It’s the integrity that counts

It’s the integrity that counts

Since the change in government on May 9,2018, the chief executives of 18 companies under Ministry of Finance Inc (MoF Inc) have been replaced with new candidates. Among the better known MoF-owned entities that saw changes are Khazanah Nasional Bhd, the Employees Provident Fund (EPF) and Kumpulan Wang Amanah Pencen (KWAP).

The lesser-known companies that have seen changes are Mass Rapid Transit Corp Sdn Bhd, Felcra Bhd, Keretapi Tanah Melayu Bhd and Indah Water Konsortium Sdn Bhd. The changes are still happening, with the CEOs of Technology Park Malaysia Corp Sdn Bhd and PBLT Sdn Bhd being replaced on Oct 1 and Nov 1, respectively.

According to the ministry, of the 18 new CEOs, the salaries of five were lower than their predecessors and four higher than the previous person. The salaries of nine were maintained at the same level of the people they replaced.

The cost savings arising from the changes come up to RM87,050 per month, or RM1.04mil per year.

If one were to look at the figures, the cost savings are not much compared to the huge budgets that these MoF companies manage annually. A company such as Felcra has a huge budget, while the EPF handles more than RM750bil for its contributors.

According to the MoF, the CEO salaries of companies under its stable are competitive, but a more important requisite is that the candidate fulfils the fit and proper criteria.

The CEOs of these companies have a huge responsibility. While it is good that there are some cost savings achieved by the new government, sometimes one wonders if it is worth all the effort, considering that the savings are small.

A more important criteria for these CEOs should be their integrity in handling public funds and projects. If they deserve a little more, so be it, as long as it brings greater good for the country and does not result in another 1Malaysia Development Bhd debacle where the CEO earned big bucks but did not stop the blatant abuse of the funds it raised.

Fake it till you make it?THE Economist recently highlighted fake state-owned enterprises (SOEs) in China and how they are misleading creditors into thinking that they have state connections which will be helpful should they run into financial trouble.

“But when trouble arises, the government is nowhere to be found.”

It cites an example in the form of Huarong, a Chinese firm that manages non-performing loans.

The firm put 610 million yuan of China Nuclear Engineering Construction Group’s assets up for sale, comprising property in the Anhui province.

Despite its name, China Nuclear focused on property like several other fake SOEs. The financial magazine writes and adds that the firm also “benefitted” from confusion with a “real SOE”, China Nuclear Engineering and Construction Corp, no thanks to an almost similar name.

Another example is China City Construction Holding Group Co. This company sold 99% of its shares in 2016 to a private investor, and kept calling itself an SOE but has since had a string of defaults, it adds. Closer to home, telco-related company OCK Group Bhd recently announced that it had signed a memorandum of understanding (MoU) with China Information Technology Designing & Consulting Institute Co Ltd (CITC), a subsidiary of China United Network Communications Group Co Ltd (China Unicom) to explore potential collaborations in the telecommunications and technology service sector.

At first glance, investors who read this piece of news may think that OCK has signed the MoU with Chinese state-owned investment company, CITIC Group Corp Ltd. Or even better, it signed on with a China unicorn, the latter being a term used to describe promising, private start-up firms with a value of over US$1bil.

But read closer and it doesn’t mean any of those things.

Whatever the case, investors should always exercise caution.

Read between the lines, do your homework and research and hopefully do not get caught up with anything that is not what it appears to be.

Shareholder fightThe foretelling of “fighting” at the AGM of Seacera Group Bhd was expected. Press reports last week of a fiery atmosphere came true based on video clips that were circulated. These scenes were confirmed by one in attendance that heated exchanges did take place.

The company in a Bursa Malaysia filing says that save for a resolution on the re-election of Dr Zulqarnain Lukman, all resolutions set out in the notice of the AGM yesterday were tabled. Zulqarnain resigned as a director with effect from Nov 4,2019 and not all resolutions proposed were passed. There were a staggering 36 resolutions at the AGM and all were conducted by a poll, and only 15 were carried.

Seacera is a subject of a heated tussle and given the large number of litigations that were announced to the stock exchange leading up to the AGM, much of the friction was foretold.A week ago, it was reported that there would be 21 individuals fighting for board seats at the firm, possibly the highest number in the history of a company this size or any size for that matter.

Seacera, a maker of tiles and a property developer, is not exactly in the pink of health.It is loss-making and yesterday, the Practice Note 17 company announced another financial loss for its last quarter.

What people are fighting for in terms of control of the company appears to be 501 acres of land in Semenyih, Selangor.

According to Seacera, based on a 2016 valuation, the market value of this land is approximately RM786.43mil. Its market capitalisation yesterday was RM149mil and the stock was down 4.6% to 31 sen.

The land, according to a report, may not be fully suitable for development and there could be debt tied to the owners of the debt of the company.

Seacera owns 51% of this piece of land on paper.What transpired at the AGM yesterday with the shoving that was captured on video is not what shareholders need to see. Corporate fights are normal, but there is little physicality involved.

What the company, or any for that matter, needs to show is the exercise of corporate responsibility, transparency and governance. Descending into a fracas should not be part of any corporate boardroom or shareholder meeting.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Business News

CPO futures expected to trend lower on profit-taking next week
Britain looking at temporary measures to alleviate trucker shortage
'Loss and pain': Families testify at Dutch MH17 trial
Oil hits highest in almost 3 years as supply tightens
GLOBAL MARKETS-S&P 500 edges up, European shares slump amid Evergrande fears, US yields rise
Banking on wealth management
Short Position - Opcom, La Nina, Taxing
Going for growth
Sapura Energy in race against time
Ge-Shen hopeful of growth amid challenges

Stories You'll Enjoy