC were prepared to advance hundreds of millions in loans against the company's revenue. Service providers such as Ingeus are not likely to have much in assets-hence the company's revenue would have had to be the main source of security for the loans.
However, it is likely that the banks would have required further security, probably in the form of some type of guarantee from a party external to the business. Unless the Rudd's have some other asset base they are not telling us about, the guarantees would have to be provided by some party or parties friendly to the Rudds.

In short; Rein can no longer expect us to believe that has grown her company on the back of AUD 7,800 loan secured on a second mortgage over the family home.

Gospel According to Francis Yeoh: All Must Pay To Enrich The Yeohs

2008-04-17T18:38:00.000-07:00

As of yesterday, 17 April 2008 June natural gas was selling at $10.45 per million British thermal units (http://www.oilmarketer.co.uk/2008/04/17/oil-prices-retreat-on-stronger-dollar/)

According to Anil Netto, Petronas sells gas to Tenaga and the independent power producers at 6.40 ringgit ($1.90) per million British thermal units .

Netto has also reported:

Since 1997, out of the 58.2 billion ringgit ($17.2 billion) that Petronas has dished out in gas subsidies, 27.6 billion ringgit or 47 percent has benefited the independent power producers, 21.2 billion ringgit ($6.2 billion) has gone to Tenaga, and small industrial, commercial and residential users received 9.4 billion ($2.8 billion). Independent power producers have thus benefited more from subsidized gas than Tenaga has.

With oil and gas prices now soaring, the government and Petronas are feeling the pinch of higher fuel and gas subsidies. The Malaysian public has incurred a staggering 27.6 billion ringgit ($8.2 billion) through gas subsidies that the national petroleum corporation Petronas has given out over the years to private power producers.

Higher gas prices and higher fuel costs are passed on to Tenaga Nasional Berhad, the state power firm, from hugely profitable, independent power producers, which sell power to Tenaga under lucrative power purchase agreements. Tenaga also generates its own electricity through its network of power plants.

The earliest of these lopsided agreements were signed with well-connected firms in the early 1990s under the administration of then-premier Mahathir Mohamad. They have about eight years left to run.

(Source:MALAYSIA: PRIVATE POWER PRODUCERS PROFIT FROM GAS SUBSIDIES

By Anil Netto ,16 October 2007,Inter Press Service)

Therese Rein's Invisage throws light on Lu Kewen , Rein, John Dawkins connection

2008-04-10T17:17:00.000-07:00

From the Invisage website , now inoperative, but held in Web Archives:

Our History
In 1991, Invisage, known then as the Clements School of Management, was approached by the then Federal Minister for Education, Mr John Dawkins, to offer a unique, nationally accredited Associate Diploma in Business Studies.

Since then we have further developed our workplace training programs, which cover the areas of marketing, sales and management.

In January 1998, Invisage as Clements became a Registered Training Organisation under the Australian National Training Authority's Australian Recognition Framework initiative. The initiative guaranteed mutual recognition of qualifications awarded throughout Australia by other registered training organisations.

Copyright © 2003 Ingeus Limited.
(Source:http://web.archive.org/web/20060129001114/invisage.edu.au/about_invisage/history.shtml)

From the SMH, 1 March 2008:
THE wife of Kevin Rudd's chief of staff, David Epstein, has been appointed to run the Canberra office of major lobbying outfit Government Relations Australia, raising concerns of a potential conflict-of-interest....Ms Eccles is now the general manager for Government Relations Australia based in Canberra — and she is not the only lobbyist in the family.

Before his appointment as Mr Rudd's chief of staff last June, Mr Epstein was also a director at GRA.....Among GRA's current directors are former Keating government treasurer John Dawkins...
(http://www.theage.com.au/news/national/rudd-office-link-with-lobbyists/2008/03/01/1204227055197.html)

From The Australian , 11 April 2008
KEVIN Rudd has failed to declare a company owned by his wife, which has been granted $160,000 of government money in the past four years.

The continued ownership of the company by the Prime Minister's wife, Therese Rein, directly contradicts repeated claims by Mr Rudd and Ms Rein that they have divested themselves of all their Australian businesses.

Mr Rudd's office said yesterday that the company was not declared on the registry of interests to the House of Representatives because it was "inactive" at the time his interests were registered on March 11 this year.

The company - Invisage Australia - was built by Ms Rein to specialise in corporate training, coaching, mentoring and personal development.
(http://www.theaustralian.news.com.au/story/0,25197,23520989-2702,00.html)

Can Lu Kewen succeed where Lee Kuan Yew failed? Will Australia like Singapore pay the price for its leader's China obsession?

2008-04-06T16:59:00.000-07:00

In the 70'swhile Lu Kewen was still practising his Mandarin at the ANU , Singapore's Lee Kuan Yew had already set Singapore on its road to China. This policy was driven in part by Lee's views on Chinese racial superiority ( see for example http://www.asiamedia.ucla.edu/article.asp?parentid=79541)

Then in 1999 Lee disaster struck:
It seemed like a fine idea when Singapore agreed with China in 1994 to build a giant $30 billion industrial park in the eastern Chinese city of Suzhou to serve as a model for attracting foreign investment to the world's most populous nation.
Five years later, the venture is heavily in debt — undermined by local officials who set up a rival park close by, forcing Singapore to cut its interests in the original project, Singapore officials say.

Singapore's senior minister, Lee Kuan Yew — who played a leading role in the effort to replicate the island-state's capitalist-style efficiency in the industrial heartland of China — conceded this week that the project had not turned out as planned and had made him more cautious about investments in China.
(http://www.iht.com/articles/1999/10/01/suzhou.2.t.php)

Now Australia has Lu Kewen in 2008:
My view is, how do you unfold a future relationship with China which has got great economic opportunities (inaudible) on both sides of the ledger, for us and for the Chinese; develop further, our political dialogue with the Chinese on a whole range of areas; become genuine partners with China in the course of the 21st century. Big challenges, climate change, us working with China. Access to the Chinese services market, huge opportunity for Australian business.
Working with the Chinese on some of our common challenges in the wider Asia Pacific region, including the South Pacific. I think these are big things that we need to work together on.

(http://www.pm.gov.au/media/Interview/2008/interview_0083.cfm)

A number of Australian China "experts" have supported Lu's obsession, arguing that his ability to speak Mandarin is going to open doors for Autsralia that may but for Lu remain closed (see for example http://www.theaustralian.news.com.au/story/0,25197,23494545-28737,00.html). These commentators appear not to have fully appreciated the disadvantages they labour under when dealing with any Asian culture.
As Lee Kuan Yew put it:
The main challenge for Singaporeans doing business with China lies in their different mindsets, said Senior Minister Lee Kuan Yew.

It is more than just the matter of understanding the Chinese culture and history, or speaking the language, he said.

It is also a question of understanding their different mindsets and appreciating its government's complexity and responsibility to its people.

'Their environment, their background, their geographical position are different from ours.

'Therefore, the way our people see things are certainly not the same.'
( Source:Singaporeans face different Chinese mindset. By Irene Ng.
11 December 2000,Straits Times)

The question we should all be asking is :Will Australia like Singapore pay the price for its leader's China obsession?

Lu Kewen friend Beijing AustChina -More links to the state?

2008-04-04T17:27:00.000-07:00

This is a continuation of my earlier post: "Lu Kewen friend Beijing AustChina ultimately a Chinese state-owned corporation? "(http://sahathevan.blogspot.com/2008/03/is-lu-kewen-friend-beijing-austchina.html)

Beijing AustChina is also referred to as AustChina Technology (see http://chinaconnections.com.au/news/view/?id=422). It appears to also go by the names Austchina Technology (Beijing)ann AustChina Information Technology Pty Ltd.

According to an ABR company search ,AustChina Information Technology Pty Ltd is a company whose shareholders are Phil Smith (4 shares @ $1 each) , and Tang Yui (6 shares @ $ 1 each).There are no charges recorded, and hence the company does not appear to have any borrowings.Hence, the company appears to be a corporate shell without the resources to conduct any form of business.

Tang Yui appears to be Ian Tang's Chinese name. It is a matter of public record that Phil Smith is a shareholder in Beijing AustChina, fully aware of its political contributions(http://www.news.com.au/story/0,23599,23406496-421,00.html?from=public_rss). Phil Smith's address in Warriewood is also the address of a fibre optic cable business, in which he is infrastrcuture manager(http://www.thehalogengroup.biz/memberdetails.php?id=32.

CONTRARY to what has been reported , Beijing AustChina or at least AustChina Information Technology Pty Ltd's principal place of business is not a suburban home in Warriewood (see Andrew Robb quoted at http://www.abc.net.au/pm/content/2008/s2194621.htm). According to the ABR company search, AustChina Information Technology Pty Ltd's registered office and principal place of business is Level 7, 68 Dixon St, Haymarket NSW 2000.

A simple Google search of that address has revealed the following information concerning political party donors, from the NSW Election Funding Authority website:

Summary of Electoral Expenditure Incurred and Political Contributions Received by Donors

Election: 2007 NSW State General Election
Election Day: Saturday 24 March 2007

Aust-China Pty Ltd (Beijing), Level 7, War Hing Building, 68 Dixon St, Haymarket NSW 2000

China TV & Film Consultant Australia Pty Ltd, Level 7, War Hing Building, 68 Dixon St, Haymarket NSW 2000

Liu, Jensen, Level 7, War Hing Blgd, 68 Dixon Street, Haymarket NSW 2000

CCTV, Level 7, War hing Bldg, 68 Dixon Street, Haymarket NSW 2000

(Located at http://www.efa.nsw.gov.au/__data/assets/pdf_file/0006/40884/Summary_of_Expenditure_Incurred_and_Contributions_Received_by_Donors.pdf)

Jensen Liu is the Australian distributor of TVB DVDs, and is reported to be Tang's Australian business partner ( see http://www.theaustralian.news.com.au/story/0,,23432780-2702,00.html?from=public_rss)

China TV & Film Consultant Australia is Liu's DVD distribution company (http://www.tvb.com/tvbi/global/australia.htm).

CCTV appears to be none other that the state-owned China Central Television.
A visit to the 7th Floor , 68 Dixon Street, on which the War Hing Building and the Golden Palace Hotel are located, has revealed that the entire floor comprises a small TVB DVD video rental outlet.

Therefore, CCTV and Austchina Technology , or Aust-China Pty Ltd (Beijing), share the same space. At the very least, CCTV has seen it right to provide the Aust-China Pty Ltd (Beijing) address as its own for the purposes of NSW Election Funding Authority disclosures.

CCTV news anchor and director of its English service Rui Chenggang refers to Kevin Rudd or Lu Kewen as a "devoted friend". The two appear to get along very well.
http://blog.sina.com.cn/ruichenggang AND www.cctv.com/english/rcg/story/profile.html

That Beijing AustChina should come within the sphere of influence of a media company despite its telecommunication business is not surprising for Beijing AustChina is linked to a media and cable TV company.

In December 2002 China Star Enterprises (CSE) acquired a 20.075% interest in
Beijing Austchina for HK$40 million.
(http://web6.masterlink.com.tw/project/hk/hk9212/China%20Star%20Entertainment%20Limited.pdf )
Via a series of transactions, CSE was acquired by a company formerly listed on the ASX, China Convergent Corp Ltd. China Convergent later changed its name to China Cable and Communications Ltd. This change of name came about after China Cable and Communications acquired the rights to operate the first foreign owned and operated cable television network in China.
The company then listed on the US OTC market, and its prospectus reveals that it is owned and controlled by Chinese nationals.The company is no longer listed on the ASX, and concerns have been raised about whether the directors and shareholders of the company have been involved in sharemarket manipulation.( see http://www.webb-site.com/articles/starway.htm).
Control of China Cable seems to have swung between two of its directors , Da-Xiang Zhang and (www.secinfo.com/d1Z1S9.155.htm)and Hong-Tao Li (www.secinfo.com/dUgwf.1d.htm);(See also http://finance.google.com/finance?q=OTC:CCCI).

Its is unlikely that China Cable would have been allowed access into the very tightly controlled cable TV sector in China, unless the company was already closely linked to the State. The CVs of both Da-Xiang Zhang and and Hong-Tao Li (see for example http://sec.edgar-online.com/2004/04/16/0001000096-04-000190/Section11.asp) suggest that these are men who have been picked to manage and front the company given their experience in managing businesses.

Ultimately it should be remembered that China's company law requires Chinese companies to establish a "board of supervisors", usually chaired by an employee representative from the All China Federation of Trade Unions, the country's only government-sanctioned union and an official from the company's internal Chinese Communist party committee (Source:Chinese boards’ structure ‘leads to confusion’,By Tom Mitchell in Hong Kong ,
Published: April 2 2008 18:43 in FT.com: http://www.ft.com/cms/s/0/b81b7dc2-00d0-11dd-a0c5-000077b07658.html?nclick_check=1)
Hence, in form or another, Chinese companies are state-controlled.

Given the fact that AustChina Information Technology Pty Ltd is a corporate shell, it does appear as if the company was merely a conduit for the financial contributions made to political parties and politicians in Australia, including the current Prime Minister and Treasurer.
Given state ownership if not control over AustChina Information Technology Pty Ltd and related entities it is reasonable to conclude that the funds were provided by the Chinese Government, if not payed under its direction. This was common practise in Malaysia where the ruling UMNO owned and controlled a number of large and small corporate entities.

Lu Kewen's proposal for a new regional security role for China likely to raise suspicion of immediate neighbours(Notes)

2008-04-01T16:30:00.000-07:00

The Australian PM Lu Kewen has proposed a new regional security role for China during talks in Washington.(http://www.abc.net.au/news/stories/2008/04/01/2204241.htm)

In doing so Lu seems to have forgotten that in our immediate neighbourhood, there remains strong suspicion of China and the Chinese.
Malaysia and Indonesia have a large Chinese population, even if these are in the minority.

The nature of the relationship between the Muslim majority in both countries and their Chinese countrymen is summarised by Singapore's Lee Kuan Yew who has said:
'My neighbours both have problems with their Chinese. They are successful, they're hardworking and therefore they are systematically marginalised, even in education.'
Lee also said that the attitude of Malaysia and Indonesia towards Singaporeans shaped by the way they treated their own ethnic Chinese minorities.
(An old Malaysian debate that refuses to die , Straits Times Singapore,27 September 2006)

Both Malaysia and Indonesia regard with suspicion any contact between their Chinese communities and China, even if they are encouraged to trade with China.
These suspicions are based on race, as well as memory of China's support for communist movements in both countries.

Hence, writing in 1991, JN Mak , then of the Malaysian Government's Institute of Strategic and International Studies (ISIS) said:
"no matter what twists and turns Malaysia-China relations may take, it can be argued that Malaysia has, and will in the foreseeable future regard China as its greatest threat in one form or another.
(J N. Mak a , The Chinese navy and the South China Sea: A Malaysian assessment
Published in: The Pacific Review, Volume 4, Issue 2 1991 , pages 150 - 161 )

There is also concern over China's claims over the Spratly's , even as trade is encouraged:

While many observers still believe that China poises a threat to the Asia–Pacic region, the ASEAN states in general maintain a fairly pragmatic position. Indeed, China as a military concern for the Southeast Asian states stems primary from the Spratlys disputes and China's hostile posture to Taiwan. This critical dispute suggests that Sino–ASEAN relations cannot be taken for granted. (Leong, Ho Khai (2001) 'Rituals, Risks and Rivalries: China and ASEAN in the coming decades', Journal of Contemporary China, 10:29, 683 - 694)

What has evolved out of the circumstances described above is a balance between trade and security, in which the US is relied upon to contain the China threat. This strategy is summarised by Denny Roy:

Southeast Asian states as a group employ two general strategies to protect themselves against domination by a strong China: engagement and hedging. The hedging includes maintaining a modest level of defence cooperation with the United States, which may be called low-intensity balancing against China. This is most clear in the cases of the Philippines and Singapore, and more subtle in the cases of Vietnam, Malaysia and Indonesia. Thailand appears to practice simple hedging, while Myanmar has no alternative to cooperation with China. The region bandwagons with China only to the extent that it desires trade with China and seeks to avoid the costs of alienating the region's rising great power. These findings suggest the region is far from passive, the United States is still a relevant player, and acceptance of China is premised on Beijing's adherence to the promises made in its recent diplomatic campaign.
(Southeast Asia and China: Balancing or Bandwagoning?
Roy, Denny ,1 August 2005
Contemporary Southeast Asia)

Given the above, one can see that Lu Kewen's proposal for a new regional security role for China is likely to be met with alarm by our immediate neighbours.Such disquiet cannot be in Australia's interest. The question again arises as why Lu Kewen continues to promote China, even when it may be against Australian interest.

Is Lu Kewen friend Beijing AustChina ultimately a Chinese state-owned corporation?

2008-03-25T18:34:00.000-07:00

Much has been made of Ian Tang, the person who at the very least manages Beijing AustChina.
As to who precisely owns the company and who finances this big donor to political parties in Australia (often the Australian Labor Party), and financier of up and coming politicians , including one Lu Kewen , now prime minister of Australia , has been difficult to determine.
Often in such cases where financial linkages are difficult to determine, indirect means of establishing linkages are necessary. One method is to trace the ownership and registration of websites. An investigation of the Beijing AustChina website reveals its website bact.com.cn to be administered by tom.xu@ltt.com.cn.
Ltt.com.cn is the website of the LTT Textiles Co., Ltd.
The company's address:
310 North Zhongshan Road , Hangzhou , China ,310003;matches that of the Zhejiang Metals and Minerals Exp&Imp Corp (http://www.zjmtd.com.cn/contact.htm)

LTT Textiles phone number: 86 - 571 - 85775641
matches one that has been provided for the ZheJiang metals & minerals Imp. & Exp. Dept. -see http://worlddirectory.indiaetrade.com/Sellers/z/Z1.html .
See also http://lacob2btrade.org/LAOSB/NewCompanyProfile.aspx?mfgcode=50092173&sInfo=Zhejiang+Metals+&+Minerals+Imp.+&+Exp.+Corporation

The ZheJiang metals & minerals Imp. & Exp. Dept. has the same address as the Zhejiang Metals and Minerals Exp&Imp Corp

Despite its name, the company produces and sells textiles also.It is a state-owned enterprise (http://www.agriculture-of-china.com.cn/html/1.html)
It appears then that Ian Tang and Bejing AustChina may well be merely conduits for the transfer of funds to chosen politicians and political parties, as well as for the transfer of technology from this region into China.

The Malaysian Elections , Anwar Ibrahim and the USD 8 Billion Commercial IBT

2008-03-24T16:12:00.000-07:00

The following are matters of public record. Readers can draw their own conclusions.

a)MALAYSIAN ruling party MPs are willing to defect to the opposition in sufficient numbers to trigger a change of government, according to de facto opposition leader Anwar Ibrahim..."The sentiments in Sabah and Sarawak are strong, with a number of people approaching us," Mr Anwar said, referring to the states on the island of Borneo.(http://www.theage.com.au/news/world/anwar-tips-defections/2008/03/19/1205602481927.html)

b)Anwar Ibrahim and associates have clearly linked themselves to formerly Melbourne based Commercial IBT Bank of Labuan, a USD 8 Billion cash-box.See story and a collection of some of documents at http://www.abc.net.au/rn/backgroundbriefing/stories/2006/1754286.htm

c) Anwar Ibrahim is not averse to money politics-See for example page 6 onwards of article at http://www.jstor.org/view/00044687/di014538/00p0434z/0
Also comments by former Anwar man Chandra Muzaffar at http://www.just-international.org/article.cfm?newsid=20002672

d)Sarawakian and Sabahan politicians are not averse to money politics -See for example http://www.aseanfocus.com/asiananalysis/article.cfm?articleID=928 AND http://news.bbc.co.uk/1/hi/world/asia-pacific/296551.stm

e) The minister in charge of bank regulation and responsible for keeping Commercial IBT, Labuan Branch, operating despite its parent company in Melbounre being de-registered is Second finance minister Nor Mohamand Yackop, a former Anwar man-see for example http://www.time.com/time/magazine/asia/

END

ABC TV interview with MKini's P.Chandran: Anwar can become PM by being made senator.....

2008-03-16T21:03:00.000-07:00

Premesh Chandran: Definitely. I think by April his limitations of standing for elections will be over and he can make his way into parliament through a by-election, or he can also be appointed a senator and join the upper house.

Each of the five state governments in the opposition can actually appoint senators to the upper house and he can make it into parliament and therefore into prime ministership through various means.

Also some truth finally on the actual outcome of the elections in Malaysia:

So you see a not so much a shift between UMNO Malay leadership to a non-Malay leadership, but a new Malay leadership arising, one which is more open minded, one which is more globalised, one which is prepared to face the challenge of meritocracy.

(http://australianetwork.com/cgi-bin/common/printfriendly.pl?http://www.abc.net.au/australianetwork/focus/s2191408.htm)

NOTE:I presume that readers are aware that the Malaysian Parliament is based on the Westminster System and hence the prime minister is usually leader of the party in majority in the lower house.

Islam and Democracy-Anwar Ibrahim shows that majority rule can be ignored

2008-03-16T16:42:00.000-07:00

The recently concluded elections in Malaysia for both state and federal parliamentary seats have provided some insight into how the Westminster system is practised in a Muslim state.

The state of Perak saw a Chinese majority party, the Democratic Action Party (DAP) win 18 of the 59 seats contested.
The Muslim party PAS won 6, and the PKR, effectively led by the leading apologist for Islam and its compatibility with western democratic principles, Anwar Ibrahim, won 7.
All three parties are members of a loose coalition led by Anwar Ibrahim that campaigned against the ruling Barisan Nasional.Hence as a coalition, they held a majority 31 seats, the majority of which were won by the DAP.
The DAP's majority should have meant that the state's chief minister would come from that party, but this was not to be for the Constitution of that state requires that the chief minsiter be a Malay Muslim.
Hence,the position of chief minsiter has gone to PAS's Mohammad Nizar Jamaluddin,
despite PAS winning only 6 of the 31 seats.

The appointment of the chief minister requires the consent of the sultan, whose constitutional duties include defending the Malay race and the Islamic faith. The constitution allows for the sultan to waive the provision , but the sultan, acting via his regent refused to do so.

The sultan is what westerners like to refer to as a "moderate" Muslim. He is a barrister trained in the UK, and prior to becoming sultan,served in the Malaysian judiciary, rising to the most senior position of Lord President of the Federal Court of Malaysia (http://www.perak.gov.my/sultan/english/azlan.htm).
More comfortable in English than in Malay, he ensured that all his children , both sons and daughters, received the best in education. His son, the regent, holds a B.A. (Hons) degree in Philosophy, Politics and Economics from Oxford University, a Masters in Public Administration from the Kennedy School of Government, Harvard University and a Ph.D. in Political Economy and Government from Harvard University. His research interests are in the area of economic and political development in southeast and northeast Asia, historical national income accounting and economic growth in developing countries. He has written articles and spoken on a wide range of issues including the role of constitutional monarchy in Malaysia, education, Islam, ethnic relations and economic development.(http://www.perak.gov.my/sultan/english/nazrin.htm)

Yet,despite all this, the sultan did not see it possible to uphold normal democratic principles. Neither did Anwar Ibrahim, whose party not only supported the principle that the chief minister should be a Malay Muslim, but also objected to the DAP having the majority of seats in the state's executive council.
Clearly, the practise of democracy in Islam is nothing like what Anwar Ibrahim has made it out to be :
Notwithstanding the current malaise of
authoritarianism plaguing the Muslim world, there can be no question that
several crucial elements of constitutional democracy and civil society are
also moral imperatives in Islam—freedom of conscience, freedom of expression,
and the sanctity of life and property—as demonstrated very clearly
by the Koran, as well as by the teachings of the Prophet Muhammad, perhaps
most succinctly and eloquently in his farewell address.
(http://www.journalofdemocracy.org/articles/gratis/Ibrahim-17-3.pdf)

Perhaps now westerners can awake to the fact that nowhere in his speeches about Islam and democracy has Anwar said anything about the rule of the majority.

A Somare two-step, with Rudd and Rimbunan Hijau

2008-03-05T21:39:00.000-08:00

Prime Minister Kevin Rudd and his Papua New Guinea counterpart Michael Somare have signed a pact to protect forests and reduce carbon emissions.

The agreement was signed at talks involving the two leaders in Port Moresby on Thursday.

Mr Rudd flew in to the PNG capital on Thursday morning for his first visit to the nation as prime minister.

Following the talks, Mr Rudd and Mr Somare said the PNG-Australia forest carbon partnership would address greenhouse emissions and deforestation.

Under the pact, a carbon trading scheme will be developed that can be linked to international markets.

The agreement follows the United Nations climate change conference in Bali late last year, at which the two leaders met for the first time.

Mr Rudd announced the partnership as part of a Port Moresby "declaration", which aims to strengthen relations between the two nations.

"I believe the time has come for us to turn over a new page and write a new chapter in Australia-PNG relations," Mr Rudd told reporters.
(http://news.theage.com.au/australia-and-png-sign-forests-pact/20080306-1x9m.html)

Meanwhile, in the real world, as reported in 2004:

The cash-starved Somare Government is sanctioning the illegal logging of PNG's rainforests, and the timber is being used for Australian furniture....A bitter battle to preserve the forests has been taken up by no less a man than former US vice-president Al Gore. Greenpeace has dispatched activists into the logging sites and now the World Bank is refusing to release $50 million in desperately needed funds to PNG unless the Government of Sir Michael Somare moves to ensure the timber industry is sustainable and accountable. Indignant, the Government brands the criticism a conspiracy designed to sabotage PNG.......The Government's own review team has found that PNG's massive logging industry is not only environmentally unsustainable but heading for economic disaster. Almost every major logging project is run illegally and the industry is characterised by "a general contempt" for environmental and conservation values......Special criticism is reserved for the Malaysian giant that dominates the industry, Rimbunan Hijau. The multinational company has a net worth of nearly $2 billion and sits at the apex of political influence in PNG, branching out into restaurants, supermarkets, even one of the nation's two daily newspapers. The performance of Rimbunan Hijau's forest operations was "seriously deficient", the team found.......The team found most landowners wanted logging to continue — they had no other avenue for development — but they were not receiving contracted cash and benefits. Funds were being diverted by landowner companies, closely linked to Rimbunan Hijau. Some roads and bridges had been shoddily built, but "these infrastructures are sustainable only as long as the company is using them to extract logs from the area", the review says.

Joe Chapman has 13 years' experience in PNG and now runs the Queensland-based TLB Timbers, a Rimbunan Hijau subsidiary, which takes about half of the company's 17,000 cubic metres of sawn timber sent to Australia from PNG each year.

The timber goes to more than 200 wholesale and retail companies. Light and heavy hopea and water gum are used for construction, and silver ash, pencil cedar and kwila are used in furniture and joinery...........
(http://www.theage.com.au/articles/2004/06/11/1086749874973.html)

Investment in Low Cost Housing by Institutional Funders-Is The Housing Minister Aware Of The Facts?

2008-03-03T17:14:00.000-08:00

Housing Minister Tanya Plibersek and Tony Jones on Lateline:

TONY JONES: Very quickly on the superannuation funds that you're hoping will join this, have you spoken to them? Have they expressed interest and have they indicated they're prepared to put up the funds to do this?

TANYA PLIBERSEK: We've had a lot of discussions with superannuation funds and other types of investors and they say they've been really looking for a way of investing in affordable housing in Australia. As was said earlier in the program, some invest in affordable housing overseas. They haven't been able to in Australia. They've been investing in commercial property and retail and so on, but not in this more affordable end of the market. That's what makes me so excited about this new proposal. It's great to see Australians' superannuation money in particular, making a contribution to making housing more affordable for lower income Australians.
(http://www.abc.net.au/lateline/content/2007/s2178777.htm)

The Facts Of Investing In Low Cost Housing in Australia:

Extracted from:
Evaluating returns in the residential rental sector ,
Peter Rossini, Paul Kershaw, Wayne Marano and Valerie Kupke
Centre for Land Economics and Real Estate Research (CLEARER),
University of South Australia, Adelaide, Australia
Publsihed in Property Management ,Vol. 23 No. 4, 2005
pp. 286-300

This study has attempted to determine an appropriate form of yield analysis that will allow for an accurate comparison of returns between low and high cost housing,
through the use of disaggregated data. The results of the research would suggest that, based on aggregate data,accurate information about returns in the private rental market could not be assumed. Not only may useful information be difficult to find; much of the information that does exist is based on erroneous assumptions...... more accurate reporting of returns would put in place the appropriate risk premium for investment in lower cost rental housing. This research shows that the risk premium is only about 0.5 percent. However, in order to match other investments it should be about 1 or 2 percent. The main risk perceived by investors would appear to be tenants. As such, policy makers need to look at schemes that would more adequately cover this risk

In other words, there is not enough information about this asset class for any institution to make an investment. Even if they did make an investment they are likely to want to be compensated or otherwise covered by the Government for the type of tenants that they would have to deal with-ie poor people are a more risky investment,and it would be up to the Government to underwrite the inherent risk.
These are not matters that Ms Plibersek seems to have addressed.

Badawi on BN candidate Yakcop : 'I need a.. minister who is always available...who does not need to worry about politics-, B.Pereira c.2004

2008-02-24T23:06:00.000-08:00

Tan Sri Nor Mohamad Yackop's promotion from economic adviser to the Prime Minister to second finance minister should assuage two groups of people: those who have felt that the Prime Minister did not have the necessary background or acumen to handle the finance portfolio. ..One of the Prime Minister's chief concerns since coming into office has been to make sure that government spending is kept under control and that contracts and projects are given out in a more transparent manner.

The Prime Minister said.....: 'I need a minister who is always available in the ministry. He is a professional. Someone who does not need to worry about politics.'

(Source:Two new postings reflect Abdullah's priorities.
Brendan Pereira,8 January 2004,Straits Times)

4 Years Later:
Tan Sri Nor Mohamed Yakcop will square off with Pas candidate Ismail Salleh, 64, in his political debut.

Tasek Gelugor incumbent MP Datuk Seri Mohd Shariff Omar agreed to make way for the second finance minister, 61.
(NST,25 Feb, 2008)

Is Rudd ceding Australian influence in the South Pacific to China

2008-02-22T16:40:00.000-08:00

The Pacific Islands can be divided into four spheres of influence: American,
Australian, New Zealander, and French....Australia’s
regional interests focus on the islands south of the equator, including the relatively large Melanesian nations of Papua New Guinea (PNG) and the Solomon Islands as well as Vanuatu....The U.S. government has both tacitly and openly supported Australia’s growing leadership role in the region.

The People’s Republic of China (PRC) has become a growing force in the
Southwest Pacific .....In order to garner political and economic influence in relation to Taiwan, the United States, and U.S. allies as well as to access raw materials, China has expanded its diplomatic and commercial presence in the region. By some accounts, the PRC has become the third-largest source of foreign aid to the South Pacific, which it largely provides without the kinds of conditions or performance criteria — some say heavy-handedness — that have engendered resentment among some Pacific Island countries toward their major benefactor, Australia. Although China’s influence is largely limited to diplomatic and economic “soft power,” some analysts worry about the PRC’s long-term intentions.
[Source:The Southwest Pacific:
U.S. Interests and China’s Growing Influence
(http://www.au.af.mil/au/awc/awcgate/crs/rl34086.pdf)]

Rudd on the other hand appears to consider China a partner in the South Pacific:

My view is how to unfold a future relationship with China....in a whole range of areas, and become genuine partners with China in the course of the 21st Century.... us working with China....working with the Chinese on some of our common challenges with the wider Asia-Pacific region, including the South Pacific.
(Rudd speaking to ABC Radio's Jim Middleton, http://www.abc.net.au/ra/connectasia/stories/s2169763.htm)

It should seem obvious that "working with the Chinese on some of our common challenges with the wider Asia-Pacific region, including the South Pacific" will mean Australia ceding at least some of its influence in the region.

The question is why cede that influence? How can it possibly be in Australia's interest to do so?

Lu Kewen (Rudd) contradicts Indian opinion on India's exclusion from US-Japan-Australia talks

2008-02-21T18:02:00.000-08:00

In an interview on Australian foreign policy to Jim Middleton on ABC Radio Canberra's 'Newshour' programme, Rudd said: 'I welcome the current level of dialogue and cooperation between those three governments (Washington, Tokyo and Canberra). But I believe that's where it most appropriately should stand into the future.'Last year, China was irked at Japan's moves to expand the strategic dialogue to include India.

Rudd told ABC Radio Canberra: 'When it comes to other proposals I have seen, which is to somehow quadrilateralise this and involve India, I have also been very plain and blunt about the fact I don't think that's an appropriate direction for us to go at this stage. I don't think our friends in New Delhi would particularly welcome that as well.'
(http://www.indiaenews.com/australia/20080221/99157.htm)

Here on the other hand is what the Indians have had to say about Rudd's decision to end quadrilateral talks, excluding India for talks with the US, Japan and Australia:

China has flexed its muscles in persuading Australia to withdraw from a nascent strategic dialogue with India, the US and Japan, security experts here say.

'This means that China is able to flex its muscles by using soft power to break coalitions, said Abanti Bhattacharya, an associate fellow at the Institute for Defence Studies and Analyses.

'It's an indication of China's crafty policies of embedding power concepts in their soft power statesmanship' ....'It's a clear sign that Australia and China are cosying up. (Under Prime Minister Keven Rudd) it is more attractive for Australia to align with China than with India.'

Maj. Gen. (retd) Ashok Mehta, another expert, agreed with this assessment.

'This is a complete U-turn. It's a completely maverick move. They won't give us uranium and now we are out of the dialogue,' he said.

According to Mehta, bilateral ties, particularly in the defence sphere, 'will certainly not be as they were (with the previous government). That's what happens when China raises its eyebrows.'

Also:

'We should leverage our strengths. They can't have their cake and eat it too. We should look at other markets for our imports (if Australia refuses to sell uranium or be part of the strategic dialogue), said Lt. Gen. (retd) Satish Nambiar.

'I am not surprised at the position Australia has taken. What is intriguing is that the trilateral dialogue will continue. This appears to convey that if India joins it, it becomes a gang up (against China),' he added.
( Source: China scores over India as Australia quits strategic dialogue: expertshttp://www.indiaenews.com/india/20080206/95920.htm)

UMNO candidate Mike Tyson was found guilty on appeal, even if acquitted

2008-02-20T15:21:00.000-08:00

As reported in THE STAR, 11 April 1997:

Tan Sri Muhammad Muhammad Taib has quit as Selangor Mentri Besar amid controversy relating to his court case and properties worth millions in Australia

Responding to a remark that the charge in the Brisbane Magistrate's Court only involved Muhammad's failure to declare the cash and not related to corruption, Dr Mahathir said the charges he faced had affected the party.

''We are more concerned with Umno. He (Muhammad) felt that he was responsible. It is his right to make a decision.

''Party members should not smear Umno's name or do something that can cause the party to be seen in a bad light
(http://161.139.39.251/akhbar/cabinet.off/1997/ss97413.htm)

As reported in THE STAR, Wednesday February 20, 2008
TAN Sri Muhammad Muhammad Taib, the popular Mike Tyson of Umno, is set to play a big role in the Federal political scenario, if he is elected an MP in the general election.

The former Selangor mentri besar is almost certain to be the Barisan Nasional flag-bearer in the Kuala Selangor parliamentary seat
(http://thestar.com.my/news/story.asp?file=/2008/2/20/central/20379307&sec=central)

As reported by AFP and carried by Malaysian papers

BRISBANE, Australia, May 29 (AFP) - Malaysian politician Muhammad Muhammad Taib was acquitted here Friday of currency regulation breaches involving more than 1.3 million Australian dollars (780,000 US).
(Source:AFP, Malaysian politician acquitted of currency breach ,
29 May 1998)

THE APPEAL OF THAT ACQUITTAL ,as reported by AP -BUT APPEARS NOT TO HAVE BEEN REPORTED IN MALAYSIAN PAPERS
Australian Judge Erred In Case Of Malaysian Politician

An Australian judge made legal errors in directing a jury which acquitted a top Malaysian politician of Australian currency law breaches involving foreign cash worth A$1.3 million, a superior court ruled Tuesday.
The ruling won't have any effect on the politician's acquittal because under Australian law an acquittal cannot be appealed and a person cannot be tried again on a charge of which they have been acquitted .
Muhammad Muhammad Taib, 52, was acquitted by a Queensland state District Court jury in May this year on one count of knowingly making a false currency report when entering Australia on Dec. 16, 1996, and another of failing to declare currency when leaving six days later.
(Source :AP,13 October 1998)

`````````````````````````````````````````````````````````````````````````````````````
THE CASE REPORT
SUPREME COURT OF QUEENSLAND
C.A. No. 219 of 1998.
Brisbane
Before Pincus J.A.
Thomas J.A.
Ambrose J.
[R v. Taib ; ex parte Cth DPP]
T H E Q U E E N
v.
MUHAMMAD BIN MUHAMMAD TAIB
REFERENCE BY COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS
PURSUANT TO SECTION 669A OF THE CRIMINAL CODE
Judgment delivered 13 October 1998
Separate reasons for judgment of each member of the Court; each concurring as to the orders made.
THE REFERENCE TO BE ANSWERED AS FOLLOWS:
1. THE LEARNED TRIAL JUDGE WAS CORRECT IN HIS RULING THAT IN ORDER TO ESTABLISH THE REQUISITE KNOWLEDGE OR MENS REA FOR AN OFFENCE AGAINST S.15(1) OF THE FINANCIAL TRANSACTION REPORTS ACT 1988 (CTH) THE PROSECUTION MUST PROVE THE ELEMENTS -
(I) THAT HE (THE ACCUSED) KNEW THAT HE HAD IN HIS POSSESSION $5,000 OR MORE;
(II) THAT HE KNEW THAT HE HAD TRANSFERRED THE CASH OUT OF AUSTRALIA;
(III) THAT HE KNEW THAT HE HAD NOT REPORTED THAT TRANSFER.
2. THE LEARNED TRIAL JUDGE WAS NOT CORRECT IN HIS RULING THAT IN ORDER TO ESTABLISH THE REQUISITE KNOWLEDGE OR MENS REA FOR AN OFFENCE AGAINST S.15(1) OF THE FINANCIAL TRANSACTION REPORTS ACT THE PROSECUTION MUST ALSO PROVE -
(I) THAT THE ACCUSED KNEW THAT THERE WAS AN OBLIGATION TO REPORT SUCH TRANSFER OF $5,000 OR MORE.
3. IT WAS NOT NECESSARY FOR THE PROSECUTION TO PROVE THAT THE ACCUSED KNEW THAT THERE WAS ANY OBLIGATION WHETHER IMPOSED BY THE FINANCIAL TRANSACTION REPORTS ACT OR OTHERWISE, TO REPORT SUCH TRANSFER OF $5,000.
( For full report see http://www.austlii.edu.au//cgi-bin/disp.pl/au/cases/qld/QCA/1998/307.html?query=Muhammad%20Taib )

Is the RBA now saying that the "skills shortage" is not a critical issue

2008-02-19T14:23:00.000-08:00

RBA Assistant Governor Malcolm Edey in 2005 ( Howard Era):

I commented at another event last week that the broader observation that supply constraints are becoming more important shouldn't strike people as all that surprising...The severity of the current skills shortage is captured by some of the business surveys which report the difficulty of finding suitable labour now is as high as it's been in the last two decades...
Against the background of capacity pressures in labour and product markets, and rising world commodity prices, it's not surprising to have seen broader price pressures emerging recently. Our quarterly statement noted that upstream price pressures had picked up during 2004
(http://www.rba.gov.au/Speeches/2005/sp_ag_030305.html)

Malcolm Edey on 19 February 2008 ( Rudd Era)
Addressing a group of business leaders in Sydney yesterday, a Reserve Bank assistant governor, Malcolm Edey, said labour markets had become more flexible in the past 20 years, which should continue to sustain low unemployment without necessarily increasing inflation.
"We should expect to see that low levels of unemployment can still be sustained without generating significant lifts in wage inflation," Dr Edey said.

A survey released yesterday by the Melbourne Institute found wages had only risen by 3 per cent in the year to February, tracking the general rate of inflation.
(http://www.smh.com.au/news/national/bank-joins-debate-on-jobless-rate/2008/02/19/1203190824103.html)

NOTE: This writer is aware and fully appreciates the meaning of the terms "can be interpreted in many different ways", "taken out of context", "depending on how one looks at it" etc etc.

Writer suggests that it might be a better idea at this point to start thinking what the consequences of an increased supply of skilled workers given the current environment might be. Here readers should recall some other new terms eg "education revolution", and its consequences , as explained by Treasurer Wayne Swan:

Australian Treasurer Wayne Swan promises to address a skills shortage in the country.
"At the core of the program we took to the Australian people are schemes to address the skills shortage and a whole series of plans to deal with infrastructure bottlenecks," said Swan. "So this government will expand the skills base in the economy."
(http://www.voanews.com/english/2008-02-18-voa8.cfm)

Readers should not need reminding that when supply increases, wages will fall.When labour supply is inceased at the top or near top of a business cycle, higher unemployment will follow.

Some reasons why taxpayer surpluses should not be left in government hands, even if it is an Australian Government

2008-02-07T14:51:00.000-08:00

New Australian Treasurer Wayne Swan has called an end to the Howard government policy of returning excess budget surpluses as tax cuts, saying the Reserve Bank had been allowed to shoulder too much responsibility for controlling inflation with interest rate rises.

The Treasurer said under the Rudd Government, any windfall revenue would be allowed to mount up as a larger budget surplus and would be quarantined, either with the Reserve Bank or the Future Fund.

"We will be banking any upward revisions to revenue, if they occur," he told The Australian.
(http://www.news.com.au/business/story/0,23636,23179313-462,00.html)

The Treasurer's proposal should be evaluated in light of the examples of Singapore and Malaysia, where compulsory savings banked into government managed and controlled funds are in effect a form of income tax. The Singapore government agency charged with the management of these funds is known as the Central Provident Fund (CPF),while its Malaysian equivalent is known as the Employees' Provident Fund.

In both countries these savings have been mismanaged.
The Singapore case has been analysed by Mukul Asher of the National University of Singapore and M.Ramesh, formerly of Sydney University.In Ramesh's words:

"... the annual returns offered on CPF funds was 1.8 percent over the 1983-2000 period which was lower than the growth in GDP and income (Asher and Newman, 2002: 58). This is gradually eroding the replacement rate whose cumulative effect over time is likely to be significant."

(http://cep.cl/UNRISD/Papers/Asia/Sing_Mal_Ramesh.doc)

CPF funds form a significant part of the funds provided Singapore's investment agencies, Temasek , and the Government of Singapore Investment Corporation. Both funds are highly regarded by many in the Western investment community, despite the evidence of poor management that is to be found in the CPF's returns, and in a number of well reported losses on investments outside Singapore.

Mismanagement of Malaysia's EPF has been reported extensively.

See for example:http://www.dapmalaysia.org/english/2007/mar07/bul/bul3255.htm,AND http://blog.limkitsiang.com/2007/12/21/epf-needs-to-explain-why-it-discontinue-the-rm14-billion-claim-against-it-six-former-executives/

Australian taxpayers should not assume that mismanagement and corruption of the type described above cannot or does not happen in Australia.

Thai AirAsia lost money-The Facts

2008-02-06T04:49:00.000-08:00

Bernama reported on February 4, 2008:
Thai Air Asia.... suffered losses of over one billion baht (10 baht=95 sen) last year due to penalties and maintenance costs after it cut short the lease period of its Boeing 737-300 fleet.

Chief Executive Officer Tassapon Bijleveld today described it as only a one-off loss as he was confident the airline will return to profit this year, with the target of carrying five million passengers as the arrival of five more Airbus 320 aircraft adds 20 percent to its seating capacity.
(http://www.bernama.com.my/bernama/v3/news_lite.php?id=312186)

FlightGlobal reported:
Low-cost carrier Thai AirAsia posted a loss last year as it faced more intense competition and higher costs.

This is according to the airline’s CEO, Tassapon Bijleveld, who told journalists in Bangkok that the carrier has had to pay lessors penalties for breaking leases on some of its Boeing 737-300s and had to spend money on maintenance to get these aircraft ready to be returned.

He says the penalties and extra maintenance costs are one-off expenses and he predicts the carrier will return to profit this year.
(http://www.flightglobal.com/articles/2008/02/06/221324/thai-airasia-posts-a-loss.html)

Despite all this Tony Fernandes says:

Thai AirAsia is expected to make additional investments amounting to one billion Baht over the next 10 years in line with its current plans to replace the existing ageing fleet of B737-300s with new Airbus A320 aircraft.

These will include expanded staffing, training/conversion costs, purchase of supporting equipment, acquisition of aircraft and engine spares and enhancement of maintenance capabilities to cater for a much bigger and newer fleet of aircraft.

This information was given by AirAsia in a statement today to clarify a recent news article entitled "Thai AirAsia Suffers One Billion Baht in Losses". The airline said Thai AirAsia's chief executive officer, Tassapon Bijleveld was misquoted in the said article.

Although Thai AirAsia is expected to slip into a loss position for the financial year 2007, Thai AirAsia has not lost one billion baht in 2007 as reported, it said.

A loss is expected mainly due to intense competition in Thailand through rampant undercutting combined with adverse effects of higher fuel cost, and once-off charge attributable to a change in accounting policy in relation to accounting for maintenance reserves to be in line with industry practice, it said.

AirAsia Bhd had already adopted the new accounting policy earlier, it said.

It also added that it was confident of the underlying business operations in Thailand and that its fundamentals were solid.
(http://www.bernama.com.my/bernama/v3/news_lite.php?id=312467)

Tassapon Bijleveld misquoted? By a number of different news agencies?To the extent that Tony Fernandes would have us believe? But of course-and white is black, black is white,and 1+1=20, or maybe 50, or perhaps 1 billion, well whatever AirAsia wants it to be.

Vincent Tan and influence over Mahathir-and the matter of only a few projects

2008-01-30T16:58:00.000-08:00

Vincent Tan in 2008:
"If I'm so influential, surely I would have lots of projects," he said.
(DR MAHATHIR IS MY FRIEND, SAYS VINCENT TAN
29 January 2008,Bernama Daily Malaysian News)

Vincent Tan in 1994:
"it is important to be friendly with the government of the day. People always say that I get projects because I am close to the prime minister. Do you think I would keep getting projects if I didn't deliver them successfully?"
(GET RICH QUICK - THE MALAYSIAN AFFAIR.
By Maurice Chittenden, Nick Rufford, John Davision and Mark Skipworth.
13 March 1994,The Sunday Times)

And the very few projects:

Sports Toto was privatised to Tan in 1985. In 1993, Indah Water won the privatisation of the national sewage disposal project. Tan's Berjaya group had the largest 20% block in Indah Water then.
(Merdeka Special: Evolution of Corporate Malaysia
By Leela Barrock ,3 September 2007
The Edge Malaysia (Weekly)

In 2004, the government of Prime Minister Abdullah Badawi knocked back plans by Ascot Sports, a private company controlled by tycoon Vincent Tan, to operate a potentially lucrative sports-betting concession, although Mr Tan's company was duly licensed by former premier Mahathir Mohamad in 2003. .
(M'sian govt unlikely to allow casino in Penang
S Jayasankaran In Kuala Lumpur ,7 January 2006,Business Times Singapore)

Berjaya Group Bhd's unit Bukit Tinggi Resort Sdn Bhd has denied market rumours that is has been given a licence to operate a casino at its Colmar Tropicale resort in Bukit Tinggi, a company official told AFX-Asia.
"It is not true. We have not been given a licence to operate a casino in Bukit Tinggi. We have 250 licences to operate slot machines," the official said when asked to comment on rumours in the market that the company has been given a casino licence

Malaysia's Berjaya Grp not given casino licence at Bukit Tinggi - co official.
23 April 2003,AFX Asia)

The other projects :

43. Lawn Bowling and Indoor Netball Stadium Project at Bukit Kiara (Alam Baiduri Sdn Bhd comprising Berjaya Leisure Bhd - Tan Sri Datuk Thong Yaw Hong, Tan Sri Vincent Tan, Datuk Danny Tan Chee Sing, Wan Lokman Wan Ibrahim and Azman Aziz).

54. Kuala Lumpur LinearCity (KL LinearCity Sdn Bhd comprising Hotel Resort Enterprise Sdn Bhd, Champ Factor Sdn Bhd, Ilham Ombak Sdn Bhd, Wasanas Sdn Bhd, Kamka Sdn Bhd and Ahmad Yasminah & Family - Datuk Kamaruddin Jaafar, Tan Sri Vincent Tan, David Chew, Kamariah Kamaruddin, the late Datuk Wan Adli Wan Ibrahim, Ahmad Abdullah and Yasminah Tor Ahmad).

56. KL People-Mover Rapid Transit (KL PRT Sdn Bhd comprising KL LinearCity Sdn Bhd and KL Monorail Concessionaire Sdn Bhd - Datuk Kamaruddin Jaafar, Tan Sri Vincent Tan, David Chew, the late Datuk Wan Adli Wan Ibrahim and Jamil Malek).

116. Privatisation of national sewerage services (Indah Water Konsortium Sdn Bhd comprising Northwest Water Sdn Bhd, Berjaya Industries Sdn Bhd, Armed Forces Superannuation Fund, Koperasi Polis Malaysia Berhad, Aims Worldwide Sdn Bhd - Tan Sri Vincent Tan, the late Datuk Wan Adli Wan Ibrahim, Datuk Ghazi Ramli, Armed Forces Superannuation Fund, Koperasi Polis Malaysia Berhad).

(Recipients of privatised projects.

21 June 1998,New Sunday Times)

Mahathir must answer why EPF money was lent "old friend" Vincent Tan

2008-01-29T18:25:00.000-08:00

Vincent Tan Chee Yioun on his relationship with former PM and Finance Minister (98-'03) Mahathir Mohamad:

“I owe whatever success I have in business to him,” he said, adding that he was very grateful to the former premier.
“..... I'm very pleased that he said I’m an old friend,”..

(http://thestar.com.my/news/story.asp?file=/2008/1/30/nation/20172668&sec=nation)

Elsewhere:

....Dr Mahathir was an excellent, good and helpful man who had given him a lot of guidance in business.

"I'm pleased when Dr Mahathir (during his testimony in the inquiry) regarded me as his close friend," he added
(http://www.bernama.com.my/bernama/v3/news.php?id=311047)

Given the above Mahathir must now explain how when he was Minister for Finance, the Employees' Provident Fund or Kumpulan Wang Simpanan Pekerja entered into transactions that led it to hold stock in Berjaya and related companies, on behalf of Vincent Tan Chee Yioun.

The following are extracts from a number of Berjaya and subsidiary companies' annual reports.
The extracts have been copied and pasted so as to avoid confusion.
The entries show , in order, name of the registered shareholder, number of shares held, and the percentage of total stock that the shares held constitute.

Below that are the names of the actual beneficiaries of those shares.

For example;
10. Bam Nominees (Tempatan) Sdn Bhd 15,388,000 1.03
Kumpulan Wang Simpanan Pekerja For Tan Sri Dato ' Seri Tan Chee Yioun (EP0018)
means 10th largest shareholder, Bam Nominees (Tempatan) Sdn Bhd, holding 15,388,000 shares comprising 1.03% of stock ,held for Kumpulan Wang Simpanan Pekerja who in turn hold For Tan Sri Dato ' Seri Tan Chee Yioun

These records suggest that Kumpulan Wang Simpanan Pekerja had become a beneficiary of Berjaya and other subsidiary companies shares which are or were originally held in the name of Tan Sri Dato ' Seri Tan Chee Yioun. It is likely that these shares were pledged to the Kumpulan Wang Simpanan Pekerja by or for Tan Sri Dato ' Seri Tan Chee Yioun under the terms of some financial facility granted by the Kumpulan Wang Simpanan Pekerja in favour of Tan Sri Dato ' Seri Tan Chee Yioun ie Kumpulan Wang Simpanan Pekerja funds appear to have been applied in favour of Tan Sri Dato ' Seri Vincent Tan Chee Yioun , " ranked top 15 wealthiest individual in Malaysia."( http://www.ascotsports.com/help/d.asp?show=about)

The extracts:
A) The following are entries from the Berjaya Group 2002 Annual Report -page 196
i) Thirty Largest Shareholders AS AT 25 SEPTEMBER 2002
10.Bam Nominees (Tempatan) Sdn Bhd 15,388,000 1.03
Kumpulan Wang Simpanan PekerjaFor Tan Sri Dato ' Seri Tan Chee Yioun
( EP0018)

B) The following is an entry from the Berjaya Group 2003 Annual Report -page 154
THIRTY LARGEST SHAREHOLDERS as at 22 September 2003
8. SBBAM Nominees (Tempatan) Sdn Bhd 20,696,000 1.38
Kumpulan Wang Simpanan Pekerja For Tan Sri Dato' Seri Vincent Tan Chee Yioun

C) The following is an entry from the Cosway Corporation Berhad Annual Report 2004 at page 98
25. Southern Investment Bank Berhad 3,906,000 1.13
Kumpulan Wang Simpanan Pekerja For Tan Sri Dato' Seri Vincent Tan Chee Yioun (EP0018)

D) The following is an entry from the Cosway Corporation Berhad Annual Report 2005 at page 97

20. Southern Investment Bank Berhad 3,906,000 1.13
Kumpulan Wang Simpanan Pekerja For Tan Sri Dato' Seri Vincent Tan Chee Yioun

E) The following is an entry from the Berjaya Corporation 2006 Annual Report -page 180

30 Largest Shareholders as at 28 August 2006:

29. Southern Investment Bank Berhad 4,139,200 0.18

Kumpulan Wang Simpanan Pekerja For Tan Sri Dato' Seri Vincent Tan Chee Yioun (Ep0018)

F) The following is an entry from the DUNHAM-BUSH (MALAYSIA) BHD 2006 Annual Report -page 90
THIRTY LARGEST SHAREHOLDERS As At 7 August 2006
27. Southern Investment Bank Berhad 665,900 0.73
Kumpulan Wang Simpanan Pekerja For Tan Chee Yioun (EP0018)

Vincent Tan takes control of NExnews;was Tong Kooi Ong pushed?

2008-01-25T14:30:00.000-08:00

According to THE EDGE:

Announcing the deal on Jan 25, BCorp said Net Edge Online and Tong had accepted its(BCorp) offer to acquire their entire 82.77 million Nexnews shares at RM1.60 each and 6.19 million warrants at 42 sen a unit.

The acquisition will be satisfied by the transfer of 164.85 million units of existing 0% irredeemable convertible unsecured loan stocks (ICULS) of 50 sen nominal amount each 2005/2015 in BCorp at 75 sen each, as well as BCorp group assuming the RM15.6 million term loan taken by Net Edge Online.

So, Tong Kooi Ong,"financial genius" is prepared to take junk bonds rather than cash in exchange for giving-up his beloved Edge?

The bonds are zero-rated-so no interest, but are convertible, but who wants BCorp stock?

Having said that the question that needs to be answered: Why is Vincent buying back full control of THE SUN? I was there when it last happened, and he did not make any money on it. In fact that episode left him with accumulated losses of RM 120 million, multiple law suits , and a drain of Berjaya's cash resources. All that when THE SUN at least looked like it had a future.

Tony Fernandes and AirAsia's nightmare

2008-01-13T15:25:00.000-08:00

On January 11 2007 Bloomberg reported:

AirAsia Bhd., Asia's biggest discount carrier by fleet size, will stop making bets on the price of oil, after incorrect forecasts contributed to a 16 percent slide in shares over the last month.

``It's a nightmare because the volatility is crazy,'' Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview yesterday. ``We took a bet that oil won't go above $90 a barrel and it has and it's staying there.''

Crude oil rose to a record $100 a barrel earlier this month instead of falling as AirAsia had predicted. If the price of oil remains at that level, earnings could fall by $2.6 million a month because of speculative hedging, according to Christopher Eng, an analyst at OSK Research Sdn. in Kuala Lumpur.

``There has been significant selling from AirAsia's foreign shareholders,'' Eng wrote in a Jan. 9 report. The drop is ``related to AirAsia's fuel-hedging policy, which some parties considered excessively speculative.''

(http://www.bloomberg.com/apps/news?pid=20601087&sid=awrmaa4rin3o&refer=home)

The 9 January 2007 OSK report has been uploaded by Rocky Atan on his blogspot,
http://rockybru.blogspot.com/2008/01/tony-fuel-going-private-talk.html.

The report actually states:

If oil were to sustain at USD 100 per barrel, AirAsia could be looking at a RM 100 million loss per annum.

Tony's nightmare does not however end there. Speculating on oil contracts and their derivatives was a major component of AirAsia's earnings for the quarter ended 30 June 2007.

In the quarter ended 30 June 2007 AirAsia's profit after tax of RM 130 million comprised a gain from the sales of swaps of RM73 million which was included in other operating income.

The notes to the earnings statement released to the KLSE and brought to readers attention in my email of 31 August 2007 state:

The Group recorded revenue of RM432 million for the quarter ended 30 June 2007 ("4Q07"), 38% higher than the revenue of RM314 million recorded in the quarter ended 30 June 2006 ("4Q06"). The Group's profit before tax improved by 838% to RM130 million as compared to the restated profit before tax of RM14 million achieved in 4Q06.

5. Unusual items due to their nature, size or incidence
The Group had disposed of 19 interest rate swaps on 12 June 2007 resulting in a gain from the sales of these swaps of RM73 million which is included in other operating income. As of the end of the financial year 30 June 2007, the Group has a total of 41interest rate swaps.

(Source: AIRASIA FOURTH QUARTER REPORT ENDED 30 JUNE 2007)

The problem now, apart from the potential losses on oil contracts, is sustaining earnings growth without resorting to trading in derivatives. Put in another way, how is AirAsia going to even maintain earnings given that past earnings have been boosted by trading in derivatives which are now to be discontinued?

Vincent's The Edge declares his ownership of the Selangor Turf Club land-share price spikes-will the SC act?

2007-11-20T15:25:00.000-08:00

On 8 October 2007, Vincent Tan's THE EDGE (see VT's CV at http://www.ascotsports.com/help/d.asp?show=about) reported:

On the home front, BLand owns some strategic pieces of land, chiefly the Selangor Turf Club(STC) in Sungai Be si and huge plots in Taman TAR and Bukit Jalil. It also has a 48.76% stake in Berjaya Sports Toto that is valued at over RM3 billion.
(Cover Story: Berjaya on the mend,By M Shanmugam
8 October 2007,The Edge Malaysia (Weekly)
(for background see story at http://sahathevan.blogspot.com/2007/10/is-selangor-dato-vincent-tan.html)

On or about the same time, Berjaya Land share price spiked.

(See graph at http://biz.thestar.com.my/marketwatch/images/9042191.gif)

Subsequent to THE EDGE story stock broking houses have begun to incorporate the Turf Club land in their valuations of Berjaya Land (see story below)

Meanwhile, nowhere in Berjaya Land's most recent audited accounts is there any mention of the Turf Club land.

The Star Online

Wednesday October 31, 2007

BLand sees growth in property sector

PETALING JAYA: Berjaya Land Bhd (BLand) sees potential growth in its property development earnings, both overseas and locally, says Kenanga Investment Bank Bhd.

It was anticipating RM30.2bil worth of mixed development projects in Vietnam to contribute to its growth, in addition to the revaluation of its landbank in Taman Tar and Selangor Turf Club (STC) in Malaysia, it said, noting that the projects in Vietnam would spread from 2009 to 2019.

An analyst from Kenanga believed that BLand had a high probability of securing these projects, noting that less cost and time would be needed on resettlement issues, seeing that most of BLand's Vietnam lands were unoccupied.

On the local front, BLand was expected to launch projects with a gross development value (GDV) of RM1.2bil on top of its on-going property development projects in the financial year ending April 30, 2008 (FY08) and FY09, the analyst said.

Its on-going projects, with GDV of RM802mil, are located in Bukit Jalil, Berjaya Park in Shah Alam, Taman Tar and Kuantan Perdana in Pahang.

According to Kenanga, BLand has planned a RM4.2bil mixed development project on the 248-acre STC, noting that its 10-year development plan had included a range of low to high-end residential development with commercial elements like a shopping mall, offices, service apartments and hotels.

STC's possible conversion title to freehold from its current leasehold was expected to increase the land value by 30% to 50%, and a potential to increase its GDV to RM6.2bil from its original GDV of RM5.4bil, it said.

On top of that, BLand has also withheld launches of its Taman Tar bungalow plots to capitalise on higher pricing upon completion of Taman Tar's main infrastructure works, as well as the pending approval for land title conversion, which is expected to increase prices by 30% to 50%.

The analyst believed that the remaining GDV of approximately RM324mil would increase by more than 15% once BLand resumed selling the land plots at Taman Tar towards the end of the year, adding that BLand had so far traded its bungalow plots in the Peak at Taman Tar at 81% to 127% higher than other residential sites in the area.

The research house rated the company as "trading buy" with a target price of RM7.61.

The counter closed two sen lower at RM4.30 yesterday on volume of 903,200 shares.

BJLAND : [Stock Watch] [ News]

For latest Bursa Malaysia indices, charts and other information click here

--------------------------------------------------------------------------------

© 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Orix of Japan will not confirm investment in AirAsia X

2007-11-05T15:43:00.001-08:00

On October 13 2007 just prior to the Australian Civil Aviation Authority granting
AirAsia X its Australian Air Operators Certificate, it was reported that 2 investors, Japan's Orix and another from Bahrain (variously named "Manama", "Perigon Capital", a "private equity fund") were to invest USD 75 million(USD 37.5 million each) for stake of 10% each in AirAsia X.(http://www.iht.com/bin/printfriendly.php?id=7875790)

ORIX was asked how they came to value a 10% stake in AirAsia X at USD 37.5 million, just a few months after Richard Branson paid USD 7.2 million for a stake of the same quantity.

ORIX's response:
Dear Ganesh,

As you mentioned, this bit of information seems to be in circulation; however, this has not been confirmed by ORIX.
Therefore we have no further comments on this matter.

Best regards,

Yui Takamatsu
(for ORIX)

ORIX is a public company listed in Tokyo with continuous disclosure requirements in Japan and in the US, unlike AirAsia X and Branson's Virgin Air which are privately held.

Is the Selangor Dato Vincent Tan challenging the Sultan of Selangor?

2007-10-26T18:07:00.000-07:00

Vincent Tan's THE EDGE has reported concerning Vincent Tan and his Berjaya Land:

On the home front, BLand owns some strategic pieces of land, chiefly the Selangor Turf Club(STC) in Sungai Besi and huge plots in Taman TAR and Bukit Jalil. It also has a 48.76% stake in Berjaya Sports Toto that is valued at over RM3 billion.

(Cover Story: Berjaya on the mend,By M Shanmugam
8 October 2007,The Edge Malaysia (Weekly))

Berjaya Land were to take ownership of the STC land in land swap that would require BLand to build a race course in Bukit Tagar, Selangor.
The Sultan of Selangor is opposed to this plan.Subsequently the Selangor State Government has refused permission for the proposed racecourse.
Vincent and Berjaya Land claiming ownership pf the STC would appear to be in clear defiance of the Sultan's wishes.

`````````````````````````````````````````````````````````````````````````````````````

Some backgound on the matter as reported by Dowjones
Berjaya Land Bhd.'s (3395.KU) billion-ringgit development plan for Selangor is in jeopardy after the state's government rejected the relocation of a horse racing club to the central Malaysian state, sources familiar with the situation said Monday.

The relocation of the Selangor Turf Club to Bukit Tagar is central to efforts by Malaysia's Berjaya Land to generate better returns from 16,451 acres of land its Berjaya Group Bhd. (3395.KU) parent owns in the area 40 kilometers north of Kuala Lumpur.

The lack of good road links in Bukit Tagar and its distance from the capital mean that properties planned for the area are unlikely to sell well unless there are added attractions such as the turf club, analysts said.

A source familiar with the situation said the government move likely means the Berjaya Land-Selangor Turf Club agreement will be aborted.

"I don't know what they are going to do," he said, but added the decision will hurt Berjaya Land's plans. Berjaya Land is a diversified company involved in hotel and resorts management, property development and gaming.

A Berjaya spokeswoman declined to comment on the Selangor decision. Selangor Turf Club officials weren't immediately available for comment.

Selangor's senior executive committee councilor, Abdul Rahman Palil, Monday said the state rejected the relocation of the club to Bukit Tagar as it would encourage gaming. Gambling is taboo in Islam but legitimate gaming is tolerated and tightly regulated in Muslim-majority Malaysia.

"We reject the relocation of a place for gambling to the rural area," Rahman told Dow Jones Newswires. The state is also likely to turn down any proposal to move the club, now located in Kuala Lumpur, to any other Selangor location, Rahman added.

Despite its name, the turf club has always been within Kuala Lumpur's boundaries. The proposal in 2004 to move the club to Bukit Tagar was prompted by its need to expand equestrian and other facilities.

In early 2004, Berjaya Land said it had won a tender to relocate the turf club. The company, which is the parent of numbers-betting operator Berjaya Sports Toto Bhd. (1562.KU), said the deal would involve Berjaya Land paying MYR35 million in cash and building a horse racing circuit and other facilities on 750 areas of land to be given to the turf club.

In exchange, the club was to give Berjaya Land the 248-acre Kuala Lumpur site of the current horse racing circuit. Berjaya Group would transfer the 16,000 acres of land to 62.5%-owned Berjaya Land as part of the deal.

(Source: Malaysia State Move Likely To Scupper Berjaya Devt Plan,6 June 2005)

Has ANZ's Mike Smith signalled the future acquisition of Standard Chartered Bank

2007-10-25T17:51:00.000-07:00

On ABC's Lateline, 25 October 2007, there was this exchange between Mike Smith, CEO ANZ and the presenter, Ali Moore:

ALI MOORE: So what, the ANZ buying a whole bank, where?

MIKE SMITH: Somewhere.

ALI MOORE: Well, you can't in China?

MIKE SMITH: No, but you can buy a regional bank that has operations in China. There are various operations and obviously I'm not going to tell you what they are, but I suspect you can work them out.

Standard Chartered appears to be the only bank that fits Smith's criteria and which would be a realistic target.

By process of elimination; banks incorporated in this region with operations in China are not likely targets for most countries in this region, like China, prohibit takeover of their banks.

That leaves two possible targets, HSBC and Standard Chartered.
HSBC is clearly too large a target, hence leaving just Standard Chartered.
END

Teh Hong Piow and 1966-Part 2

2007-10-22T22:02:00.000-07:00

On October 28, 1966, about a month and a half after Teh Hong Piow and other former senior executives of Malayan Banking Bhd opened Public Bank Bhd for business, there was a run on Malayan Banking.
The matter was so serious that police had to be called in to control crowds at some branches, and Bank Negara and its then Governor Ismail Ali had to issue a statement expressing Government support for Malayan(Straits Times, Saturday ,29 October 1966,page 1).

According to a market commentary in the Straits Times, Monday 31 October 1966:

The (Bank Negara) statement on Malayan Banking was more than timely in view of the rumours that have been sweeping through the market over the past month or so.
The market has to a large extent been holding back because of concern about the affairs of this huge bank chain, with all its ramifications and which in the past few years has expanded so rapidly.
The report and accounts for the year ended June 30 are well overdue.The annual meeting is some six weeks late .....the market view is that the affairs of the bank
should be the subject of an investigation to clear the air completely.

According to the Bank Negara Annual Report for the year ended 31 December 1966:
Rumours arose from the differences of opinion among some members of the board of directors of the bank regarding certain material advances to customers of the bank.These advances were found to be inadequately secured, particularly as a result of depressed prices of property shares which formed the main security of the advances.Subsequently additional securities were lodged with the bank in respect of these advances.
(Note: The Bank Negara report is careful to not name Malayan Banking -it simply refers to a commercial bank which experienced abnormal withdrawals at the end of October 1966 which required the Central Bank to issue a public statement to assure the bank's depositors of the safety of their funds)

And to take readers back to Part 1 of the Teh Hong Piow story:

He rose swiftly through the ranks and became general manager (in 1964).

In 1966 came the decision to strike out on his own.

One of his earliest breakthroughs – a foray into housing development – generated some RM10mil, which was used as seed money to set up the bank.
(http://biz.thestar.com.my/news/story.asp?file=/2007/10/18/business/19198449&sec=business )

So -Teh left Maybank in 1966-got into property development , made RM 10 million-and started his own bank in August that year.How brilliant, how skillful......(readers can add other adjectives)

(see full story at http://sahathevan.blogspot.com/2007/10/public-banks-teh-hong-piowwhat-exaclty.html)

Public Bank's Teh Hong Piow:What exaclty happened in 1966 ?

2007-10-17T20:25:00.000-07:00

From THE STAR 18 October 2007:
Teh Hong Piow, then 36, beat all the odds and became the founder, owner and managing director of Public Bank Bhd, which opened its doors for business on Aug 6, 1966, in a three-storey building at No 4, Jalan Gereja in Kuala Lumpur
..........

In 1960, the 30-year-old Teh left OCBC to be part of a small group which helped start Malayan Banking. He was one of the management staff charged with building the bank from scratch.

He rose swiftly through the ranks and became general manager within four years.

In 1966 came the decision to strike out on his own.

One of his earliest breakthroughs – a foray into housing development – generated some RM10mil, which was used as seed money to set up the bank.
(http://biz.thestar.com.my/news/story.asp?file=/2007/10/18/business/19198449&sec=business )

So -Teh left Maybank in 1966-got into property development , made RM 10 million-and started his own bank in August that year.How brilliant, how skillful......(readers can add other adjectives)

Now, some other matters that took place in 1966:

In 1959, Khoo Teck Puat established the Malayan Banking Corporation in Malaya. The bank grew rapidly, but in 1966, rumours that he had channelled its funds to his own interests led to a run on the bank
(http://www.theage.com.au/articles/2004/03/11/1078594496940.html?from=storyrhs)

Khoo's general manager was one Teh Hong Piow:
Mr Teh Hong Piow began as a clerk in Singapore's OCBC Bank where he caught the eye of Khoo Teck Puat, a Malaysian then working in a senior position in OCBC. Mr Khoo had been asked to return to Malaysia to help start Maybank in 1960 and he tapped Mr Teh to join him as manager.

Mr Teh swiftly rose through the ranks and was general manager in four years. He was also spotted by the then governor of Malaysia's central bank Ismail Ali who, according to a retired banker, had taken a dislike to Mr Khoo and wanted Mr Teh to replace him.

But Mr Teh had other ideas and began lobbying for a bank licence of his own through the Malaysian Chinese Association, the second largest political party in the then ruling Alliance coalition, according to a former associate. The minister of finance, to whom the central bank's Mr Ismail reported to, was Tan Siew Sin, the head of the MCA and an ethnic Chinese himself.

Mr Tan gave the nod and Public Bank was born in 1966.
(The bank that Teh built ,S Jayasankaran KL Correspondent ,
17 June 2005,Business Times Singapore)

The problems at Maybank required new management:
Mr Yong Pung How was appointed by the Malaysian Central bank to reorganise Malayan Banking Bhd, Malaysia's largest bank, following difficulties experienced by the bank. He was MBB's vice-chairman from 1966-1971.

(Profile of OCBC Bank chairman Yong Pung How. 8 June 1989
Business Times Singapore)

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2007-10-16T18:13:00.000-07:00

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On Shreedar Subramaniam:
Sreedhar Subramaniam

Member Since 05/24/1999

Last Update: 05/18/2007

My Email: sreedhar_my@yahoo.co.uk

Real Name: Sreedhar Subramaniam

Location:
Petaling Jaya, Malaysia
Age: 44
Marital Status: Married
Sex: Male
Occupation: Management Consultant
Links Home Page: www.bris.com.my

Gaming (judi) is less haram,maybe even halal under Islam Hadhari

2007-10-15T18:36:00.000-07:00

Then:

BANK Negara will stand firm in not allowing any company with gaming interests to own equity stakes in banks, a stand which may affect Berjaya Group's proposed purchase of a 20 per cent stake in Intradagang Merchant Bankers (M).....Jaffar said companies in such a position will have to forgo their gaming interest first before acquiring any stake in a bank.

"Gaming and banking do not go together," Jaffar added.

(Source:GAMING FIRMS CAN'T HAVE STAKES IN BANKS'.
By Mustapha Kamil. 31 March 1993
Business Times)

Now:
From the Berjaya Corporation website :

KUALA LUMPUR: Asia’s first private mint is almost complete and is set to start operations by the end of this year.

The RM700mil Focus Equity Sdn Bhd facility in Bukit Tagar, near Kuala Selangor, is the only private currency printing outfit outside Europe and aims to make Malaysia a world player in this niche industry.

Most mints are owned by governments.

“The new and ultra modern high-tech facility has the latest security features that other currency printing presses in the world run by governments will not have,” said managing director Joseph Vijay Kumar.

“The high-tech security features will be able to deter counterfeiters.”

Focus Equity will print 1.5 billion currency notes a year by the beginning of next year for both the domestic and foreign markets, Joseph said.

Berjaya Group Bhd and Istimewa Restu Sdn Bhd, owned by Joseph, hold a 32.5% stake each. One of Europe’s leading private printers, Royal Joh Enschede of the Netherlands, holds 5% and the rest is held by various parties.

The Dutch company and Focus Equity, which specialises in working with printers supplying the ringgit, had signed an agreement witnessed by Prime Minister Datuk Seri Abdullah Ahmad Badawi in Amsterdam in May to set up the plant.

In addition to printing currency notes, the plant can also print other high security documents such as passports, bond certificates and stamps.

Joseph said that Focus Equity could produce both conventional banknotes as well as synthetic polymer notes.
(http://www.berjaya.com.my/180407thestar.htm)

Berjaya's main source of cash remain the revenue from Sports Toto.
It seems that while in the past "gaming and banking do not go together," today under Islam Hadhari gaming and printing the country's currency is kosher/halal.

Russian Federal Space Agency lists Malaysians as "flight participants"

2007-10-09T19:04:00.000-07:00

Cosmonaut Rank
Yuri Ivanovich Malenchenko Soyuz TMA Commander
Peggy Whitson Soyuz TMA Flight Engineer
Sheikh Muszaphar Shukor Flight Participant
Salizhan Shakirovich Sharipov Soyuz TMA Commander Backup
Edward Michael Fincke Soyuz TMA Flight Engineer Backup
Faiz bin Khaleed Flight Participant Backup

The actual designations become clearer when one looks at the Bios at http://www.roscosmos.ru/Member.asp?screwID=40 AND http://www.roscosmos.ru/Member.asp?screwID=43

For contrast see bio of Charles Simonyi , a space tourist, but nevertheless listed as "Mission Specialist".

Charles Simonyi

Mission Specialist
Spaceflight training: In early 2006 Simonyi expressed interest in becoming a space tourist and signed agreements with the world’s leading space tourism company, Space Adventures, Ltd., for a 10-day mission to the International Space Station.

In August 2006, he passed a pre-qualification medical exam, called the Government Medical Commission (GMK), signifying the achievement of a major milestone in his orbital spaceflight preparation.

He started training at Star City on September 5, 2006. Roscosmos officials said he signed a contract for a space mission later in September.
http://www.roscosmos.ru/Member.asp?screwID=37

AirAsia-is the difference between actual orders and hype a lazy RM 18 billion

2007-10-07T21:53:00.000-07:00

Extract from AIRASIA BERHAD FOURTH QUARTER REPORT ENDED 30 JUNE 2007

15. Capital commitments outstanding not provided for in the interim financial report

Capital commitments outstanding not provided for in the interim financial report
Capital commitments for property, plant and equipment:

Group as at 30.06.07 :
Contracted for RM 18,405,482,000
Authorised but not contracted for RM 98,664,000

Deposit on aircraft purchase RM 317,296,000

Comment:If it has been actually committed, should it not be accounted for?
(Accepted that capital commitments can inclduing items like buildings etc; but it is likely that the bulk of the amount would pertain to investment in aircraft)

Does AirAsia have only 6 planes on order-not the hundreds as reported

2007-10-05T18:23:00.000-07:00

Most media have reported, as has the BBC in the story below, that Air Asia has ordered hundreds of new A320s.

However the list provided at http://www.edinavtn.co.uk/assets/files/PDFs/A320.pdf, dated 1 September 2007, shows on 6 planes on order.

Air Asia raises Airbus A320 order
Malaysian airline Air Asia has boosted the size of its fleet, ordering 100 more A320 planes from Airbus.
The group has also taken out an option for a further 30 planes as it prepares for the launch of a joint venture for budget long-haul flights, Air Asia X.

Air Asia declined to give details of the deal, but at catalogue prices it would be worth more than $6bn (£3bn).

The deal doubles an order the group placed with European planemaker Airbus last month for 100 of the A320s.

The small planes are used for short- and medium-haul flights, and are expected to be delivered after 2012.

Air Asia currently has a fleet of 50 aircraft, comprising 15 A320s and 35 Boeing 737-300s.

Earlier this month, the group said it was launching a no-frills long-haul service in partnership with Fly Asian Express, the carrier that is majority owned by Air Asia chief Tony Fernandes.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/6243895.stm

Published: 2007/01/09 10:00:12 GMT

© BBC MMVII

AirAsia X will be flying a 13 year-old plane on the Australia and China routes-has taken out insurance to cover costs of suspended or delayed flights

2007-10-05T18:09:00.000-07:00

Details of AirAsia X's sole plane:
The aircraft with registration 9M-XXA was first delivered for use in Ocober 1994( see entry 54 at http://www.edinavtn.co.uk/assets/files/PDFs/A330.pdf)

History of the aircraft Delivery Date Operator Registration Remark
02/05/1994 Aer Lingus EI-SHN lsd ILFC - ret 28/06/02 as N54AN
27/04/2004 Air Algerie F-OMSA lsd from AWAS - ret to lessor 27/08/05
28/09/2005 Air Madrid EC-JMF Suspended operations 16/12/06 - Stored at BCN - To SN Brussels - reg N54AN
14/09/2007 Fly Asian Xpress 9M-XAA AirAsiaX

(http://www.airfleets.net/ficheapp/plane-a330-54.htm)

One plane with plans for more is enough for AirAsiaX

Steve Creedy | October 05, 2007

AIRASIAX has rejected suggestions from rival Jetstar that passengers on its new Australian services will be stranded if its only plane breaks down.

The long-haul, low-cost carrier - to start flying to Australia early next month - will begin service with just one leased A330 aircraft flying four times a week to Australia and five times to China, but it's what may come next that has Jetstar paying attention.

Additional aircraft will come on stream over the next five years. The airline has committed to 15 A330-300s, with options on 10, and gets its first two planes next year. It is also looking at extra leased A330s and, possibly, bigger A340s to service Europe.

Jetstar - which has had its own troubles with aircraft problems that have left passengers stranded - has raised questions about AirAsiaX's ability to repatriate Australian travellers if there are problems while it is operating with a single plane.

AirAsiaX chief executive Asran Osman-Rani says the airline has the contingency covered, however, and had an insurance plan to cover costs such as food, accommodation and tickets. "One of the things we will offer is compensation, either in refunds or getting people on board other flights," he said.

"If you think about it, even if I had five planes I wouldn't have a spare just sitting on the ground.

"They're all going to be flying to different destinations and realistically, in our model, I wouldn't expect these planes to be flying about half-full. They'll probably be flying about three-quarters full, if not more.

"So there's a limited ability to really do rescue planes on our own flights." The Malaysian-based carrier last Friday announced one-way introductory fares of $99 on its four weekly return services between Kuala Lumpur and Gold Coast......( http://www.theaustralian.news.com.au/story/0,25197,22531453-23349,00.html)

Hint of kick-backs in Malaysian Sukhoi jet deal courtesy Rosoboronexport's Deputy General Director Sergei Chemezov

2007-10-01T22:31:00.000-07:00

According to a TASS News Agency report:

Russia is expected to receive U.S. $900 million from the sale of 18 Sukhoi-30MKM fighter jets to Malaysia, under an agreement signed Tuesday within the framework of Russian President Vladimir Putin's visit to Kuala Lumpur, ITAR-TASS reported quoting Russia's state arms exporting agency Rosoboronexport's Deputy General Director Sergei Chemezov.
Malaysia will pay for the jets in cash, Chemezov said dismissing reports that part of the contract might be paid in kind.
"No palm oil, the entire sum will be paid in foreign exchange, that is U.S. dollars," Chemezov said.
Although Malaysian law envisages that a certain portion of cash received under such a contract is to be used for purchase of Malaysian-made goods, some unspecified Malaysian companies has proposed that the quota be given to them thus enabling Russia to receive the whole sum, Chemezov said.
"I hope the issue will be decided in a positive way," Chemezov said.
[Source:Russia to supply $900-mln worth fighter jets to Malaysia.
6 August 2003,06:43,Prime-TASS News (Russia)]

Other TASS News reports have stated that Russia will earn a profit of USD 900 million on the deal.

... contract for the delivery of 18 Russian-made Su-30MKM jet fighters to Malaysia was signed in the presence of Russian President Vladimir Putin and Malaysian Prime Minister Mohathir bin Mohamad in the city of Putrajaya on Tuesday. Russia will receive a net profit of 900 million dollars under the contract, according to first deputy director-general of Rosoboronexport arms trading company Sergei Chemezov.

(Source:Itar-Tass news digest of August 5 - 4. 6 August 2003
ITAR-TASS World Service

NSW Court finds sufficient evidence to establish an arguable case of improper purpose against Berjaya Group

2007-09-25T16:36:00.000-07:00

Stuart Karim Ariff & Ors v Ian Kim Seng Fong
Headnote
Facts

On 12 May 2006, the opponent, Mr Fong, was appointed by the Australian Securities and Investments Commission (ASIC) as an eligible applicant on behalf of the Berjaya group of companies for the purposes of conducting an examination of the affairs of the corporate claimants pursuant to Pt 5.9 of the Corporations Act 2001 (Cth) (the Corporations Act). The Berjaya group of companies holds approximately 97 per cent of the issued shares in the company CarLovers Carwash Limited, being one of four companies in the CarLovers group and was the major unsecured creditor.
The first claimant, Mr Ariff, is the deed administrator of each of the companies in the CarLovers group, having been appointed by the directors of the companies in the group on 10 July 2003, as a voluntary administrator pursuant to s 436A of the Corporations Act. In May 2006, Mr Fong caused to be issued examination summonses against Mr Ariff, Jo Drysdale and John Sewerle. Subsequently, on 5 July 2006, Mr Fong caused to be issued a number of Notices to Produce and Subpoenas. The claimants, by an Amended Interlocutory Process filed in court on 24 July 2006, have sought a number of orders, including orders that various of the examination summonses be set aside and also that the Notices to Produce and Subpoenas be set aside.

By way of a preliminary to the determination to set the examination summonses aside, the claimants also sought an order pursuant to s 596C(2) of the Corporations Act that the affidavit in support of Mr Fong’s application to issue summonses for examination to Mr Ariff, Ms Drysdale and Mr Sewerle be made available for their inspection.

The claimants contended that it was arguable that the examination summonses were issued for an improper purpose, namely, to exert improper commercial pressure on Mr Ariff to force him to hand back control of the CarLovers group to the shareholders, to terminate the deeds of company arrangement prior to them being performed to completion and to compromise his claim for outstanding fees. Mr Fong submitted that the claimants’ complaints were essentially that he was acting to embarrass Mr Ariff and that he was pursuing Berjaya’s interests in seeking to have Mr Ariff return the control of the CarLovers group to Berjaya without the payment of his remuneration. Mr Fong stated there was typically embarrassment caused by the examination of a company’s affairs and that Mr Ariff’s remuneration was protected by an order of the court.

The application for inspection of the affidavit was heard by Barrett J, who, on 3 October 2006, dismissed the application finding that an arguable case of improper purpose had not been established. The claimants sought leave to appeal and to appeal from the trial judge’s order.
Held by the Court (Beazley, Giles and Santow JJA):
(1) In order to grant access to the affidavit, the Court must be satisfied that the claimants have an arguable case that the examination summonses had been issued for an improper purpose or involved an abuse of the court’s processes. Once an arguable case has been raised, it can be accepted that there are persuasive grounds for allowing access to the affidavit

(2) There was sufficient evidence to establish an arguable case of improper purpose. That evidence includes the threats that are alleged to have been made, the number of examination summonses issued and the width of the Notices to Produce and Subpoenas. That being so, the Court should inspect the affidavit to determine whether the affidavit should be made available for inspection

(3) Having inspected the affidavit, the Court concluded the affidavit should be made available for inspection. In the first instance, that inspection should be limited to the claimants’ legal representatives: [91]

Full case reoprt at:
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCA/2007/183.html?query=^Berjaya&nocontext

The Equine Capital Bhd Crash: Coming Soon to A Cinema Near You

2007-09-12T16:57:00.000-07:00

Excerpt:

As Businessweek puts it:

In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.

This is a story seen many times before.
Earlier versions of this story were titled, MRCB, Berjaya Land , RHB etc etc.

The storyline was always the same:
a) Listed company comes from nowhere, and listed company and/or associate is given prime land to play with (eg Brickfields Railway Yard, Sentul Railway Quarters, land opposite Pudu Prison etc etc)

b) Huge billion dollar project is announced, project usually featuring foreign names-or at least foreign sounding names eg "Times Square", "Central", "Sentral"(last example is not meant to be proof that Sdr "Dr" Anwar cannot spell)

c) Project appears to commence, but then listed company discovers that dreams are built on cash-flow, of which it has very little.
Sometimes one can get lucky, for instance luck could come in the form of Sports Toto, standing ready willing an able to provide inter-company loans.
Other times, it could be pre-planned-eg KLCC and Petronas, where big plans were grounded on the fact that Petronas would oil the deal(pun intended).

d)Listed company collapses, CEO and major shareholders continue to pretend to have money; often times bailed-out by Government, in the National Interest; naturally.

Whcih brings me to Equine Capital Bhd.
As reported by Bernama:

Billed as one of the high impact projects of the Northern Corridor Economic Region (NCER) the PGCC will become the new landmark for Penang island.To be developed by Abad Naluri Sdn Bhd, a subsidiary of Equine Capital Berhad, on a 104ha site, the first phase involving the construction of roads and a public park, is expected to kick off within the next 12 months.Equine Capital Berhad executive chairman Datuk Patrick Lim, in a media briefing recently, said the PGCC would have five-star hotels, a Penang Performing Arts centre (PenPAC), high-end retail outlets, two iconic towers, residential and commercial properties and a world-class meeting and convention centre.On the first phase, Lim said the company would invest RM70 million to build two flyovers to connect the centre to the Penang Outer Ring Road (PORR) and an underground tunnel to mitigate traffic congestion from Jalan Scotland to the project site.He said the public park would involve the development of 40ha for greenery, comprising a 10.4ha one-kilometre linear Central Park and another 29.6ha of hilly land called Penang Hill Park.The 40ha in the public realm will be linked to the existing Municipal Youth Park and Penang Botanical Garden with pathways to create a whopping 344ha of park lands, one of the biggest in the country, on the island, which is tentatively named Penang Metropolitan Park."We wanted to make these parks like the Kuala Lumpur City Centre (KLCC) park and the Central Park in New York, a place where the people can always look forward to going to. We want to make these parks one of the great public parks where the residents can benefit from the recreational activities there, which they can be proud of........He said the development of the Central Park alone will cost around RM40 million.
(http://www.bernama.com.my/bernama/v3/news.php?id=284277)

And the basis for all of this-note the amounts required for infrastructure and other such works which cannot be financed by selling of the plan(ie pay first , build later):

CASH FROM OPERATIONS

Mar 31 2004: RM -8.2 million

Mar 31 2005: RM -2.1 million

Mar 31 2006: RM -30.2 million

Mar 31 2007: RM 20.1 million

The Mar 31 2007 figure appears to be turnaround , but only until one looks at the change in the Net Cash Position , which as RM -15.9 million.

As Businessweek puts it:

In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.

Also, the net income for the year ended Mar 31 2007 was only RM 3.6 million, compared to RM 9.3 , 30.1 and 17.1 million in the prior years listed. Therefore the seeming increase in cashflow from operations is likely due to accounting changes.

For more financial detail see http://investing.businessweek.com/businessweek/research/stocks/financials/ratios.asp?symbol=EQUE.KL

AIRASIA Bhd profit before tax increase 838%-but see these numbers

2007-09-02T17:04:00.000-07:00

From the AirAsia Bursamalaysia announcement of results for quarter ended 30 June 2007:

The Group recorded revenue of RM432 million for the quarter ended 30 June 2007 ("4Q07"), 38% higher than the revenue of RM314 million recorded in the quarter ended 30 June 2006 ("4Q06"). The Group's profit before tax improved by 838% to RM130 million as compared to the restated profit before tax of RM14 million achieved in 4Q06.

From the notes to the accounts:

viii) Reclassification of revenue components
Fuel surcharge, passenger liability insurance and admin fees was previously classified as part of cost of sales. The Group has now reclassified these surcharges as part of revenue. The impact of the reclassification to the revenue component for the previous financial year and preceding year corresponding quarter is RM208.1 million and RM75.6 million respectively.

NOTE THAT NO FIGURE IS PROVIDED FOR THE QUANTUM INCLUDED IN THIS QUARTER'S EARNINGS

ALSO NO EXPLANATION HAS BEEN PROVIDED AS TO HOW ITEMS FORMERLY CLASSED AS "COSTS" CAN NOW BE CLASSED "REVENUE".

5. Unusual items due to their nature, size or incidence
The Group had disposed of 19 interest rate swaps on 12 June 2007 resulting in a gain from the sales of these swaps of RM73 million which is included in other operating income. As of the end of the financial year 30 June 2007, the Group has a total of 41 interest rate swaps.

14. Changes in Contingent liabilities Since the Last Annual Balance Sheet Date
In the previous financial year, the Group had disclosed the potential penalty payable in respect of late payment of certain withholding tax estimated to be RM10.4 million. The Company had applied for the waiver of this penalty and were of the opinion that the waiver application will receive due consideration from the government. During the financial year, the penalty waiver was finalised and settled for RM1 million

Therefore provisions for taxes payable would have been reduced by RM 9.4 million-this also would have contributed to the higher pre-tax profit.

FROM THE CASHFLOW STATEMENT

Cash generated from operations
Interest paid 105,413 ,000

Interest received 100,209 ,000

Yes,both interest paid and interest received was positive.

CEO Tony Fernandes has told THE STAR that the company has about RM1bil in cash and deposits for aircraft purchases, and that's equivalent to eight months with zero revenue.

(http://biz.thestar.com.my/news/story.asp?file=/2007/9/3/business/18762194&sec=business)

However according to the cashflow statement issued the Bursamalaysia :
*CASH AND CASH EQUIVALENTS AT END OF
FINANCIAL YEAR 30 June 2007: RM 5 74,346,000 AFTER receipt of RM 1 ,701,488,000 in term loans.

In the year ended 30 June 2006 the balance was RM 412,907,000 AFTER receipt of RM
1 ,170,932 in term loans.

I wish I could believe Raja Nazrin......but cannot.

2007-08-16T19:08:00.000-07:00

Regent of Perak, HRH Raja Dr Nazrin has said all groups in society must participate in making decisions that affect their lives; and that institutions of governance must demonstrate norms that are fundamentally efficient, productive and just.
http://thestar.com.my/news/story.asp?file=/2007/8/6/nation/18510694&sec=nation

He is being hailed a reformer, a seeker of justice, a defender of the common man & woman's rights etc etc etc.

To this writer at least, HRH 's actions appear to be noblesse oblige - the perceived obligation of those of high rank to be honorable and generous, but while hanging on to their privileges.

2 examples to make the point.

HRH's sister YAM Raja Dato' Seri Eleena Azlan Shah45, is a director and major shareholder of Generasi Setia (M) Sdn Bhd, which is a major shareholder of Gamuda.

Her (and Nazrin's) uncle Y Bhg Dato' Ir Kamarul Zaman bin Mohd Ali, also a director of Gamuda, rose from being Quarry Manager, JKR , to some kind of executive at G.B. Kuari Sdn Bhd, a subsidiary of Gamuda, on 1 June 1990.
http://www.gamuda.com.my/GAMUDA03/corporate_bod_05.htm

Gamuda owns most of Litrak, and between them both companies operate toll roads that provide operating margins and cash flow that can rival most gaming companies.
Ordinary people who need to work to earn a living are contributors to this wealth creating machine par excellence.
It was also the EPF savings of this group that was used to finance LITRAK-see
http://ronnieliutiankhiew.wordpress.com/2007/01/05/the-sun-reporters-sacked-for-exposing-litrak-in-1999/

Subsequently, cheap finance and high tolls -a quasi tax - is what has contributed to Gamuda and Litrak's growth in value-and YAM Raja Eleena being ranked amongst the richest in the country.

Then , there is the case of Forthwave Consulting Sdn Bhd, a company headed until recently by another royal, one Zara Davidson-HRH's wife.(see http://www.aseansources.com/en/FCS0015,
AND http://www.malaysia-today.net/blog2006/beritankom.php?itemid=4503)

Top student from Nottingham, a university made famous in Malaysia because her father-in-law, DYMM Sultan Azlan Shah studied there.

In any case, Forthwave appears to be making its name not for its technical expertise but via that fine old tradition of being granted contracts that are then farmed out to foreign companies with the expertise:

In Malaysia, Subsurface Consultants & Associates, LLC (SCA) has two agencies representing our services, Forthwave and PT SEA. Forthwave is a subsidiary of one of the largest IT service providers in Malaysia. They represent SCA for all our consultancy
services in Malaysia and the surrounding SE Asia area. Our arrangement
with Forthwave is now going into its second year. Last year through the
efforts of SCA and Forthwave, SCA won and completed our first
significant deepwater study with Petronas in the Sabah-Sarawak area.
Several co-authored papers between SCA and Petronas resulted from this study.http://www.scacompanies.com/Q106/Q106news.pdf

AirAsiaX/FAX's financial position-in Tony Fernandes & AirAsia's own words

2007-08-12T17:59:00.000-07:00

Point 1 -FAX,which now plans to operate a long haul service, could not run a rural air service for want of funds

Financial considerations were the primary consideration of MAS in dealing with FAX, despite this being a national service operation. When FAX was not able to fully meet payments due to MAS as FAX had yet to receive sufficient funds from the Government, critical spares were held back by MAS. .....when FAX was not able to completely acquire MAS' inventory of spares for turbo-prop aircraft due to lack of available capital, MAS physically transferred the spares to Subang, Kuala Lumpur – further compounding the problem of access to spares."

Azran Osman-Rani
Chief Executive Officer
Fly Asian Xpress Sdn Bhd

From http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_cece9f2e-cb73c03a-9fdee000-3f717de2

Point 2-Apart from the funds that are said to have been provided by Richard Branson/Virgin and perhaps AirAsia at a later date, which may amount to perhaps USD 16 million in total, FAX/AirAsiaX has no money

Last Friday Tony Fernandes told THE STAR:

Apart from the 20% stake sale to Virgin, FAX would sell an additional 20% to AirAsia Bhd and that would mark the first round of fund-raising exercise, capitalising FAX at nearly US$40mil, FAX director Datuk Tony Fernandes told a press conference after FAX and Virgin signed the share sale agreement yesterday.

This statement should be read in light of the admissions stated in Point 1 by Azran Osman-Rani Chief Executive Officer FAX/AirAsiaX.

Point 3-FAX/AirAsiaX cashlow forecasts are not reliable

On 8 August the Wall Street Journal reported:

Commenting on AirAsia's expansion plans, Mr. Fernandes said the airline wouldn't need to raise any capital for funding."We don't have the need to issue bonds or issue stock. Our expansion will be funded by a strong cash flow and long-term loans," he said.

Yet,not 2 days later came the announcement from Fernandes that apart from the investment by Branson/Virgin, AirAsia will also be called upon to invest in AirAsiaX.

Point 4-Cost cutting brought upon by a lack of funds

Malaysia Airlines (MAS) is not willing to put the lives of passengers at risk and wants the 12 aircraft, under dispute in an audit report by Singapore’s Fokker Services Asia Pte Ltd, repaired before it can begin rural air service (RAS) operations(that had been relinquished by FAX).

MAS requested Fokker Services to conduct an audit, the findings of which are being disputed by FAX.

MAS, in its statement, reiterated that one aircraft had been cannibalised of both of its engines, both propellers and had 70 parts missing.
This has been vehemently disputed by FAX which, in a statement earlier, said that over the past 11 months of operations, FAX had to overhaul six F50 engines and four Twin Otters engines, four F50 propellers and three Twin Otters propellers, and two Twin Otters landing gear, among others.
FAX said it did not cannibalise aircraft parts but rather rotated parts from airplanes coming in for maintenance to service those coming out of maintenance.

ALSO SEE:

Fernandes, who has dreamed up all kinds of ways to save money, claims AirAsia is the world's lowest-cost airline. ...... His pilots are trained to land at a later point on the runway and at a slower speed to conserve fuel and reduce wear and tear on tires.

(http://www.time.com/time/magazine/article/0,9171,501040719-662824,00.html)

Then See:

AirAsia in a statement said due to heavy rain and bad weather, its aircraft bound for Kota Kinabalu from Kuala Lumpur skidded lightly off the runway after it touched down at Terminal Two of the Kota Kinabalu International Airport..... passengers and the two pilots suffered minor injuries.

All of the above raises the question of why AirAsia is allowed to fly in Malaysia-for that story see upcoming part 2.

AirAsiaX-now everyone can fly,but where to? Are Virgin, AirAsia guilty of market manipulation?

2007-08-09T17:07:00.001-07:00

Story now at www.sahathevan.blogspot.com
by Ganesh Sahathevan

On 6 August 2007, Malaysia's STAR reported :
It is learnt that Branson, via the Virgin Group, would take up a 20% stake in the airline's operator, Fly Asian Xpress Sdn Bhd (FAX). .......Sources said plans are also in place for the September take-off and the first destination still being speculated could be either Avalon in Melbourne or Brisbane.

In response to that story Virgin's Paul Charles said:
Virgin Group is watching the development of FAX very closely, but I can't confirm the story.

On 8 August the Wall Street Journal reported:
Malaysia's Fly Asian Express Sdn. Bhd., the privately owned carrier launching long-haul budget carrier AirAsiaX, will be profitable in 2008 and start flights at the end of September or beginning of October, co-owner Tony Fernandes said.
"We will start flying at end-September or early October. Our first destination will be Australia, followed by China, India, Japan and South Korea. It depends on the delivery of our planes, but I hope to serve all those destinations in 2008," Mr. Fernandes said.
Commenting on AirAsia's expansion plans, Mr. Fernandes said the airline wouldn't need to raise any capital for funding.
"We don't have the need to issue bonds or issue stock. Our expansion will be funded by a strong cash flow and long-term loans," he said.

However by 9 August the WSJ was reporting:

The Virgin Group plans to announce Friday that it will buy a 20% stake in a low-cost, long-haul Malaysian airline owned by the main shareholders of AirAsia Bhd., Asia's biggest budget carrier.
Virgin will invest about $7.2 million in Fly Asian Xpress Sdn. Bhd., also called FAX, executives at FAX said Thursday. The startup airline aims to adapt the successful low-cost-airline model to long-haul flights now dominated by full-service airlines. The new airline will be called AirAsia X...AirAsia X plans to begin flying as soon as next month using at least one leased Airbus A330. Its likely first destination will be in Australia.

Hence over the last 3 days both Virgin and AirAsia have encouraged market rumours regarding a significant investment, "tie-up", or whatever else one might call it. A main theme in their song-AirAsiaX will fly to Australia-and soon.

Flying to Australia-soon-requires that AirAsia have at least applied for a foreign air operators certificate.
According to the Australian Civil Aviation Safety Authority(CASA), in a response received this morning, 10 August 2007:
CASA has not received an application for a foreign air operators certificate from AirAsia X. Thus we have not assessed this airline for operations in Australia.

FAX may be privately owned but its operations will be an integral part of the Malaysian Stock Exchange listed AirAsia Bhd , controlled by Tony Fernandes.

Bank Negara's reserves at levels which should cause concern.

2007-07-19T17:20:00.000-07:00

Malaysia's reserves of Gold ,Foreign Exchange and Other Reserves including SDR as at 29 June 2007 stood at MYR 339,774,970,225.

67.4% of this amount was financed by deposits from financial institutions which totalled RM
229,099,593,853.

It was a similar asset-liability position that left Malaysia and the Ringgit vulnerable to speculative attacks in 1997.
As then finance minister, " Dr" Anwar Ibrahim was responsible for financing Malaysia's foreign reserves almost entirely out of statutory deposits -- placed at no interest by financial institutions -- at the Central Bank. (for full story by Sahathevan see http://findarticles.com/p/articles/mi_m0BJT/is_24_6/ai_55143627)

To illustrate:

At 30 June 1997 , Gold and Foreign Exchange and Other Reserves including SDR totalled RM
70,705,200,558 ; while deposits from financial institutions totalled RM 61,771,338,858; or 87.3% of the reserves.

However, by 31 December 1998, after Mahathir removed and replaced "Dr" Anwar as finance minister , Gold and Foreign Exchange and Other Reserves including SDR totalled RM 9,438,053,960 , while deposits from financial institutions totalled RM 34,650,553,608; or only 34.84% of reserves.

Nevertheless, by 30 October 2003, when Mahathir left office,
Gold and Foreign Exchange and Other Reserves including SDR totalled RM
165,805,782,524, while deposits from financial institutions totalled RM 94,302,076,338, or 56.87% reserves.

As mentioned, that percentage has now risen to 67.4%,despite the massive oil and gas revenue provided by Petronas.

The problem with an over reliance on deposits from financial institutions as a means of financing the reserves is this : what happens if Ringgit deposits are withdrawn suddenly, thus requiring a draw-down of the statutory deposit to meet at least short-term demand, and there is at the same time an increased demand for foreign currency from depositors wanting to repatriate funds off-shore ? Would not Bank Negara be then supplying the demand for both from the same pool?

The collapse of the Ringgit in 1997 shows us that such a scenario is not fantasy, and recent reports that "Bank Negara Malaysia (BNM) is unfazed by the inflow of what is said to be speculative funds into the country as the bond market has reached a size where it can absorb such inflows and outflows"(see http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_b3486968-cb73c03a-d647d800-d2aa7a39) sound too much like the explanations then governor Ahmad Don use to provide in 1997-98,when he managed to stop himself laughing.