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Accounts: PA fixed, WP got fixed?

In Corporate governance, Political governance on 24/02/2014 at 5:24 am

The usual suspects and other anti-PAP netizens are outraged that Khaw’s ministry has highlighted various concerns regarding the auditor’s report on the financial statements of Aljunied-Hougang Town Council (AHTC) for Financial Year 2012, and Tharman has gotten the Auditor-General to investigate the matter, while no-one in govt is investigating why the PA’s “auditors have been giving an “adverse opinion” on the financial reports from the People’s Association (PA) for several years now.” http://www.tremeritus.com/2014/02/20/breaking-auditors-give-adverse-ratings-to-pas-financial-reports/

I won’t go into the rights and wrongs of the AHTC’s accounts because we will soon know the truth*, except tthat I found it puzzling that Auntie said bar one concern, they were related to handing-over issues. Some were, the others were not, even a cursory glance would have shown her, as it did me (both of us are trained lawyers). Anyway let’s wait for the report, though having witnessed at first hand how the AudG audits govt bodies, WP is in for a nasty report. It is hated and feared by the rest of the govt machinery. It works like the ISD: takes no prisoners. AudG is also very petty.

As to the PA’s accounts, I won’t go into details because the issue is one of consolidating accounts** and the PA had given up its row with its auditor and will be consolidating the accounts that the auditor wanted consolidated effective last yr’s accounts, due soon. It had resisted complying since the auditor raised the issue (“Auditor KPMG noted the omission of the financial statements of the community centres and community clubs”).in the accounts for FY 2001.

The usual suspects should be asking if the fixing of the PA’s accounts (WP Low had raised the issue in 2008 and was told to  Foff http://www.theonlinecitizen.com/2014/02/low-thia-khiangs-question-in-2008-on-pas-adverse-accounts-rating/: there was nothing wrong with the accounts**) and the row over the AHTC’s accounts are linked? Could it be that the decision to fix the way the PA’s accounts are prepared, was done in the expectation that the dysfunctional duo (Auntie and PritamS: remember they are lawyers, not accountants) would have failed to fix the AHTC’s accounts for the second yr in a row. And there could be an opportunity to show the entire WP as dysfunctional? Remember that a chain is as strong as its weakest link, and Pritam has shown us repeatedly that he keeps saying or doing the wrong things***. Or is this line of reasoning (fixing to fix) too cynical or too conspiratorial? Even believing that JBJ and friends really won at Cheng San, or that Ong Teng cheong lost the presidential elections is more believable?

Seriously, in thinking about the row on the audit reports, I hope readers remember the wise words of Low.  TOC reported that Low is also extremely “confident” that none of the Town Council’s funds were lost, and that there was no involvement of any form of illegal payment or transaction.”

WP Low got the issue absolutely right. It’s all about whether any funds were lost, and whether  there was “any form of illegal payment or transaction”, not whether he PA’s or AHTC’s accounts get clean audit reports, ’cause they do the “right” things. Audit reports are very impt, but they are maps not the reality.  The auditor gave Enron a clean audit report. Both are history. 

They should also take into account the following comments:

–  I think overall audit standards are tightening. What passed as ok earlier is not acceptable anymore (unless we have a serious case of casting with closed eyes). Seeing how liable for professional negligence auditors can be, no one is going to ruin their rice bowl any time soon unless they’re really old and ready to be disbarred. (Facebook poster)

As somebody who has been audited many times and qualified as an accountant, I am also breathless with admiration how so many capable and intelligent people can deliver so little value to society. Most big four accountants are capable individuals but put them together and they seem incapable of delivering anything of value to companies.  (A FT reader on a FT article on accountants)

I’ll leave with a wicked tot. Low has said he is “not an accountant”. Remember he said he was “not a private investigator (remember  http://atans1.wordpress.com/2012/05/21/lol-expelling-yaw-took-courage/?). So will he, one day, tell tell us he is not a manager when Auntie’s and Pritam’s dysfunctionality finally causes the WP serious damage, and they have to move on from the WP like Yaw?

*Though I sure if the AudG sides with the MND, the usual suspects and groupies will be accusing AuditorG of being biased. When that happens, I hope they will then stop using AudG’s reports against the govt. Can’t suka suka use favourable reports, not unfavourables. After all, they claim not to be like the PAP govt: who is happy to use TI’s figures when it praises S’pore and slimes it when its figures slime S’pore http://www.tremeritus.com/2014/02/19/dr-ng-condemns-tis-defence-spending-rating-for-sg/. If the government finds TI not to be credible {on defence procurement issues] as Dr Ng has alleged in Parliament, perhaps the government should stop using TI’s rankings and surveys altogether.

For a start perhaps, CPIB could stop using TI’s rankings on its website. Presently, it prominently displays TI’s CPI on its home page [Link]:

**As regards PA’s non-consolidation of grassroots organisations’ accounts, the auditor, PriceWaterhouseCoopers, has qualified the financial statements of People’s Association on the basis that the accounts of the grassroots organisations were not consolidated. PA’s view is that the accounts of grassroots organisations should not be consolidated for the following reasons.

Firstly, the funds in these accounts belong to the grassroots organisations. Secondly, the Government grants and the cost of staff support are already accounted for in PA’s financial statements. Thirdly, the grassroots organisations are operationally self-funding through revenues from activities, courses and donations. Fourthly, the grassroots organisations decide on how their money should be spent for the benefit of the residents. And, finally, proper procurement procedures, financial control and good corporate governance practices apply to the grassroots organisations.

***Think

– his “coalition with the PAP” comment;

– planning footie on PAP MPs’ team:

– silly slip that only a lawyer buruk would make http://atans1.wordpress.com/2012/03/16/c-wps-performance-during-the-budget-debate/

– Hawkergate: http://atans1.wordpress.com/2013/07/25/low-shows-the-usefulness-of-non-action/

DBS doing NS on HDB loans?

In Corporate governance on 13/11/2013 at 4:26 am

If it’s one thing S’poreans who are paying off the mortgages on their HDB flats can agree on, it is that the govt is stretching the truth when it says that HDB mortgage payments are affordable because mortgagors can use CPF money leh. They are not that daft not to realise that it affects their old-age funds. And anyway, it’s always nice to pay less.

So it’s interesting that DBS has a very gd scheme for HDB borrowers. So gd that only the daft wouldn’t apply for it. I’ll let BT explain:

Thousands of HDB homeowners are turning to DBS Bank for a mortgage product that guarantees savings.

Those who took up a POSB HDB loan when it was launched in April could be looking at savings of as much as $1,600 by next month, calculations from DBS showed.

The first POSB HDB loan pilot launch – where homebuyers enjoyed a floating-rate loan with interest capped below the HDB concessionary rate for 10 years – was fully sold.

The bank is now into its second offering, which charges the same rate but for eight years, said Ms Lui.

The current POSB HDB loan charges for the first eight years the three-month Sibor (Singapore interbank offered rate) plus 1.38 per cent, capped at the CPF Ordinary Account rate. The current CPF Ordinary Account rate is 2.50 per cent.

Thereafter, the loan charges three-month Sibor plus 1.48 per cent. The September three-month Sibor is 0.374 per cent.

The HDB concessionary loan now charges 2.60 per cent, which consists of 0.10 per cent plus the CPF Ordinary Account rate of 2.50 per cent. Based on the three-month Sibor of 0.38 per cent, borrowers who switch from the HDB concessionary loan will pay a lower interest rate of 1.75 per cent.

For a homebuyer refinancing from the HDB in April, based on a loan of $400,000 and 25-year tenor, the potential savings over six months amount to $1,684.

And should interest rates rise over the next eight years, DBS guarantees that it will be capped at the CPF Ordinary Account rate of 2.50 per cent or 0.10 per cent below the HDB concessionary rate.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={563079109-19246-5011258124}

Nice to see DBS returning to its roots as “Development Bank of S’pore”., and using the POSB brand which some Foreign Trash CEO tried to get rid off. Fortunately, he went before the POSB brand went. Gd work ,New Citizen Gupta.

But if DBS is doing gd, is this mortgage making money, on a risk-adjusted basis, for DBS? How come OCBC and UOB don’t have similar schemes? Maybe DBS is helping out in constructive nation-building? Err what about shareholder value for non-controlling shareholders and gd corporate governance?

Never mind, I don’t own DBS shares.

Retail punters suffer ’cause SGX, MAS dysfunctional?

In Corporate governance, Malaysia on 29/10/2013 at 4:53 am

I waz surprised at the swiftness that SGX allowed Asiasons Capital, Blumont Group and LionGold Corp to resume normal trading, as I had expected a prolonged period under “designated trading”, allowing me time to think about and investigate Asiasons. (My initial tots on Asiasons).

My immediate reaction waz, “Shld have had the balls to buy at 12ish cents*” with cash upfront. My next reaction was “How come SGX come to conclusion everything halal so fast?”. My third tot was, “Wonder if SGX and punters are going to repent?”.

A few days after stocks cheonged following the lifting of trading restrictions, SGX and MAS announced investigations. On 26 October 2013, BT reported JUST as shares of Asiasons Capital, Blumont Group and LionGold Corp shares appeared to be clambering out of their doldrums, news of the Monetary Authority of Singapore’s (MAS) investigation into their trading activities dragged them down again.

“MAS and the Singapore Exchange (SGX) are conducting an extensive review of the activities around these stocks,” MAS said in a statement yesterday. “This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly.”

All three stocks slid to their lowest level in a week as skittish investors took profit. Asiasons shares fell 18 per cent to 19 cents, Blumont stock dropped 19 per cent to 16 cents and LionGold shed 15 per cent to 25 cents by the close of trading yesterday. The three counters were among the five biggest percentage decliners on the SGX.

Why couldn’t the plans to investigate and the lifting of trading restrictions be announced at the same time? If necessary, the latter could have been delayed a few days, while SGX and MAS deliberated? No wonder MAS MD got only a B rating compared to his M’sian and Pinoy counterparts (A) http://www.tremeritus.com/2013/10/27/head-of-mas-ravi-menon-only-gets-a-b-grade/. Shamefully that S’porean is graded lower than Pinoy or M’sian.

And do remember that FTs hold the top two posts at SGX.

Anyway, I’m not complaining. Gives me time to think about and investigate Asiasons. But lifting the trading restrictions (implying everything halal) and, a few days later, saying that there were going to be investigations,  ain’t fair to punters.

SGX has publicly said it wants retail investors in the market. Great way to treat them. But then there were S-Chips. I remember the boast by one Larence Wong of SGX (now departed), in the early noughties, that only chinese companies with accounts certified by int’l auditors were to be listed. They were, but looked what happened? The perils of ang moh tua kee.

Related post: http://finance.yahoo.com/news/singapores-penny-stock-mystery-increases-210030112.html

*Closed at 0.147 yesterday.

Freight Links loaned $45m to CHC months after issuing bonds

In Corporate governance, Humour on 29/09/2013 at 10:28 am

A sharp-eyed TRE reader wrote to TRE as follows

Straits Times article dated 27 Sep reported on a $45 million new loan taken out by City Harvest Church (CHC).  The loan was not taken from any financial institution but a logistics company listed on the Singapore Exchange called Freight Links Express Holdings (FLEH).

FLEH’s core business is in freight forwarding.  To offer a loan of this size suggests its core business may have changed.  Have shareholders been notified?  At 8 per cent per annum, the interest charged by FLEH is also quite high.  But I guess CHC is desperate and will grab anything that comes along because no financial institution will offer a religious organisation a $45 million loan to purchase properties based on expected future ‘earnings’ from worshippers.
What is interesting is that FLEH had managed to raise $100 million in a Fixed Rate Note issue bearing an interest rate of 4. 6 per cent  just 4 months ago. http://www.freightlinks.net/MediaRelease/Press54.pdf  These IOUs are normally used for general corporate purposes and financing investments related to its core business, certainly not for loans. 
Business wise, it certainly does make sense to be earning 8 per cent while paying only 4.6 per cent without taking any risk.
However, this will set a precedent for every other listed companies on the exchange to stray from their core business.  Should this be allowed by the Singapore Exchange?
 
Phillip Ang
Surprising that our journalists from our “constructive”, nation-building media did not raise this corporate governance issue. Waiting for govt media briefing or telephone call to tell them what to say?
While I’m sure the transaction is perfectly legal, there is the governance issue of whether a logistics provider should become a lender to a church, albeit for a sum which is “peanuts” in the context of its financials. And there is the issue of the bond issue: normally used for general corporate purposes and financing investments related to its core business, certainly not for loans.
Restores my faith in the quality of people who read and post on TRE. Glad to see that not all readers and posters are “PAP are bastards” ranters. Maybe, they moved on to TOC or TRS?

Why preacher boy’s congregation will follow him to hell & back

In Corporate governance, Internet on 13/09/2013 at 6:01 am

(Or “Don’t be jealous that Kong Hee’s got it all leh”)

Woody Allen* once said that believing in God would be easier if He would show Himself by making a large deposit in a Swiss bank account in the director’s name.

No wonder Kong Hee (RI boy, like that thieving monk, and that ex-bishop (Methodist) of S’pore) is able to convince many people that prosperity gospel works: he is living proof of the $ that it brings. He is married Sun Ho**, who he said has rich, filthy rich, parents***. And he has Wahju Hanafi, as God’s personal ATM on earth:

– An Indonesian businessman and member of the City Harvest Church (CHC) … cast the business of saving souls in terms of a return on investment.

Justifying his $1 million-a-year donation to CHC for its Crossover Project – the church’s way of evangelising through pop music – Wahju Hanafi said: “If I spend $1 million and we win 138,000 souls, that means every soul is worth less than $1,000. To me, that is a good buy.

“I’m a businessman, and for every investment that I (make), I have to see a return. To me, in this case, the return is the souls that we are winning. If (we) are not winning souls, then I will probably pull back my money.” (BT report)

THERE was talk of love gifts like a Sentosa condo, expensive weddings and sponsorships so pop singer Ho Yeow Sun could receive bonuses.

God’s been putting serious money into his bank account. “If him, why not us?”, believers tell themselves. They got a point.
Now to the serious stuff.

First, the way the evidence is heading seems to indicate, to me, remember I’m a trained lawyer, that it was one big balls-up by the CHC people. They were trying to avoid paying tax or trying to help donors avoid tax. Whether they crossed the line, and were guilty of the offences charged remains to be seen. Anyway they didn’t have the benefit of this advice: Avoiding tax is not a fiduciary duty for UK company directors, opines a top UK law firm recently. http://taxjustice.blogspot.sg/2013/09/a-legal-opinion-on-directors-duties-on.html

The general principles of the opinion apply here too. CHC is registered as a company.

Next, much has been said by the magnificient seven bloggers and other lesser mortals about the intolerance of the PAP govt of views that do not fit the “right” narrative.Sadly, netizens too can be be a pretty intolerant bunch, reminding me of the biblical passage: “He that is without sin among you, let him first cast a stone …”.

Here http://vivitelaeti.blogspot.sg/2013/08/kong-hees-spokesman-on-english-language.html the blogger makes fun of a CHC member’s and PR flack’s “bad” grammar because of her undoubted bad manners.

But grammar and bad manners aside, she has a very serious, valid point, on the use of the word “sorry”.As someone who is a lapsed Methodist (into meditation nowadays), and who disagrees with the prosperity gospel believers that worshiping God results in a bigger bank balance, I never viewed the clip in qn in the way netizens spreading it, or commenting on it, were trying to frame it.

I read it as him telling fellow believers that their God was “comforting” him for trials inflicted by their loving God. Waz wrong with that? It’s basic Christian doctrine. But it doesn’t fit the dominant internet narrative that religious people are stupid, irrational and intolerant.

Methinks also there is a lot of jealousy out there on the internet. It is not only hostile territory for the PAPpies (rightly so), but also for successful people. There seems to be a “tall poppy syndrome” on the internet. Google the term if you are a “green-eyed “char tou”, envious of others.

The vileness of the attacks on pastor boy and CHC are gd examples (Auntie’s different as she can’t sing or act). I’ll blog on other examples. Juz because the PAPpies do DRUMS to the beat of RAVII****, doesn’t mean we have to follow them. Be mean by all means (this blog believes in being mean, provided there are reasonable grounds to be mean) but don’t do the RAVII DRUMS.

Use this method (used successfully by a secret police force) to evaluate the reasonableness of data before being mean.

Other CHC related posts

http://atans1.wordpress.com/2012/07/16/chc-missing-a-trick/

http://atans1.wordpress.com/2012/06/29/chc-charity-denial-persecution/

http://atans1.wordpress.com/2012/07/13/chc-a-prophecy/

http://atans1.wordpress.com/2012/07/06/render-to-caesar-the-things-that-are-caesars/

*A stockbroker is “Someone who invests your money until it’s all gone.”

**Who in certain poses and when viewed from certain angles can be pretty gorgeous. But not in China Wine or when she leaves her hair black.

***But not rich enough to indulge her in her singing ambitions. Or they know she can’t sing or act?

****Recriminations, Accusations, Vilifications, Insinuations & Insults

Performance-related pay: Not applicable to CEOs and minsters

In Corporate governance, Political governance, Public Administration on 11/09/2013 at 5:32 am

The financial industry especially investment banking and broking gets a bad name because of the outlandish bonuses for the rainmakers or the swinging big dicks i.e. top traders and salesmen. But it’s abt income generated whether thru fees, commissions or trading profits. Example: 46%  of the department of Merrill Lynch’s Global Wealth & Investment Managment revenue comes from only 21% of its top-producing brokers, about 2,500 people. http://www.reuters.com/article/2012/05/09/us-merrill-brokers-elite-idUSBRE84817N20120509

Of course there is moral hazard: losses are borne out to shareholders and taxpayers. And sure there are issues of cost and risk allocations especially the cost of capital used but there is a link between productivity (measured here by revenue) and pay.

BUT

There is no correlation between FTSE 100 bosses’ pay and the performance of the companies they run, a BBC report reveals.

And

C.E.O. Pay Keeps Climbing Shareholders have sounded alarms over executive pay and achieved victories at companies like Citigroup and Hewlett-Packard. But despite the noise, the median pay of the nation’s 200 top-paid C.E.O.’s was $14.5 million last year, an increase of 5 percent from the year earlier, according to a study conducted for The New York Times by the compensation data firm Equilar.

“One might reasonably conclude that the senior management of a bank cannot possibly know what is going on at the level of the individual traders; banks are just too complex. Fair enough. But one cannot have it both ways. If bank executives cannot be held responsible for all the shenanigans that go on underneath them, nor can they be responsible for all the profits that result. A lot goes on at a bank that is entirely out of the CEO’s control. So when Barclays makes a bumper profit, why should the CEO get an outsized bonus? The profits may be down to luck, or to rising markets, or to trades that the CEO cannot possibly be aware of.”

So the fallacy of paying ministers, CEO-like salaries is based on the wrong premise. CEOs’ pay are not performance-related.

Then, there is another problem with performance-related pay for ministers. This time the issue of collegiality. Everyone is more or less paid the same to promote team-work and shared responsibility. Remember collective cabinet responsibility is a political convention.

Tharman, Teo, Ng, Khaw, Shan, Kee Chui and now VB* (notice that the Indians are punching above their weight** despite only constituting 7% of the population) have to carry the likes of Yaacob, Lui, Tan, Fu, and Hng Kiang. In the cabinet, the salary differentials are very narrow according to PM, so the gd performers don’t get that much more. But thank god for small mercies. We once had to pay for SM Goh, Raymond Lim, DPM Wong, George Yeo, VB (not cut out for “compassion” jobs but gd at “rational” tasks?) and Mah, in addition to the present bunch of non-performing cabinet ministers who were then in cabinet. And wider still what abt the Speaker, and jnr ministers and parly secs?

Finally there is the point raised by this TRE reader? Can ministers who are ex-generals earn that much in the private sector http://atans1.wordpress.com/2012/01/25/refute-this-question-pap/

*”Haze? What haze?” since he shouted “Rape!” at the Indons. I mean PM said haze was returning: he was wrong; as usual. I mean the haze season is ending. Related post: http://atans1.wordpress.com/2013/07/05/haze-pm-silence-is-not-a-solution/. And he doing something about the flooding at Orchard Rd and now an expressway: listening to the engineers who have advocated spending money on flood prevention projects. Yaacob stuck his head under sand under the water, like what he and his sis did when LKY uttered his Hard Truth about the Malays, muttering something about “worse case scenario”. His sis was there when LKY made the remarks. It was left to PM to sort dad out. http://atans1.wordpress.com/2012/02/10/state-of-the-pap-my-light-hearted-analysis-based-on-gossip-heard/

**Judged by relative results

Norway’s SWF: transparency & performance not exclusive

In Corporate governance, Financial competency, GIC, Temasek on 15/07/2013 at 5:09 am

From FT

Transparent, yet doing well.So large it owns an average 1.25% of every listed company in the world, or 2.5% of every European listed company.

Temasek, GIC and govt can learn from Norway? Pigs will fly first, I suspect.

Update two hrs after publication:

Unlike Temasek, it ain’t big on Chinese banks

Temasek owns big chunks in three out of four China’s major banks

– 2% of Bank of China

– 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

http://atans1.wordpress.com/2013/07/02/time-to-worry-about-temaseks-strategy-on-chinese-banks/

BTW

Temasek has stakes in three out of the four biggest Chinese banks. It therefore has stakes in the world’s largest, fifth and 9th largest banks. It doesn’t have a stake in Agriculutural Bank, the 10th largest.

Why SIAS should sit down and shut up

In Corporate governance, Financial competency on 28/06/2013 at 7:04 am

So long as shares go up, investors don’t care about corporate governance

The Trade: In Shareholder Say-on-Pay Votes, More Whispers Than Shouts The Dodd-Frank Act required shareholder approval of executive pay packages, but investors don’t seem to care about pay if their stocks are up, says Jesse Eisinger of ProPublica.

DEALBOOK

Splitting the CEO and Chairman roles: It’s complicated …

In Corporate governance, Financial competency on 21/04/2013 at 6:20 am

if the firm is having performance problems; it’s not so helpful if everything is running smoothly. Our study showed that CEO-chairman separation tends to reverse a company’s performance: Low-performing firms benefit from a separation event, while high-performing firms suffer.

It also matters how the firm chooses to separate its top jobs. For the company to see this reversal of fortune, it has to go through what we call a “demotion” separation, whereby the CEO remains the same, but a new, independent chairman is appointed to oversee him or her.

http://www.businessweek.com/articles/2012-11-01/splitting-the-ceo-and-chairman-roles-it-s-complicated

Why S-Chips no hew our laws

In China, Corporate governance on 26/03/2013 at 5:46 am

Chinese no hue US laws.

Ned L. Sherwood won a proxy contest with the ChinaCast Education Corporation, an education company based in China that is incorporated in the United States, but the ousted executives subsequently transferred all the company’s valuable Asian assets, leaving Mr. Sherwood and the US public shareholders with nothing but a lawsuit in China. The deal highlighted the risks of investing in Chinese companies.

AND

Now some distressed debt investors get to find out what exactly it is you buy when you buy American-issued debt in a company incorporated in the Cayman Islands and doing business in China. I suspect the answer will be “not much.” http://dealbook.nytimes.com/2013/03/22/chinese-solar-giants-bankruptcy-presents-a-test/?nl=business&emc=edit_dlbkpm_20130322

But investors still buying these bonds.  http://blogs.reuters.com/breakingviews/2013/03/22/exposed-bondholders-suffer-solar-burns-in-china/

Citi sees shareholders* no ak, ignores their wishes

In Banks, Corporate governance, Temasek on 07/03/2013 at 5:37 am

Citigroup Makes Preparations for Profit-Sharing Plans Executives of Citigroup “stand to collect $579 million under profit-sharing plans that include the one shareholders voted against last year. The lender booked a $246 million expense in 2012 tied to the plans, adding to $285 million for the previous year and $48 million in 2010, according to regulatory filings,” Bloomberg News reports.

Charles Peabody, an analyst with Portales Partners LLC in New York, said the payouts are difficult to justify given last year’s shareholder rejection. Peabody, who told clients in a 2011 note that he was “dismayed” by the lack of stringent financial thresholds in that year’s plan, said today that Citigroup hasn’t done enough to tie pay to performance.

“The compensation plan was a travesty,” said Peabody, who has an underperform rating on the shares. “Citi’s board and management team continue to make a mockery of shareholder, political and regulatory demands that compensation reflect performance.” …The profit-sharing payouts are on top of annual salaries and bonuses granted to senior executives …

… Citigroup’s use of pretax profit to grant awards “sets the bar too low,” said Hodgson, the compensation analyst. “They’re not looking at anything else apart from pretax income, which is just not a good enough measure of a bank’s performance.”

*GIC still has a slug of Citi

Asean round-up

In Casinos, Corporate governance, Indonesia on 23/02/2013 at 6:49 am

The Philippine unit of Macau casino company Melco Crown Entertainment Ltd  said on Tuesday it plans to sell up to 1 billion shares as it prepares to develop a $1 billion casino-resort project with local partner Belle Corp.

Melco, run by Australian billionaire James Packer and the son of Macau gambling tycoon Stanley Ho, bought a 93% in Manchester, a formerly illiquid stock with investments in pharmaceutical and real estate businesses. Melco paid Manchester shareholders 1.3 billion pesos for the backdoor listing.

Melco and Belle, controlled by the Philippines’ richest man, Henry Sy, formalized their partnership in October.

Belle plans to build an integrated entertainment resort complex called Belle Grande Manila Bay, which features a 30,000-square-metre casino in a sprawling gaming complex being developed near Manila Bay. Melco will operate the casino.

There are three other groups with casino licences in the Philippines.

Financier Nathaniel Rothschild has lost his bid to oust the current board of coal mining giant Bumi, the company he helped to found.

Chairman Samin Tan survived a vote to remove him but informed the board he was stepping down.

Mr Rothschild had wanted to rejoin the company and expel 12 of the 14 board members, including the chief executive and chairman.Allegations of financial irregularities at Bumi’s key Indonesian operating subsidiary, PT Bumi Resources – in which it owns 29% alongside the Bakrie family – first emerged in September 2012 , after Mr Rothschild received information from a whistleblower.

Thailand’s economic growth exceeded expectations in the last three months of 2012 as it continued to recover from the previous year’s devastating floods.

Gross domestic product surged 18.9% in the October-December period, from a year earlier. Most analysts had forecast a figure close to 15%.

Compared with the previous quarter, the economy grew by 3.6%. But inflation is a concern.

Asean round-up

In Corporate governance, Indonesia on 26/01/2013 at 5:52 pm

Problems Chinese and British investors face.

Chinese investments in Burma

U/m extracted from BBC report:

– China has nearly $14bn of interests in Burma – one third of all foreign investment in the country

– About US$13bn of that has been invested since 2008

– Most investments are in hydro-electric power, oil and gas, mining, jade and teak

– Critics say a US$2.5bn project for twin oil and gas pipelines from the Bay of Bengal to western China will provide China with cheap energy while Rangoon continues to suffer power cuts

– In 2011 Burma halted a hydropower project, the Myitsone dam on the Irrawaddy river, which would have created a reservoir bigger than Singapore.

– There is a major row between villagers and a mining project that the Chinese have an investment in. The copper mine, is a joint venture between China’s Wanbao company – a subsidiary of the arms manufacturer, Norinco – and the business arm of the Burmese military,People have badly hurt protesting against the US$1bn expansion of thr copper mine.

Corporate governance row continues in Indonesia

Coal miner Bumi has said it is unable to substantiate claims of potential financial and other irregularities at its Indonesian operations.

Bumi is facing a battle for control after agreeing to a shareholder vote that will decide the future of the majority of its board members.The vote will take place in February, at a date to be named.

Nathaniel Rothschild, co-founder of Bumi, had demanded the vote in an attempt to return to the firm’s board. Mr Rothschild wants to oust 12 of the 14 board members and bring in new ones in an effort to turn the firm around.

He had quit the board last year amid a row with Indonesia’s Bakrie family.

Bumi owns a stake in key Bakrie assets and there have been tensions between the two over potential irregularities at one of the Bakrie firms.

The dispute revolves around Bakries’ Indonesian firm PT Bumi Resources, in which Bumi owns a 29% stake.

Mr Rothschild had called for a radical clean-up at the firm in 2011, leading to relations between the two being soured. Last year, Bumi began an inquiry into what it said were “potential financial and other irregularities” at the firm.

Then, the Bakrie family offered to buy back its assets from Bumi for an estimated $1.4bn (£870m) and split from the firm.

However, Mr Rothschild said the proposal was “not in the interests of minority shareholders” and resigned from the board.

The deteriorating relations between the two key shareholders have stoked fears about the future of the firm and hurt its share price. Its shares have plunged more than 65% in the past 12 months.

Bumi has also been hurt by a drop in coal prices, which has hurt its earnings and forced it to review its expansion plans.

Indons no “hue” UK governance rules

In Corporate governance, Indonesia on 28/12/2012 at 5:58 am

UK Takeover Panel is asking questions of Bakries and another Indon investor in Bumi for time being can only vote 29.9% of their shares.

http://www.guardian.co.uk/business/2012/dec/19/nat-rothschild-bumi-resume-conflict

 

Corporate governance Indon style cont’d

In Corporate governance, Energy, Indonesia, Uncategorized on 14/12/2012 at 6:00 am

The  Bakrie Group said this week some documents used to justify an investigation at Bumi Resources PLC were stolen or accessed by hacking.

“Some of these documents appear then to have been ‘doctored’ to give a purposely misleading impression of a number of business transactions at Bumi Resources,” a Bakrie Group spokesman, said on Dec. 10. The Bakries plan to submit a report to U.K. police and regulatory authorities, while Indonesian police are probing the hacking complaints, Fong said.

Nathaniel Rothschild described the allegations as a “desperate attempt to divert the inquiry” by the Bakries and Chairman Samin Tan. He said e may seek to remove the board of the coal venture he founded with Indonesia’s Bakrie family in the coming weeks because it has failed shareholders.

http://www.bloomberg.com/news/2012-12-12/bumi-seeks-to-end-ties-with-bakries-as-von-schirnding-named-ceo.html

FTs running SGX wanted this turd

In Corporate governance, Financial competency, Uncategorized on 11/12/2012 at 6:40 am

Earlier this year F1 annced that it would list here. It then pulled back its listing citing market conditions. This could have been true as markets were volatile when it pulled its IPO. But F1 is now shown to be in one big legal mess.

On its face, the investment by CVC Capital Partners in Formula One seems like a winner. But thanks to recent lawsuits, “this enormously rewarding investment may now be in jeopardy,”Steven M. Davidoff writes in the Deal Professor column. A firm that was a competing bidder for Formula One, Bluewaters Communications Holdings, recently sued CVC, the bank BayernLB and Bernie Ecclestone, the Englishman who built the racing business. The claims are over a payment that has already been a source of legal headaches. Bluewaters says the payment was to “steer the sale of Formula One to CVC,” Mr. Davidoff writes, and the firm is “claiming at least $650 million in damages, the lost profit it would have earned had it bought Formula One.”

Well investors and S’pore have been spared this dog with fleas. No thanks to the CEO and COO of SGX, FTs all. And they are advertising in FT, six other posts hoping to get more FTs to keep them company.

And this despite S’pore slipping further down the IPO league tables, with KL at 5th place and HK at 4th. There are no FTs in KLSE.

Meritocracy’s feet of clay: Ong Ye Kung

In Corporate governance, Political economy, Political governance on 10/12/2012 at 5:29 am

(Update on 3 January 2013: He has joined Keppel Gp, a TLC, and not as expected his father-in-law’s property company. I’ll be blogging on this next week. Want to try to find out if his in-laws scared that their workers’ will go on strike or be unhappy if he joined them. I mean his record at SMRT/ NTUC not too good.)

Our nation-building constructive media are ignoring the white elephant in the space where of the circles of TLCs/GLCs, PAP, NTUC and the civil service meet: sometimes also known as S’pore Inc.

Once upon a time, Ong Ye Kung, was S’pore Inc’s poster boy of meritocracy.

Just in April 2011, before the May GE, our nation-building constructive media praised him as an example of meritocracy at work. Son of a Barisan Socialist MP (and no friend of one LKY), he was a scholar* who rose to a senior civil service post**, then became a senior NTUC leader, and then a PAP MP candidate. It was whispered that he was Zorro Lim’s anointed successor as NTUC chief; and was tipped by ST as a future candidate for ministerial office. He did became the NTUC’s Deputy Secretary-General in June 2011.

But by then his slave worker drawn chariot had gotten stuck in the mud . He was a member of George Yeo’s losing Aljunied GRC team. Worse was to follow in 2012: the wheels came off his chariot of gold and ivory and he was thrown-off, and cast into the darkness and mud and became a person that the constructive, nation-building media knew not.

Earlier this year, SMRT’s S’porean drivers made known publicly their unhappiness over pay proposals that had his endorsement as Executive Secretary of NTWU (Nation Transport Workers’ Union). As he was also a non-executive director of SMRT, if he were an investment banker, a US judge would have rebuked and censured him for his multiple, conflicting roles.

Then he resigned, effective last month, from NTUC to “join the private sector”.

In perhaps a farewell, good-riddance gesture, FT PRC workers went on strike (illegally) and we learnt:

– they lived in sub-standard accommodation (SMRT admitted this);

– unlike most SBS FT PRC drivers, most of SMRT’s PRC drivers were not union members; and

– Ministry of Manpower reprimanded SMRT for its HR practices.

All this reflects badly on Ong: NTUC’s Deputy Secretary-General,  Executive-Secretary of NTWU and SMRT non-executive director. And on the system that allowed him to rise to the top. After all his ex-boss said the following reported on Friday, which given Ong’s multiple roles in SMRT, can reasonably be interpreted as criticism of Ong:

In his first comments on the illegal strike, which saw 171 workers protesting over salary increases and living conditions, the Secretary-General of the National Trades Union Congress (NTUC) said the labour dispute “shouldn’t have happened” and “could have been avoided”. [So where was Ong: looking at his monthly CPF statements and being happy?]

NTUC is thus reaching out to SMRT’s management to persuade them “to adopt a more enlightened approach to embrace the union as a partner”, he added. [Hello, NTUC's Deputy Secretary-General was on SMRT's board, so what waz he doing?]

Mr Lim, who was speaking to reporters on the sidelines of the Labour Movement Workplan Seminar, cited the example of SMRT’s rival SBS Transit where nine in 10 of its China bus drivers are union members. Only one in 10 of SMRT’s China bus drivers are union members, according to union sources. [So, why didn't Ong advise SMRT to help unionise these FTs, and if he did, why didn't NTUC push harder ehen SMRT refused?]

SBS Transit’s management “recognised the constructive role of the union”, while union leaders “played the role of looking after the interests of the drivers”, said Mr Lim.

“And as a result … they work very closely as one team, it’s a win-win outcome. In terms of how workers are being treated and respected, how management are responsive, how they work together, I think it’s a kind of model that we ought to see more and more in Singapore.” (Today)

Apparently, Ong is supposed to join his father-in-law’s property development business: but with this revelations, it should come as no surprise if his in-law’s family has reservations about him: he might mismanage and upset the workers. Property development companies are fragile because of their leverage: they can’t afford executives who can’t execute.

And if anyone is wondering about the origins and meaning of the term “feet of clay”:

Thou, O king, sawest, and behold a great image. This great image, whose brightness was excellent, stood before thee; and the form thereof was terrible.

This image’s head was of fine gold, his breast and his arms of silver, his belly and his thighs of brass,

His legs of iron, his feet part of iron and part of clay. (Daniel 2:31-33)

And whereas thou sawest the feet and toes, part of potters’ clay, and part of iron, the kingdom shall be divided; but there shall be in it of the strength of the iron, forasmuch as thou sawest the iron mixed with miry clay.

And as the toes of the feet were part of iron, and part of clay, so the kingdom shall be partly strong, and partly broken.

And whereas thou sawest iron mixed with miry clay, they shall mingle themselves with the seed of men: but they shall not cleave one to another, even as iron is not mixed with clay. (Daniel 2:41-43)

…………………….

*From 1993 to 1999, he was in the then Ministry of Communications, where he helped develop the Land Transport White Paper and was part of the team which established Singapore’s Land Transport Authority. Taz right, he was there at the beginning of the great SMRT cock-up.

**He was the Principal Private Secretary to one Lee Hsien Loong, then became the CEO of the Singapore Workforce Development Agency.

Olam: Snake bites itself

In Accounting, Commodities, Corporate governance on 06/12/2012 at 10:00 am

Opps looks like Olam tried to be too clever by half. By calling a rights type issue but not answering two of Muddy Point’s questions (that it is spending lots of $ on lousy investments and the restatements), investors have decided to sell given that there will a lot more debt, at expensive prices, a possible dilution, and that Muddy Waters might just be right.

Then there is the cred of management: saying it had lots of cash but then calling yet another bond issue. And having to retract a statement on the approach to Temasek.

In such a confused situation, investors might as well sell esp with the year end in sight.

And on a technical issue: leaving the warrants to be priced tomorrow was asking for trouble.

All in all, management and its investment banks have not covered themselves in competency.

Update:  “The latest Temasek-backed transaction raises significant issues, as it is extremely expensive debt and equity capital, capital that Olam spent a week telling the market it didn’t need,” said Dee. “Muddy Waters is not the issue here, it is Olam’s strategic and financial decisions that have brought this situation to a head.”

Olam: Snake confuses mongoose

In Commodities, Corporate governance, Temasek on 04/12/2012 at 5:58 am

Olam proposed an underwritten rights issue of US$750m in principal amount of 6.75% bonds due in 2018, along with 387.4 million free detachable warrants. The issue price of the bonds will be 95% of the principal amount and the gross proceeds from the issue of the bonds are US$712.5 million. Terms of bond are generous.

Olam said the transaction was fully backed by  Temasek which owns a 16% stake in the company. Temasek’s commitment “is a very strong, decisive action (for investors) not to have any worries about any of the allegations,” Olam’s CEO said.

The issue is underwritten by four major bank creditors: Credit Suisse, DBS, HSBC and JP Morgan. Again another sign of confidence.

So Temasek and the banks are onside. Goes without saying that the Indian conglomerate controlling Olam will subscribe for its share: It would, wouldn’t it?

And the shortists will have to cover their positions as investors recall their shares to make sure they get their rights.

Yr move, mongoose.

PS (at 8.50am): Gd counter by snake (must be King Cobra) to offer to pay for credit rating. Ang Moh Kaws must never underestimate Indians.

Update (1.15pm)

Shares of Olam climb more than 8%

Olam: Mongoose bites snake

In Commodities, Corporate governance on 03/12/2012 at 7:25 am

Muddy Waters offers to pay for Olam to get debt rating. It is a cheeky response to Olam’s “shock and awe” response (constructive, nation-buildingST’s description) to its allegations.

Wonder what excuse Olam will give when refusing to accept offer? After all Temasek, its investee, has a debt rating. And it is a SWF

Wonder what Olam’s banks’ will think if it rejects offer?

 

Olam: Ang Moh Kaw bites

In Commodities, Corporate governance on 28/11/2012 at 5:21 am

It’s been over a week since  Muddy Waters made allegations about the accounts of Olam. Since then Olam has come out swinging, refuting the allegations and suing.

Yesterday evening, the report was made available. Most of the issues have been flagged by analysts earlier. But there are issues about the restatements of accounts that don’t affect profits and capex that need addressing by Olam.

Remember Temasek owns 16% of Olam. So it too will be studying the report.

Indonesia: Fight connections with connections

In Corporate governance, Indonesia on 08/11/2012 at 6:48 am

Citi: Last dog in the race

In Banks, Corporate governance, GIC on 23/10/2012 at 5:15 am

http://www.businessweek.com/articles/2012-10-18/a-daunting-to-do-list-for-citigroups-new-ceo#p1

And we own a big chunk of it still. ((((((

FT’s banking editor suggested that it could be split five ways: “into an equity and fixed-income trading entity; an advisory platform; a US retail bank network; a global trade finance shop; and an emerging markets retail bank.” [This para added at 6.07am on day of publication.]

Indonesia: Governance is an issue

In Corporate governance, Indonesia on 18/10/2012 at 6:39 am

I’m bullish on Indonesia, but governance issues give me regular heart tremors.

Nathaniel Rothschild, co-founder of coal mining giant Bumi, has quit the firm’s board amid a row with Indonesia’s influential Bakrie family.

MFA refutes Indonesia news report on extradition.

Indonesia: An interesting statistic

In Corporate governance, Indonesia on 07/10/2012 at 10:01 am

Less than US$1bn of the US$26bn in net equity inflows into Asia outside of Japan have gone to Indonesia this year, HSBC estimates. Seems that there isn’t enough quality investments there. Well we know corporate governance is an issue even among friends  http://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/.

Indonesia: Even friends get screwed

In Corporate governance, Indonesia on 25/09/2012 at 6:21 pm

Samin Tan, an Indonesian entrepreneur who bought 23.8% of Bumi Plc at almost £11 pound a share from the Bakries last year after the family was unable to top up a loan guaranteed by Bumi Plc shares. He now has 29% and is executive chairman but yesterday the shares fell a further 25% and closed eventually at 148p. But the Bakries still control PT Bumi where the alleged irregularities occur.

 
A Bakrie is the chairman of the Golkar party (part of the ruling coalition) and is a presidential candidate in next year’s Indon election.
 
God what a country and what a family.
 
More on the family . Updated on 26 Sept at 8.16am.
 
 

Rot at SGX continues despite (or because of?) FT CEO & president

In Corporate governance on 01/09/2012 at 8:40 am

Not only are the two FTs unable to attract mega-IPOs, CIMB Research says the string of privatisations is likely to continue, helped by cash-rich buyers, highly-valued Asian consumer franchises and battered valuations for cyclical companies.

We have seen a few privatisation offers, the latest being Heineken for Asia Pacific Breweries and another from Thai energy firm PTT to buy out Sakari Resources.

CIMB said stocks that may receive privatisation offers include offshore marine firms CH Offshore and KS Energy, as well as property developers such as Bukit Sembawang and Ho Bee.

To identify privatisation situations, CIMB looked at stocks trading below 1 standard deviation from their historical trading ranges and shareholders with interest and means to de-list the companies.

“We believe that globally, corporates have been building up cash to prepare for the worst, ever since the global financial crisis. They have the means to make an offer.”

Related rant: http://atans1.wordpress.com/2012/08/28/rubbishing-msias-ipo-streak/

Independent directors can continue sleeping on the job

In Corporate governance on 14/08/2012 at 6:58 pm

Chief Justice Chan Sek Keong’s recent acquittal of two former board members of Airocean Group should make it harder to prosecute independent directors of Singapore-listed companies.

He made it clear that companies may not have to disclose information because it is trade (business not market, I assume) sensitive: the information has to be likely to significantly move the share price as well. And directors in most instances should not be expected to question professional advice that they receive with respect to how they discharge their duties.

Independent directors were scared after a district judge convicted former Airocean independent directors Peter Madhavan and Ong Seow Yong on charges related to disclosure lapses from 2005 relating to the corruption investigation of ex-Airocean chief executive Thomas Tay.

Another nail in the coffin of our regime of disclosure. If can suka-suka no need to dislose WTF! I prefer DJ’s reasoning. Hope AG “appeals”.

S-Chip after S-Chip shows that corporate governance didn’t work. Yet independent directors never ever were held accoutable except in one case: directors there were slapped lightly on the cheek by SGX. WTF!

Is PAPpie Ong Ye Kung behaving like a bad Goldie investment banker?

In Corporate governance on 09/08/2012 at 6:16 am

So SMRT bus drivers have given a tight slap to their union chief* and  NTUC’s deputy secretary-general, who is also a board member of SMRT Corporation, Ong Ye Kung. He also happens to be part of the PAP GRC team that lost Aljunied. He had told them that working six days a week is a fairly standard arrangement, and insisted that with the increase in basic pay, their salaries will be higher, compared with what they had earned in a five-day work week plus an additional day with overtime pay**.

They have complained to his NTUC boss, a cabinet minister.

He is lucky he is not in the US, and not an investment banker. A few months ago, a judge’s ruling made Goldman Sachs potentially liable for some pretty serious damages if shareholders of a company wanted to sue it (Some are). Anyway, the ruling was another hole below the hull in Goldmans fast sinking reputation.

Goldman was on every conceivable side of a deal involving the sale of El Paso. As a result, El Paso may have unwittingly sold itself far too cheaply. Goldman was inherently conflicted because it represented El Paso for part of the time in the sale negotiations with Kinder Morgan, the buyer, and advised El Paso on a possible spinoff of its pipeline business. But Goldman’s private equity arm also owns 19.1% of Kinder Morgan and has two appointees on Kinder Morgan’s board. For more details see links below.

Sounds a bit like Ong’s position. He is everywhere in the proposed pay deal: union leader of the drivers, negotiating for drivers, leader of the constructive, nation-building NTUC, SMRT director, and who knows where else.

No wonder, the drivers don’t trust his judgment.

And then there is a big question mark on his character. His dad, now deceased, was a fierce opponent of the PAP. So fierce, that he was detained under ISA. Yet he joined the NTUC, a training ground for Sith Lords. And became a PAPpie after dad died, standing in Aljunied GRC and helped create history by being part of George Yeo’s losing team: first PAP, and combine ministerial and NTUC team (two cabinet ministers and one jnr minister and two NTUC leaders) to lose a GRC.

Links mentioned above

http://dealbook.nytimes.com/2012/03/01/the-losers-in-the-el-paso-corp-opinion/?nl=business&emc=dlbkpma1

http://dealbook.nytimes.com/2012/03/05/advising-deal-goldman-sachs-had-all-angles-for-a-payday/?nl=business&emc=edit_dlbkam_20120306

————————————

*The executive secretary of the National Transport Workers’ Union.

**To be fair to him, it sounds like a gd deal. But I defer to the judgement of those affected. I’m no elitist even though I’m from RI. I even once won a prize for academic excellence.

StanChart in v.v. serious trouble

In Corporate governance, Temasek on 07/08/2012 at 5:51 am

Opps spoke to soon abt StanChart http://atans1.wordpress.com/2012/08/04/wheres-the-cheers-for-temasek/ According to the FT, it could lose its NY licence. Price fell 6% on the news. Wonder if our MSM will report this?

Standard Chartered Accused of Hiding Iranian Transfers Calling the British bank a “rogue institution,” New York State’s financial regulator has accused Standard Chartered of enabling Iranian businesses to hide illegally more than $250 billion in transactions, Jessica Silver-Greenberg reports.

Yikes! Prosperity Gospel works!

In Corporate governance on 06/08/2012 at 5:49 am

(Or “Gd PR for Kong’s message that donors’ wealth multiply will manifold” or “Other people’s money: taz the Prosperity Gospel’s message”)

When I read that Kong Hee ‘s fellow defendants had all engaged Senior Counsels to defend them*, I tot, “Where get money leh?” A SC is not cheap. In a recently concluded case, the SC’s fees (including that of his team of junior lawyers), I know, amounted to over S$1m. And it was rumoured that Susan Lim, the surgeon, sold her Sentosa Cove bungalow for over S$30m, partly to fund her ongoing case that the medical authorities took out against her.

So I expected the question of whether the City Harvest Church  was funding the defence to be raised by netizens or the MSM, and if the CHC was funding their defence, how come the Commissioner of Charities allowed it?

Or, I tot, maybe CHC had the foresight (thanks to the God its members worhip?) to have bought a “water-tight” insurance policy that covered its managers legal liabilities? Bit like indemnity policies that doctors, lawyers, accountants, company directors etc take out, except a lot more generous.

Then CHC announced that it was not funding the defence. And there was no mention of an insurance policy.

I then tot, “Wah maybe Auntie Sun’s hubbie’s and CHC’s message that donations to the church would cause donors personal wealth to multiply manifold, is true?”

After all, his co-defendants were at best middle management level professionals earning at best decent salaries, so how can afford SCs? They were not like Kong and Auntie Sun who were entrepreneurs: they spotted a gap in the market that other Christian churches were not exploiting, and went for it. The result: a Sentosa Cove penthouse for Kong Hee, and a rented Hollywood mansion a singing career for Auntie (even then she got other people’s money to fund her fantasies). .

Well turns out that Kong Hee’s friends (and him) are “blessed” by their God. According to a  ST report on Saturday, members are rushing to fund the defence of them and Kong. As it’s not via the church, it’s legal. Maybe when the dust clears over the criminal charges, the members should fund Auntie’s Hollywood lifestyle and her singing career Crossover Project direct? But then all the details of all her expenses might become public.   

In “high finance”, a central premise is that the ability to mobilise funds or in the jargon “using other people’s money” is the best indicator of one’s success as a deal maker, and vof one’s influence. By that criteria, Kong and friends are very, very succesful. They can mobilise other people’s money for their own ends. QED: “Prosperity” gospel works.

S’porean Chinese who worship money: forget about going to the Middle Road Quan Yin temple or its branch at Tembling Rd or any other temple famous for rewarding devotees. Juz attend CHC, and make a mega donation.

Leave the rest to the God of the Prosperity Gospel.

———–

*While Kong did not engage a SC, his lawyer charges about the same rates as a typical SC, if not more.

F&N/ APB: Slightly better terms

In Corporate governance on 03/08/2012 at 6:02 am

Secret Squirrel tells me that the F&N Board would recommend a marginally improved offer by Heineken for F&N’s share of APB. Given that Heineken already has more than 51% of APB, no one would bid against it. So if F&N rejected the offer, and the Dutch walked away, ang moh fund mgrs would be howling in pain and anger, rightly so.

Now let’s see if ThaiBev can block the bid via its stake in 24.1% in F&N. Or will it try to make a deal with the Dutch in exchange for supporting the deal. Kirin, with 15%, will be talking to F&N, to see if can gain shumething for supporting the deal.

Kirin and Coca-Cola interested in F&N’s soft drinks biz which has bigger market share in S’pore and M’sia than Coca-Cola’s: 26% versus 13%. Grewing faster too 10% average growth versus 5% in last five yrs.

F&N on its way to be a property co. Think it will have problems.

F&N/APB: Fun & games

In Corporate governance on 26/07/2012 at 6:02 pm

The price of APB closed at the takeover price, down 3.9%. Bit strange as I tot that the reason it traded to $52 yesterday was because it was in the interest of some people to keep it at above the takeover price of $50, making it more difficult for F&N to accept the bid by tomorrow. Watch and wait.

Another analysis on the break-up value of F&N http://www.breakingviews.com/asian-conglomerate-owners-owe-heineken-a-toast/21031773.article.

F&N & APB: Updates

In Corporate governance on 24/07/2012 at 7:03 pm

The Wall Street Journal reports: “Kirin Holdings Co. is in early discussions with bankers for a potential bid for Asia Pacific Breweries Ltd., a move that could intensify the battle for control of the Singapore maker of Tiger beer, people familiar with the matter said Monday.”

Goldmans appted to adise F&N and Nomura’s analysis 

http://www.nytimes.com/reuters/2012/07/23/business/23reuters-apb-shares.html?_r=1&src=busln&nl=business&emc=edit_dlbkam_20120723

Another co decides not to list on SGX

In Corporate governance on 23/07/2012 at 6:48 am
Reliance Communications  postponed the Singapore listing of its undersea cable division. In a statement the group said it would “await supportive market conditions and easing of prevailing global uncertainties to proceed with the offering/listing at an appropriate time in the future”.
 
OK, so my headline is misleading. But MU too delayed its posting for a similar reason and now has gone to the US. F1 too delayed its listing and the constructive, nation-building MediaCorp reported that it might not be listing here after all.
 
And as I bitched earlier, the FT ang moh CEO’s contract has been renewed, and that his number two is also an FT.   http://atans1.wordpress.com/2012/06/27/sgx-learns-from-fas/ 
 
WTF!!!!!  Ang Moh and other FTs tua kee? 
 
Especially since the ang moh is talking big about attracting big IPOs (especially Asian ones). Missed maybe three in a row.  

Bid tests F&N’s corporate governance

In Corporate governance on 21/07/2012 at 5:32 am

With competitive offers for a beer business that F&N does not, in the end, control, the company’s independent directors should be working to extract the best deal for all shareholders – not just its new Japanese and Thai constituents.

Int’l media’s analysis

http://www.breakingviews.com/heineken-tries-to-take-the-asian-tiger-by-the-toe/21030929.article

http://dealbook.nytimes.com/2012/07/20/heineken-offers-4-1-billion-for-asia-pacific-breweries-stake/

Waz that again Law Soc?

In Corporate governance on 20/07/2012 at 4:58 am

Or “Law Soc in denial?” or “More patients for you Dr Fonz?”

The Law Society seems to want to be like the PM and his DPMs: trying to be comedians. And no, I don’t mean to talk about its officer,Wong Siew Hong, turning up in court without his jacket (bit like appearing at a wedding in one’s underwear), but this: “LSS asks that commentators check their facts, preferably with LSS, before making their comments.” Ain’t the Law Soc forgetting something?

Forgot that it retracted earlier statements? Statement that many netizens used when commenting on the Law Soc’s actions. The boys and gals at TRE did a good article on this retraction.

But even funnier is: “LSS believes that it is important that the public has confidence in LSS as an independent professional body which has always balanced the interests of the public and individual lawyers.” Come on, pull the other leg, its got bells on it. Ever since the changes initiated by the government in the 1980s, many members of the public and even many lawyers regard the Law Soc as part of the Dark Side: to publicly deny this perception amounts to a form of insanity: denial of a perception.

No, I’m not going to make fun of, “Any suggestion of a conspiracy involving the LSS is untrue and irresponsible” because I’m waiting to see if Ravi denies a report in ST that he was involved in an incident at a temple on Sunday the 15th of July. I mean it’s ST, part of the constructive, nation-building media, and more importantly, the sister publication of STOMP where a “content producer” fabricated a story, and where “content producers” posed as citizen journalists and members of the public.

If it could happen at STOMP, it could happen at ST where during the Hougang by-election, pixs were used very judiciously. One got the impression that Ah Huat was Low’s proxy, while Desmond Choo was “his own man”. And again in that by-election, there was no mention that Desmond’s “model” (his uncle, an ex-PAP MP) is a convicted cheat, facing fresh charges. If it had been Ah Huat’s uncle, I’m sure we would’ve been reminded of the relationship with a criminal.

If Ravi doesn’t deny the story, then I’ll blog on why Wong Siew Hong and Dr Fones should be commended for being good civic-minded S’poreans, even if they did not do things the proper way, and why the Law Soc Council does not deserve any respect. But taz another day.

CHC: A prophecy

In Corporate governance, Humour on 13/07/2012 at 7:51 am

First some recapping: 

– CHC mgt says:

“The people currently in the news are our pastors and trusted staff and leaders who have always put God and CHC first,” he said. “As a church we stand with them and I believe fully in their integrity.”

“The S$24 million, which went into investment bonds, was returned to the church in full, with interest… The church did not lose any funds in the relevant transactions, and no personal profit was gained by the individuals concerned.”

– And Geriatric Geisha’s hubbie says : “Kong Hee insisted on his integrity” and “Please know that there are always two sides to a story. I look forward to the day I caun tell you my side of the story in court.”

Going by the above comments by management and Kong,  and the failure of CHC  to appeal against the findings of the Commissioner of Charities, I prophesy that when the court finds him and the other four guilty as charged (Yup I think the court will find them guilty as charged), CHC management, Kong and the other four will simply say,”It was an honest mistake. We know what we did was in accordance with the wishes of the God of prosperity, and we thought it was legal under S’pore’s law. It seems we were badly advised on the latter.”

Based on the words of mgt and Kong, and the failure to appeal against CoC’s findings, the basis of the charges against the Famous Five, it would seem that the factual findings of the COC is not in dispute.

While there are good legal, and financial (lawyers are expensive and Auntie Sun needs money for her Hollywood lifestyle) reasons not to appeal the CoC’s findings of fact, but to use the coming trials to contest them, the very public assertions of the accused “integrity”, no monies lost, and the deafening silence on the findings of fact by CoC leads me to conclude that

– at the trials, the “pureness” of the motives (saving souls via Auntie Sun’s Hollywood lifestyle and work) will be stressed in the hope that this will lead to their acquittals, and

– if it doesn’t, then they will spin “It was an honest mistake. In our desire to save souls, we unwittingly broke the laws of Caesar for which the five of us will go to jail. Pass the plate round, we need to pay the lawyers and the rent of Auntie Sun’s Hollywood mansion.”

Err someone should ask CHC mgt abt their God’s mansions and how come Auntie Sun and Kong (remember his prnthouse in Sentosa Cove): “In my Father’s house are many mansions: if it were not so, I would have told you. I go to prepare a place for you.”

It’s Official: MU tells SGX to f***off

In Corporate governance, Footie on 04/07/2012 at 7:16 am

MU has applied to list on NYSE.

http://www.bbc.co.uk/news/business-18699885

So much for SGX’s prostitution of its principles. Three cheers for the central bank. http://atans1.wordpress.com/2012/06/14/you-wont-read-this-in-our-msm-mu-frustrated-with-sgx/

Related posts: http://atans1.wordpress.com/2012/06/27/sgx-learns-from-fas/, http://atans1.wordpress.com/2012/06/28/korean-and-jap-exchanges-are-eating-sgxs-lunch-in-asean/

Temasek investment divesting assets as shareholders revolt

In Corporate governance, Energy, Temasek on 11/06/2012 at 7:18 pm

http://dealbook.nytimes.com/2012/06/08/chesapeake-to-sell-midstream-assets-for-4-billion/?nl=business&emc=edit_dlbkpm_20120608

Background on this investment: “bad” http://atans1.wordpress.com/2012/05/27/temasek-the-gd-the-bad-and-the-ugly/

Test needed to ask questions at co. meetings

In China, Corporate governance, Financial competency, Humour, Property on 04/06/2012 at 5:01 am

(Or “Shume really stupid shareholders” or “Why SGX shld pay Mano Sabnani to conduct courses on asking sensible qns at AGMs and EGMs”)  

Sometime back, the media reported that some daft shareholders (same people as those who complained at DBS AGM that DBS paid 50% premium over Bank Danamon’s share price to get controlling stake? I mean these people never ever heard of a premium needed to secure a controlling block?) abt CapitaLand’s China exposure and share price since 2008 or 2007 at its AGM.

Don’t they read the int’l media?

Example from BBC Online:”China has, thus far, avoided the much-feared hard landing,” said IHS Global’s Ren Xianfeng.

“Expect no major property meltdown or construction bust. Expect no deflationary spiral or banking crunch.”

Analysts said that given the steadiness of the property market, policymakers were likely to continue to ease their policies to boost growth.

Ting Liu of Bank of America-Merrill Lynch forecast that China’s economy was likely to grow at an annual rate on 8.5% in the second quarter, up from 8.1% in the first three months of the year.

And on the share price: don’t they realise that equity markets have had a choppy ride since 2008. And that China-related stocks have been the target of bear raids and that CapitaLand is an obvious target to short given that the stock is liquid and shares can be easily borrowed

In case anyone doesn’t understand the reference to Mano, he asks vv intelligent questions at AGMs and EGMs. Only one I can bitch abt is at K-Reit EGM when he queried the price paid for Ocean Towers from its parent. Shumething like Ocean Towers seldom gets sold at mkt price, except perhaps in distressed sale. Kanna pay premium.

How times have changed since the late 70s (Moral suasion)

In Corporate governance, Political governance, Property on 01/06/2012 at 6:39 am
Someone wrote in to Voices as follows
 
Property developers countering govt policy
 
The extra stamp duty of 10 per cent was introduced in December to curb excessive foreign investment in private residential property. This cooling measure has failed. New private home sales last month were the strongest in nearly three years.One possible reason is the increasingly common practice by property developers to absorb the extra stamp duty as part of their marketing strategy, visibly offered as a carrot to potential buyers in their advertisements of property launches.If a government policy could be circumvented this easily, then it has lost its effectiveness. The Government should make it illegal for property developers to absorb any stamp duty.
 
In the late 1970s, never mind making it illegal for property developers to absorb any stamp duty: someone would call up the developers offering this deal and tell them that what they were doing was “not in the national interest”, and please scrap the offers. Developers would listen to the polite request to behave responsibly in obeying the spirit of the law rather than the letter of the law because no developer wanted the tax authorities going thru their books if they decided to follow the letter of the law.
 
How times have changed since when I started work. For the better or the worse in this instance, I am uncertain.
 
 

OCBC: KPI for new CEO?

In Banks, Corporate governance on 15/05/2012 at 8:33 am

OCBC Bank was recently named as the world’s strongest bank for the second straight year by Bloomberg Markets Magazine. (The ranking featured 78 global banks with at least US$100 billion in total assets.They were assessed based on factors such as their Tier 1 capital ratio, loan-to-deposit ratio, ratio of non-performing assets to total assets and their efficiency ratio, which compares costs with revenues.)

OCBC said the bank’s strength is partly built on its “disciplined credit management practices and robust risk management capabilities”.

If I were the controlling shareholder of OCBC, I’d be very upset at this ranking because what it means is that OCBC is not making its assets work: it has too much capital. I’d tell the board that the most impt KPI should be that OCBC drops out of the top 10 on the list.

It can be done. UOB was at seventh place, down from sixth last year, while DBS fell three spots to eighth this year.

UOB and DBS are doing the right thing. Their core market (like that of OCBC) is S’pore and it’s a safe, boring, stable market where margins are only so-so. So not much capital is needed, if one sticks to the basics of banking, and not try to be a hedgie.

As to the right amount of capital, look at StanChart at no.12. It operates in a wide range of emerging markets, some in unstable parts of the world like West Africa and so needs to have capital lying around. If S’porean banks have abt the same level of capital, they should still be safe.

SMRT: “Cowboys” were right

In Corporate governance, Infrastructure on 14/05/2012 at 8:52 am

Since the trains started breaking down towards the end of last yr, bloggers and posters (not I) have been attacking SMRT for putting profits before safety, and disregarding the engineers’ advice (though without having a clue abt the said advice). Yacoob’s exemplar for the new media, the constructive, nation-building media were deafening in their silence on this national issue. I was silent because I was trying to figure out if I shld go buy some SMRT shares.

Well, based on the comments by the chairman, Koh Yong Gua, reported by ST and ST’s headline on an inside page, the inhabitants of cowboy towns were correct. (Explain that Yacoob and DPM Teo.)

“SMRT to refocus on its engineers” read the headline. This implied that SMRT had lost its focus on engineers somewhere along the line, assuming it once had such a focus.

Mr Koh said that “SMRT will be repositioned an engineering company”, begging the question “What was its earlier positioning?”. Retailer, property developer, financial engineer, or cash cow for Temasek? Since SMRT was listed in 2000, Temasek has received $694.3m in dividends (I’ve including the dividend declared recently).

The promotion of Mr Khoo Hean Siang in March 2011 to COO was meant to show the importance of engineers, he said. The previous COO who was “removed” was not a technical person. Wonder what was he? Ex-SAF officer or financial man? With the CEO a retailer, it surprises me that until 2011, the COO was not a technical man. And that board meetings did not include a very senior engineer in attendance.

Actually, I think Mr Koh still hasn’t got it. SMRT is not an engineering company. It is a company whose main business is moving large numbers of people around S’pore safely, and in reasonable comfort (most of the time). By focusing on engineers and positioning SMRT as an engineering company, he could be laying the seeds for a serious problem somewhere along the track. Investors in the West have found that companies dominated by engineers tend to goldplate processes and systems. Siemens, Rolls-Royce, Westinghouse, Boeing, Airbus and even GE, had to be run by non-engineers before shareholders benefitted.  

Commuters may say so what? So long as it is safer and doesn’t breakdown, power to the engineers. The problem is that goldplating is expensive, and eventually someone has to pay. This is likely to be the commuter (via fare increases) or his avatar or alter ego the taxpayer.

I was planning to buy into a rights issue when one is annced, as I expect. But given the positioning as an “engineering company” and its “refocus on its engineers”, I think I’ll give the stock a miss for the time being. But never ever bet against Temasek when it comes to a local company.

Related post:

http://atans1.wordpress.com/2012/05/06/smrt-quiet-re-nationalisation/

Corporate governance: Better value elsewhere in region?

In Corporate governance, Economy on 23/04/2012 at 7:24 pm

Chart shows that the authorities are pricing S’pore out of fees to themselves, and to the accountants, lawyers etc based here by making S’pore more expensive than HK when it comes to charging cos fees to set-up and maintain here. HK is the leading Asian centre for registrating and maintaining offshore companies outside of the “Sunny places for shady people” to misquote Somerset Maugham.

And S’pore non-executive directors are well paid and do less work vis-a-vis our neighbours.

Non-executive directors (NEDs) in Singapore got the second-highest pay when compared with directors in Malaysia, Indonesia and Thailand, a report by Hay Group showed yesterday. Those in Indonesia were better than S’porean NEDs.

But boards in Singapore also meet the least often, and hold the least number of committee meetings compared with their regional peers.

The management consultancy analysed data collected from 200 large companies in the four countries from 2008 to 2010.

The results showed that at the median level, NEDs from large companies in Singapore were paid US$75,300 in 2010, second to those in Indonesia, who took home US$178,600.

By comparison, NEDs in Thailand and Malaysia received US$46,600 and US$46,300 respectively.

In Indonesia, NEDs take home a substantially higher pay because state-owned companies and some private companies stipulate their pay to NEDs as a percentage of the president-director’s compensation for both the salary and bonus portions. These which are supposedly linked to performance – already made up about four-fifths of NEDs’ pay.

Most of the remuneration for NEDs in Singapore, Thailand and Malaysia is made up of a flat fee, not performance-linked.

The salary of NEDs in the region have been heading higher over the past few years.

In Singapore, the increase was 9% in both 2009 and 2010, while in Malaysia, the NED pay rose 17% in 2009 and 3% in 2010.

In Indonesia, the increase was% 13% and 10% respectively in 2009 and 2010. In Thailand, the NED pay rose 14% in both years.

Thai companies held the most number of board meetings between 2008 and 2010, on a median level. In 2010, an average of nine board meetings were called by the 48 Thai companies reviewed.

Singapore fared the worst, with the 50 companies calling just five board meetings each in 2010. Malaysia’s top companies held six meetings, while those in Indonesia conducted seven.

Indonesian companies also had their audit committees meet more than 10 times a year between 2008 and 2010, which is significantly more often than in Singapore – at four times a year – and Malaysia, at five times a year.

As audit committees have a heavier responsibility than other committees, in Singapore, the chairman and members of the audit committee get higher annual retainers than those in other committees. Thai cos also do something similar

The median tenure of independent directors is the highest in Singapore, which stands at seven years. Malaysia follows with six years, Indonesia is at four-and-a-half years and Thailand has a median tenure of three years.

Proposed revisions to Singapore’s Code of Corporate Governance note that companies must explain the reasons that a director who has served more than nine years on the board is still deemed independent.

Hay Group’s review showed that 62% of the top companies in Singapore have at least one independent director who has served more than nine years on their board.

When will this happen to a S-Chip?

In China, Corporate governance on 22/04/2012 at 7:20 pm

It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.

Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.

And recently more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing.

http://dealbook.nytimes.com/2012/04/19/battle-over-a-chinese-company-turns-physical/?src=dlbksb

No wonder S-chips are finding it difficult to get people to be non-executive or independent directors.  And the row between China Sky’s former independent director Yeap Wai Kong and SGX doesn’t help. He took SGX to court in an attempt to quash its public reprimand issued against him in December 2011. The court is hearing the case.

Why UOB is “betterest”?

In Banks, Corporate governance on 06/04/2012 at 7:41 am

Bank results down 4%, CEO’s salary down 18%.

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1193445/1/.html

Own shares in Haw Par which has stake in UOB.

DBS: Investors don’t like the Indon deal

In Banks, Corporate governance, Indonesia, Temasek on 03/04/2012 at 11:34 am

Well DBS is down 0.44 to 13.74 some 3% from Friday’s close.

Despite all the propoganda from our constructive, nation-building mainstream media, aided and abetted by the wires and most brokers, investors don’t like the Bank Danamon deal. To be fair, investors nowadays don’t like their investee companies doing mega strategic deals (like Pru’s attempted purchase of AIA last year) because the historical numbers (still disputed) seem to show that strategic deals destroy shareholder value.

Well the non-Temasek shareholders of DBS will have an opportunity to reject the deal, if they think that Temasek benefits far more than DBS? BTW, did you know that when DBS bot PosBank from Temasek all that many years ago, it was a great deal for Temasek, not so gd for DBS .

Temasek: Meritocracy at work?

In Corporate governance, Temasek, Vietnam on 02/04/2012 at 6:28 am

So the S’porean MD of Singapore Technologies Telemedia (ST Telemedia), a 100%-owned unit of Temasek, Lee Theng Kiat, is now a president of Temasek, and its general counsel. He is in exalted company as one of the other two presidents was once a contender to be CEO of BoA. http://www.bloomberg.com/news/2012-03-30/temasek-hires-st-telemedia-s-lee-as-president-general-counsel.html

But it was also reported last week by the wires  that Eircom applied for court protection as expected last to allow it to restructure its 3.75 billion euro (S$6.29 billion) debt, a move it said was “necessary and unavoidable”.

The application follows the company’s agreement to support a proposal under which most senior lenders take control of the company from current majority shareholder ST Telemedia and cut its debt by 40 to 50%.

ST Telemedia bought 65% of Eircom in 2009 for 140 million euros in cash and shares. An employee share trust owns the other 35%. Eircom has 4.1 billion euros of gross debt and more than 300 million euros of cash on its balance sheet, giving net debt of around 3.75 billion euros.http://www.reuters.com/article/2012/03/29/us-eircom-idUSBRE82S14R20120329?rpc=401&feedType=RSS&feedName=technologyNews&rpc=401

Lee was the MD of ST Telemedia when Eircom was purchased.

Well the Communist Party and Government in Vietnam are not so forgiving of executives who goof. Nine top officials have been given tough jail sentences for their role in the near-bankruptcy of one of Vietnam’s largest state-owned companies. Err they  were convicted of being directly responsible for a loss of US$43m http://www.bbc.co.uk/news/world-asia-17561109. Peanuts when compared to Euros 140m.

BTW, came across this comment about Merrill Lynch recently, “From July 2007 to July 2008, a total of [US]$19.2 billion vaporized – or [US}$52 million in losses per day!” For the record, Temasek bot into ML in December 2007 and in late July 2008.http://moneymorning.com/2008/07/29/merrill-lynch/

Temasek’s loss ran into billions of US dollars http://online.wsj.com/article/SB124236495798923123.html. The Vietnamese officials would have been hung, drawn and quatered if they had been held responsible for such a loss. Nothing happened to Temasek officials.

Another day, another sucker

In China, Corporate governance on 21/03/2012 at 8:53 am

First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?

http://www.reuters.com/article/2012/03/14/ipo-london-china-idUSL5E8E8A2220120314?feedType=RSS&feedName=financialsSector

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