Our central bank is really Mickey Mouse

(Explanation: When Chris K was a tua kee swinging big dick, MAS was known as Mickey Mouse, according to him. Don’t know about now)

Several months ago, former US treasury secretary Larry Summers, made an acerbic remark, taking issue with central bankers’ growing focus on climate-related risks. Comparing them with children neglecting their homework for the sake of extracurricular activities, Summers said: “Maybe you don’t get to take on global climate change when you’re having double-digit inflation rates.”

This remark about the consequences of not focusing on one’s reason for existence while doing BS came to mind recently: firstly when I read

A South Korean court issued an arrest warrant for Do Kwon, the co-founder of collapsed cryptocurrency operator Terraform Labs, over alleged violations of capital market rules after the $40bn implosion of the terra stablecoin.

https://www.bbc.com/news/business-62910462

The South Koreans said he was in S’pore, though the S’pore police deny he is here. Whatever, the five other individuals connected to the case that the Koreans want to arrest are here.

Meanwhile MAS is trying to clean up its act by cracking down on crypto firms. It had encouraged them to come here.

Secondly, Chris K, now a pensioner who is managing his money like a hedgie is KPKBing:

Ofcos the supertalents missed inflation surge earlier this year. They were in the transitory bandwagon even at the time the central bankers were getting cold feet whether it was after all transitory. And don’t worry, the inflation rate will moderate in the 2nd half of this year, the minister(s) cooed. Ofcos none of that happened, they were offside by a long yard …

Chris K on Facebook

All in all, MAS’s cockups on crypto and inflation (Remember that it’s part of the Pay And Pay ecosystem) show that paying millions doesn’t mean not getting monkeys.

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Hwa Hong: Ongs have no stomach for Mexican standoff

They raised the white flag and will tender their 29.26% stake in Hwa Hong to the consortium led by Ong Choo Eng, a previous MD of Hwa Hong.

So I’ve tendered all my shares.

Without the Ongs block, the consortium faced the probability of failing to achieve a stake of more than 50% in the company. And even if they succeeded, there would be about minority shareholders of about 40%. Hwa Hong: Mexican standoff in the offing/ Must be Asia Dymon again.

As it is, the bidders are likely to be able to take the co private.

So I tendered my shares.

Can’t really complain as the shares appreciated 42% since June. And I had collected a 1 cent dividend in May.

Hwa Hong: Mexican standoff in the offing/ Must be Asia Dymon again

Further to Reported NAV is a lot of BS, here’s more on the unfriendly takeover bid at Hwa Hong.

The current Ong directors and their immediate families, who hold 29.26% of the total number of issued shares, do not intend to accept the Offer. Going by precedent, they won’t be allowed by the authorities to change their minds.

The Ong that is part of the takeover bid was the MD of the company from 1989 to 2021. He was the guy responsible for the good payouts I talked about in Reported NAV is a lot of BS. But his brothers and half brothers didn’t want him handing over the running of the co to his son. They wanted their sons to run the co. Typical Chinese family squabble. Btw, there are those who think that the row between LHL and LSY is a typical Chinese family row along similar lines. LSY’s eldest son’s public comments seem to give credence to the allegations that he thinks as a PES5 Brianac he should be a future LEEder even if the other Brianac Lee did his NS (and is an officer).

Coming back to the bid, the bidders control enough shares to make their offer mandatory. But it remains conditional (more than 50% of shareholders must accept) and it’s hard going because of shareholders like me who are ambivalent about the bid. The bidders are buying in the market at 0.40 cents. Those selling want to take the 40 cents (less commission) and move on.

I tendered 58% of my holdings but I won’t be very unhappy if the takeover fails and my tendered shares get rejected.

Because then there’ll be a Mexican standoff.

The bidders will own anywhere between 30% to a shade under 50%, the other Ongs 29.26% and people like me the balance. A very unstable situation and all to play for.

Even if the bid becomes unconditional, the winners have a Mexican standoff albeit one where they have 50%+ of the votes. They have to contend with critical minority shareholders who will have at least 35% of the votes.

Interestingly, Asia Dymon is part of the bidding consortium. I own shares in Penguin Int’l which Asia Dymon and the MD tried to privatise in 2020. Although they now control the co, they can’t take it private because of people like me. We tot that they should have bid 15% higher. The illiquid shares trade above the takeover price. They stopped the dividend for two years but reinstated it recently at a higher level because presumably they need to finance their loans. A dividend yield of 3.31% is not to be sneered at even if S’pore Savings Bonds now yield 3%.

Asia Dymon never learnt that being a cheapskate is problematic.

Coming soon, never use OCBC to be your adviser when bidding. They can’t even communicate the facts to shareholders.

Reported NAV is a lot of BS

I own some Hwa Hong shares, the bulk of the shares since the early 1990s. It paid good dividends: regularly there were special dividends as the co sold off some or other asset. For the last 11 years, I’ve been collecting decent but unexciting dividends. Juz waiting for something to happen.

Hwa Hong is now the target of an unfriendly takeover orchestrated by a former MD.

The book net asset value as at Dec 31, 2021 stood at $0.2852 based on historical valuations. I always assumed that NAV was a lot higher, probably at least $0.37. Btw, the NAV has been around that mark for a long time.

So when the ex-MD, a member of the Ong family controlling the co and some outsiders bid for the co at $0.37, I wasn’t too surprised.

The bidders soon raised their bid to $0.40.

The independent adviser reported that the fair value surplus of these investment properties of $97.4 million represents approximately $0.1492 per share, which would result in a revalued NAV per share of $0.4344. Again I didn’t find this too surprising.

All the usual accounting smoke and mirrors. Nothing to get upset about.

But that isn’t all. Based on information provided by the management (who include other members of a member of the Ong family is an executive director, and other Ongs also happen to be directors: there’s only one independent director), Provenance says the adjusted RNAV as at Dec 31 is $0.5052. [Note this paragraph was amended for clarity on 20 July at 5am)

This is 77% more than the book net asset value as at Dec 31, 2021 of $0.2852. This I found amazing. Something is really wrong with the accounting profession which allows such vast discrepancies in what should be an objective, hard number. They shouldn’t be helping write fiction.

Hence this grumble.

This issue isn’t new here: Hyflux fiasco shows why “book value” is BS. There the shareholders also found out that the NAV was fiction. And so did the directors including Oliver Lum the founder and major shareholder. At least Hwa Hong minority shareholders can laugh all the way to the bank.

Coming back to the takeover, Provenance recommends that the offer is “fair and reasonable”, a call I can’t argue against.

More on the takeover soon.

Yesterday it was Three Arrows, today it’s Vauld

Another bad day in the office for the MAS, and our millionaire ministers.

Another crypto business based in supposedly well regulated and crypto-friendly S’pore tanks.*

Vauld, a S’pore-based crypto lender halted withdrawals and trading on its platform, int’l media reports. It said was looking at all options, including restructuring. It was offering clients annualised returns of up to 40% to lend out their crypto tokens, said clients had yanked almost US$200mn from its platform in the past three weeks as high-profile failures panicked investors. Doubtless our central bank allowed it to operate here because Coinbase exchange and billionaire investor Peter Thiel.

Let’s see if our constructive, nation-building media reports this breaking story. Remember this: Did our constructive, nation-building media report this?

---

*This sentence was added hours after first publication.

Why China is afraid of its tech cos

Chinese regulators have drafted new antitrust rules aimed at technology firms like Alibaba and Tencent. They will target a range of practices, including treating customers differently based on their spending behaviour and data. The move follows the suspension of the initial public offering of Ant Group, a fintech firm, days before its flotation in Hong Kong and Shanghai.

What all this shows is that Chinese tech groups such as ecommerce group Alibaba have become a little too western for the liking of Xi and other Chinese leaders.

Hyflux: Sue those with money

This means going after the directors and mgrs (Remember MD Oliver Lum has a Dalvey Rd house and her motorcycles), the auditors, and the valuers of Tuaspring.

I was inspired to suggest this after reading the very droll Mr Lombard

Get claws in to auditors

A probe into Grant Thornton’s audit of collapsed contractor Interserve suggests a scandalous anomaly, and a possible deterrent. Advisers to the company were paid more in fees than its market value before administration. It happened at Carillion and Patisserie Valerie, too. If fees could be clawed back in the event of shareholders being wiped out, it might improve the quality of both audits and advice.

Here’s why the directors, mgrs and auditors could be liable:

So in the light of the loss in 2017, it’s reasonable to ask why the book value of Tuaspring was not looked at again before the auditors blessed the 2017 accounts in March 2018,

Hyflux directors, mgt & auditors kooning from 2016 onwards?

Here’s why the valuers are worth shaking down.

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

Hyflux fiasco shows why “book value” is BS

But

“This valuation [Done in 2018 which showed that the book value was BS: my comment]  is based on the most recent market study conducted by K4K Training & Advisory SL, the same consultant who did a similar market study in 2016 (which supported the valuation then). The view taken in this most recent market study is significantly different from that in 2016 due to . . . the losses in the electricity market in the recent years and the projected lower spark spreads for the remaining concession period.”

Noting that the current valuation is “significantly lower” than that adopted in 2016, Hyflux said that it intends to commission a further valuation to be undertaken by a different valuer for the purposes of finalising the 2018 full-year financial results.

“As the carrying value is a reflection of the current depressed market, in the event that the Singapore power market recovers to provide generation companies with sufficient spark spread margins, the valuation might then be revised.”

Hyflux as reported by BT

Hopefully, ACRA do more than watching (but don’t hold yr breath): Hyflux: “going concern” BS/ KPMG again and again.

 

DBS should take leaf from Temask’s book

Too bad Hyflux and DBS (the bank issuing it’s securities) didn’t have in 2016, Temasek as a precedent to follow. Temasek in a letter to ST’s Forum (Ownself praise ownself) talked about its disclosure format for its bonds’ issues in 2018

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

…

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Temasek letter to ST’s Forum (Full text below)

Now go tell DBS how to try harder make sure greedy people read: though pigs will surely fly first. Perp investors were warned: Hyflux: Don’t cry for the investors

The letter in full:

Bond issues should be easy to understand for retail investors

Dr Jeremy Teo Chin Ghee raised interesting points in his letter (Timely to encourage retail bond market, April 5).

Our research showed that Singapore retail investors have very different risk capacities and appetites.

Younger investors look for growth, while older retirees may prefer a steady income stream. Others seek higher risk-reward opportunities.

We believe retail investors should have access to a wider range of risk-reward products, rather than be cut from riskier products through tighter regulations – the current regulations already require comprehensive disclosures of risks.

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

No two businesses will be the same, and all will have different risk and credit parameters.

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Stephen Forshaw

Head, Public Affairs

Temasek International

Temasek cares. Vote wisely.

Hyflux: “going concern” BS/ KPMG again and again

The constructive, nation-building media report that the Accounting and Corporate Regulatory Authority (Acra) is watching the Hyflux fiasco closely. And this is newsworthy? It’s ACRA job to investigate, not watch, cock-ups like these.

But then being a regulatory bureaucrat is one good way of getting a very expensive free lunch. The other is being a minister.

ACRA is watching because Hyflux investors (who never bothered to read the issue documents or Hyflux’s financials) are asking why Hyflux’s auditor KPMG failed to flag the risks of Hyflux earlier. Like real given they didn’t bother to read: Hyflux: Don’t cry for the investors. So even if accounts were qualified, what could the investors do? Only KPKB earlier because the shares etc would have been suspended on a haram certification.

Seriously, this “news” reminded me that UK’s accounting watchdog Financial Reporting Council (FRC) made public, several weeks ago, plans to make auditors apply more robust checks when reviewing whether a company was likely to continue operating in response to several high-profile corporate failures that have undermined confidence in business.

Two recent UK corporate failures were similar in nature to what happened at Hyflux.

To recap: KPMG on 22 Match 2018, said the 2017 accounts were halal, but on 22 May 2018, the company sought court protection from its creditors: Did Hyflux’s auditors mislead? and Hyflux directors, mgt & auditors kooning from 2016 onwards?.

——————————————

Hyflux’s BS explanation:

“When KPMG issued an unqualified opinion on the full year results for the Hyflux Group in March 2018, there were no events or conditions that individually or collectively, cast significant doubt on the going concern assumption as at the balance sheet date of 31 December 2017, or at the audit report date of 22 March 2018.”

Then according to Hyflux, everything went wrong when in May, there was a run on Hyflux by its banksters. Because of its bad (and unexpected?) Q12018 results announced on 9 May: “certain financiers expressed concerns over their ability to continue with existing credit exposures to the group.”* They tot halal Hyflux had transmuted into haram Hyflux.

Hyflux on investor losses: “Not our fault, banksters at work”

Hyflux should have remembered

A Banker Lends You His Umbrella When It’s Sunny and Wants It Back When It Rains

(Often attributed to Mark Twain)

———————————–

Coming back to the FRC: it wants auditors to do more when reviewing whether a company was a “going concern” and likely to remain in business for another year, highlighting the collapses of construction group Carillion (auditor KPMG) and retailer BHS as key factors behind the decision.

It said auditors should challenge corporate management teams “more robustly” and “thoroughly test” the adequacy of the evidence put forward by company directors. It also wants auditors to say whether they believed management assessments with respect to going concern judgments were appropriate, and to explain how they came to that conclusion.

It said the collapse of BHS, Carillion, and failed UK bank HBOS during the financial crisis, had “brought into question why such companies had clean auditor’s opinions, which included no warnings that the companies were at risk of collapse”. Sounds like Hyflux?

Mike Suffield, the FRC’s acting executive director of audit regulation

Recent corporate failures and the FRC’s own enforcement work has shown the existing [going concern requirements] needs to be strengthened.

Our proposals will significantly expand the work required of auditors — however, we believe this to be an important investment in the quality of the work that underpins what is a cornerstone of audit.”

Karthik Ramanna, professor of business and public policy at the University of Oxford’s Blavatnik School of Government

The implication of these proposals is that auditors missed key red flags due to weak auditing standards. The real issue isn’t that the auditors need more technical guidance but rather that they are conflicted in their dual roles as watchdog and consultant.

(Emphasis mine)

Hyflux shareholders should be angry to learn that KPMG (their auditor which audited Carillion and HBOS), said it had (in the UK) already increased how much information it provided in audit reports this year by highlighting the key risks the firm considered when “carrying out work on the going concern basis of accounting”.

KPMG added: “It is vital that as a profession, we examine all possible avenues to improve public trust both in audit, and the wider corporate landscape. We welcome the FRC’s consultation into the standards governing our work around going concern, and how we report on that work to shareholders.”

Will KPMG also provide this info for us natives for SGX listcos?

Btw, KPMG is the forensic auditor whose report the Aljunied Town Council is relying on in take the Wankers Three to the cleaners: “Peanuts”: WP MPs’ liability. KPMG is also Temasek’s auditor: TOC misrepresents facts yet again.

Hyflux: Don’t cry for the investors

Perpetuals buyers were warned, while pref share investors made money in the 2011 pref shares issue.

Tan Kin Lian in Hong Leong Park on Saturday

shared that he was aware how some of them became Hyflux perpetual securities and preference shareholders despite not being financially “savvy”.

“They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk. If they wanted to take risk, they would have bought shares,” said Mr Tan, who donated funds to organise the protest event.

Read more at https://www.channelnewsasia.com/news/singapore/we-have-not-lost-faith-hundreds-of-hyflux-investors-gather-to-11395566

He couldn’t be more wrong (as is usual) about “They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk.” But then he’s the talk cock, sing song king who (together with his partner in that crime, Goh Meng Seng) deprived us of President Tan Cheng Bock, allowing the PAP’s preferred candidate to win.

Well it seems he never bothered to read document offering the perpetual securities to the public. Pg 37 of the perpetual securities issue document had this warning (Emphasis mine) which the investors ignored

RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES
The Securities may not be a suitable investment for all investors.
The purchase of the Securities involves certain risks including market risk, interest rate risk,
foreign exchange risk, credit risk and liquidity risk. Investors should ensure that they fully
understand the nature of all these risks before making a decision to invest in the Securities. Each potential investor in the Securities must also determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the Securities,
the merits and risks of investing in the Securities and the information contained or
incorporated by reference in this Offer Information Statement and the Product Highlights
Sheet;
• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in the Securities and the impact such
investment will have on its overall investment portfolio;
• have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Securities;
• understand thoroughly the terms of the Securities; and
• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
for economic and other factors that may affect its investment and its ability to bear the
applicable risks.
The Securities are complex financial instruments. Sophisticated institutional investors generally
do not purchase complex financial instruments as stand-alone investments. They purchase
complex financial instruments as a way to reduce risk or enhance yield with an understood,
measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Securities which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Securities will perform underchanging conditions, the resulting effects on the value of such Securities and the impact this investment will have on the potential investor’s overall investment portfolio.
This Offer Information Statement and the Product Highlights Sheet are not and do not purport to
be investment advice. Investors should conduct such independent investigation and analysis
regarding the Securities as they deem appropriate. Investors should also consult their own legal,
tax, accounting, financial and other professional advisers to assist them in determining the
suitability of the Securities for them as an investment. Investors should make an investment only
after they have determined that such investment is suitable for their financial investment
objectives. Investors should consider carefully whether the Securities are suitable for them in light
of their experience, objectives, financial position and other relevant circumstances.

Pretty comprehensive and in reasonably simple English. So either the perpetuals investors ignored the warning or never bothered to read: just buy.

Kee chiu if you still sympathise with them? After all they must be PAP voters, Will Oliver Lum and other Hyflux investors still vote for the PAP?, because we know the cybernuts don’t have money to even fund their favourite alt media sites.

Interestingly (I stand corrected because I may have missed it because I was getting tired), I can’t find such a provision in the offer document of the Cumulative Non-voting Non-convertible Perpetual Class A Preference Shares .

Wonder why? An honest mistake? No, most likely because Hyflux pref shares had been issued before (Hyflux: Qns to ask?) to the public, and nothing went wrong: in fact investors made money. And preference shares are shares (“You die, yr problem”) while the Perpetual Securities could according to Chris K be mistaken for bonds, hence the warnings. Don’t anyhow say PAP govt don’t care?

Still, if I were a pref share holder, I’d ask SIAS to KPKB about the lack of warning: nothing to lose further, since lost everything except underwear. Anyway, Morocco Mole (Secret Squirrel’s side kick) tells me that his second cousin removed working in DBS’s investment bank tells him that most of the 2016 buyers had made money in the 2011 issue: issue traded above par. They were hoping for a repeat killing. Kee Chiu if you think they deserve sympathy.

Btw, an interesting read: http://thefinance.sg/2019/03/11/when-exactly-did-tuasprings-operational-problems-start-hyflux/

The is the kind of stuff TOC and other anti-PAP alt media publications should be publishing instead of the rants of anti-PAP types like Goh Meng Seng and his wind bag kaki. I did forward the piece to TOC: no pix, no sound. Sad.

Related posts:

Hyflux directors, mgt & auditors kooning from 2016 onwards?

Hyflux on investor losses: “Not our fault, banksters at work”

Hyflux fiasco shows why “book value” is BS

A really curious incident

========================

*Did TKL read the other offer document? And did Meng Seng, other anti-PAP cybernuts, and other alt media experts read the 2016 securities issue documents? Or even Hyflux’s recent reply to SIAS. Somehow I don’t think so going by their comments. Sad.

 

Hyflux directors, mgt & auditors kooning from 2016 onwards?

And will Hyflux retail investors still vote for the PAP? (Reference: Will Oliver Lum and other Hyflux investors still vote for the PAP?)

So

HYFLUX has taken a S$916 million impairment for the nine months ended Sept 30, to adjust for a fall in carrying value of the Tuaspring water and power plant and other write-downs.

This figure was released … after Hyflux submitted its latest statement of financial position to the High Court.

“The impairment loss . . . relates predominantly to the impairment loss arising from the assessment of the carrying value of Tuaspring and the impairment of receivables for previously completed projects,” …

Hyflux had asked a valuer to conduct an up-to-date valuation of the Tuaspring plant, but no exact figure was shared in the submission.

BT report in early March

But

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

Hyflux fiasco shows why “book value” is BS

And when it did its 6% Perpetuals in 2016, the book value attributed Tuaspring was around this value.

So in the light of the loss in 2017, it’s reasonable to ask why the book value of Tuaspring was not looked at again before the auditors blessed the 2017 accounts in March 2018,

When KPMG issued an unqualified opinion on the full year results for the Hyflux Group in March 2018, there were no events or conditions that individually or collectively, cast significant doubt on the going concern assumption as at the balance sheet date of 31 December 2017, or at the audit report date of 22 March 2018.

Hyflux on investor losses: “Not our fault, banksters at work”;

if not earlier in 2017 when signs of trouble may have become apparent. Unless of course maybe Hyflux’s finance and accounting departments were staffed by Wankers or their relatives and friends? See: Wankers’ Party still blur on audits and accounting and What the US army and WP have in common?.

OK, OK, juz joking.

I’ll end with more extracts from BT report to give an idea of how big the hole caused by the drop in book value of Tuaspring and how the banksters are getting their money back while PAP voters are being screwed (anti-PAP voters got no money according to TRE cybernuts):.

At the end of September 2018, the value of Hyflux’s held-for-sale assets was S$651 million, or S$824 million lower.

Hyflux said: “This valuation is based on the most recent market study conducted by K4K Training & Advisory SL, the same consultant who did a similar market study in 2016 (which supported the valuation then). The view taken in this most recent market study is significantly different from that in 2016 due to . . . the losses in the electricity market in the recent years and the projected lower spark spreads for the remaining concession period.”

Noting that the current valuation is “significantly lower” than that adopted in 2016, Hyflux said that it intends to commission a further valuation to be undertaken by a different valuer for the purposes of finalising the 2018 full-year financial results.

“As the carrying value is a reflection of the current depressed market, in the event that the Singapore power market recovers to provide generation companies with sufficient spark spread margins, the valuation might then be revised,” Hyflux said.

Banksters take their money and run:

However, if creditors consent to haircuts under its proposed restructuring scheme, Hyflux will return to a net asset position of S$1.1 billion, according to the group’s pro forma calculations. Mr Gerald said: “This means that the company may have positive value post restructuring.”

Post-restructuring, Hyflux’s pro-forma net tangible assets (NTA) per share would be 4.2 Singapore cents, based on an NTA of S$815.3 million distributed across an enlarged share base after an equity injection and various debt-for-equity swaps.

Indonesia’s Salim Group and Medco Group had earlier agreed to give Hyflux a S$400 million equity injection in exchange for a 60 per cent stake in the company post-restructuring. Effectively, Salim-Medco is buying into Hyflux at 3.4 Singapore cents a share.

If the Salim-Medco deal goes through, Hyflux’s debt securities holders and senior unsecured lenders will be cleaned off the balance sheet.

PAP voters get shafted:

Retail perpetual and preference share holders will have their S$900 million in claims swapped for S$27 million in cash and S$69.2 million shares, assuming that the shares are valued at 3.4 cents apiece. That works out to a 10.7 per cent recovery rate on their principal.

And there’s the retail shareholders.

Will they still vote for the PAP?  Double confirm, ground not sweet for PAP.

Vote wisely. But the problem is Mad Dog, Lim Tean and Meng Seng. 

Sad.

 

Hyflux fiasco shows why “book value” is BS

And why audited accounts are juz another genre of fiction: science fiction is closer to reality.

I tot these tots when I read Hyflux’s response to a question from the Securities Investors Association of S’pore (SIAS) which read:

On what basis was Tuaspring being valued at SGD1.4 billion? This has proven to be overstated by at least SGD900 million as Hyflux has confirmed any bids received in the 2018 sale process for Tuaspring were for less than Maybank’ s outstanding project finance debt of approximately SGD500 million?

This is what Hyflux said:

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

When the Tuaspring power plant entered into commercial operations in 2016, the lender commissioned another independent market study before the drawdown of the second tranche of the project finance loan, which valuation also then supported the book value ascribed to the Tuaspring project. However, while the 2017 divestment process attracted three preliminary non-binding bids that also supported the book value of the project, the 2018 sale process for Tuaspring during the moratorium did not yield a similar bid due to the limited number of parties pre-qualified to perform due diligence at such time. Please refer to https://www.hyflux.com/qa-from-second-noteholders-townhall-meetings/ for further details on the Tuaspring divestment process.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

So book value is what Hyflux or any company says it is. To be fair, this can only happen with the approval of the accounting prostitutes profession and other prostitutes experts.

Think I’m unfair?

This is Hyflux’s response as to how the major assets of Hyflux were valued, and in particular why no impairment write-downs were made:

All major assets of Hyflux are measured at fair value, in accordance with the Financial Reporting Standard (“FRS”) 39 –Financial Instruments: Recognition and Measurement and FRS 105 –Non-current Assets Held for Sale and Discontinued Operations. These assets are assessed at the end of each reporting period to determine whether there is objective evidence that they are impaired, in accordance with FRS 36 –Impairment of Assets.

In accordance with the Group’s accounting policies (set out in the Annual Reports), an impairment loss, once determined, is recognised in the Income Statement in the relevant period.

Impairment losses recognised in respect of all non-derivative financial assets and non-financial assets, including investments, (if any) have been disclosed in the Annual Reports in the respective years.

The financial statements of Hyflux, as in all general purpose financial statements, have been prepared using the going concern basis of accounting.Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for the foreseeable future.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

But Hyflux and the prostitutes accountants and other experts, can point out that the non-recourse lender (Maybank) “commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.”

If a leading Asean bank could screw up so badly, anti-PAP types shouldn’t be too upset that retail investors lost money.

Related posts:

A really curious incident

Did Hyflux’s auditors mislead?

igNoble Hse omnishambles puts spotlight two int’l accounting firms

 

Did Hyflux’s auditors mislead?

Further to A really curious incident, where I criticised SIAS for not KPKBing early, here’s one criticism it got right, though why didn’t it raise this earlier, much earlier?

“On Mar 22 2018, KPMG provided a clean a clean audit report for Hyflux Group for the financial year 2017. On May 22 2018, Hyflux Limited and a number of subsidiaries filed for court protection from creditors,” SIAS said, asking what transpired between Mar 22 and May 22 in 2018.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Really shumething must be done about the audit prostitutes profession. Very related post: igNoble Hse omnishambles puts spotlight two int’l accounting firms

A really curious incident

The silence of a self-proclaimed watchdog: only KPKBing when Hyflux was bust.

SIAS raises questions about Hyflux CEO’s remuneration amid financial troubles

Despite reporting losses of S$115.6 million in 2017, troubled water treatment firm Hyflux spent about S$2.7 million on remuneration for its key executives, with CEO Olivia Lum receiving between S$750,000 and S$1 million in salary, benefits and bonuses.

In addition to this “large remuneration”, Ms Lum also received more than S$60 million in dividends “in the time that shareholders and bond holders have seen their entire investment destroyed”, according to the Securities Investors’ Association (Singapore) (SIAS).

Highlighting these points, SIAS asked why the Hyflux founder – which has 34 per cent ordinary shareholding in the company – did not contribute her gains to the restructuring process. The investor watchdog also asked if Ms Lum would have any role in the Hyflux group after the firm’s restructuring.

These were just two of more than 40 questions put to Ms Lum and the Hyflux board by the investor watchdog in a letter issued on Monday (Feb 11) and signed off by its President and CEO David Gerald.

“SIAS, representing the interests of the numerous stakeholders of various securities, is seriously concerned that many questions regarding the operations, valuation and accountability of the board of directors of Hyflux have not been addressed, so as to help securities holders make an informed decision, with respect to the restructuring,” Mr Gerald said.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Like real, barking after things went wrong. Not when things were going wrong and things could possibly be done to rectify the situation. Talk of bolting the stable door after the horse bolted.

 

If SIAS was my watchdog, I’d have shot it. The audited accounts raised many red flags. It’s not as though, the debts, and cashflow issues were hidden. All public knowledge. So was thisBS?

“Hyflux Group has generated negative operating cashflow in every year since 2009. Was this highlighted to bondholders and shareholders? If so, in what form? Why did the Board continue to pay dividends, when the operating cashflow was negative and accumulate more debt during this time?”

The investor watchdog also highlighted that Hyflux, despite the negative operating cashflow, reported profits in each year before 2017 and asked how this was possible.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Whatever, I’ll return to the fact that it kept quiet earlier: why?

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the night-time.”

Gregory: “The dog did nothing in the night-time.”

Holmes: “That was the curious incident.”

Silver Blaze by  Sir Arthur Conan Doyle

HoHoHo: Temasek’s “rogue bank” kanna caught again

Standard Chartered pays $40m fine after forex rigging probe

US authorities claim UK traders tried to manipulate emerging markets currencies

FT Headline

More on its problems:

“Criminal” activities

StanChart: Yet more problems for “rogue bank”

HoHoHo: Ho’s rogue bank woes (Cont’d)

Ho Ho Ho: StanChart still in jail

Incompetent mgt

HohoHo: StanChart’s strategic plans are sounding like our restructuring plans

HoHoHo: StanChart’s CEO is worse than our paper generals

No home market

HO Ho Ho: What Temasek forgot when it bot into StanChart (Got share price chart since Temasek bot into it. Got very sick looking at it)

 

But the gd news is that FT reported recently that Temasek had very recently told the mgt that it was not happy. I wrote last October HoHoHo: Time for StanChart’s CEO to go?. Shumeone in Temasek reads me? Ho Ho Ho

Have a prosperous and Happy Chinese New Year. To ensure this vote wisely. And certainly not for Mad Dog, Lim Tean and Meng Seng . But do think of voting for good SDP teams if they are better than the PAPpies.

“The appeal of Singapore is zero tax”

The above is the headline of a side article from the FT on Dyson’s move to shift its HQ here, though the main reason for the move seems to be to

liberate the business from UK disclosure rules for privately-owned companies, which Sir James has previously criticised as giving too much away to foreign competitors.

Main FT article

The text of “The appeal of Singapore is zero tax” reads

One of Singapore’s strongest appeals for foreign companies is the potential to lower their tax rate to zero per cent.

The headline rate of corporate tax is 17 per cent, a level that the UK will match from 2020, down from 19 per cent at present.

However, a combination of incentive schemes, which include an international headquarters award, can bring the country’s rate down to nothing.

“It is very very rare, but it has happened in the past,” said Chris Woo, tax leader at PwC Singapore.

Another corporate tax expert said it was “not impossible” for Dyson to snatch the 0 per cent corporate tax rate given it produces high-end goods that would transfer technology to Singapore; it will probably increase capital expenditure and high-skilled headcount; and it would boost R&D activity in the country — all of which is of interest to Singapore.

Dyson on Tuesday said it would expand its Singapore Technology Centre and that “an increasing proportion” of Dyson’s executive team will be based in the south-east Asian nation given a growing majority of the company’s customers and manufacturing operations are based in Asia.

In addition, the Singapore Economic Development Board offers companies tax exemptions or concessionary tax rates of 5 or 10 per cent for up to five years, with the possibility of extension.

To qualify, companies must boost employment, generate investment that spills over to the local economy and commit to developing technology, knowhow and skills in the city state, according to the EDB.

“The EDB must have pulled out all the stops to convince Dyson to relocate its headquarters,” said Eugene Tan, law professor at Singapore Management University.

Kiren Kumar, assistant managing director at the EDB, said: “Singapore and Dyson have enjoyed a strong partnership for more than ten years.

“Dyson has grown from a small team developing motors to 1,100 employees undertaking a variety of functions including supply chain management, advanced manufacturing and R&D”.

Stefania Palma

Related posts: What ST & CNA not saying abt Dyson’s move of HQ to S’pore and Ang moh manufacturer employs more people here than in China and planning to employ a lot more.

 

Why TOC’s Danisha Hakeem is a menace to the credibility of alt media

He’s regularly propagating fake news, or fabricated news.

This was very apparent in a story about our financial sector, an important driver of the economy, thus supporting the govt’s argument on the need to regulate fake news:

Senior Minister of State for Law Edwin Tong has hinted at the tabling of a Bill aimed at curbing the spread of deliberate online falsehoods in the coming months after numerous consultations and debates among legislators and members of the public surrounding the potential anti-“fake news” laws.

TOC

The fake news is that the S’pore govt was and is not doing anything about S’pore-based banks role in laundering 1MDB funds. This could affect our financial sector, and hence our economy.

Danisha Hakeem ended a TOC piece headlined “Singapore figured very highly as a place from which money laundering occurred”: Veteran business journalist on 1MDB fiasco

Given the stringent approach often adopted by Singapore authorities –– particularly relevant to this case is the Monetary Authority of Singapore (MAS) –– in dealing with legal misconduct, it certainly raises some questions as to why potentially illegal financial movements on such a scale did not seem to have raised any red flags for the authorities at the time the activities were carried out.

In reaching this conclusion, Danisha Hakeem conveniently omitted in the piece the following facts which even my Vocational Institute educated dog knows:

— the banks found to be at fault didn’t report these transactions as suspicious as they were or are supposed to;

— there was an official investigation;

— offending banks (including UOB and StanChart) were fined;

— one bank was closed down;

— and bank executives prosecuted and jailed.

Some links to give the lie to the fake news that the S’pore govt did not do anything about the 1MDB scandal.

— https://www.cnbc.com/2017/05/29/singapores-central-bank-fines-credit-suisse-and-uob-for-1mdb-related-transactions.html

— http://fortune.com/2016/10/11/1mdb-singapore-dbs-ubs-falcon-bank/

— https://www.reuters.com/article/us-malaysia-scandal-bsi/singapore-sentences-ex-bsi-banker-to-more-jail-time-in-1mdb-linked-case-idUSKBN19X0MC

— https://www.channelnewsasia.com/news/singapore/1mdb-probe-former-bsi-bank-director-yvonne-seah-sentenced-to-2-w-7670980

He’s like the infamous Alex Tan in fabricating false news.

Also  by fabricating the news, Danisha Hakeem undermines TOC’s claim on why we need independent media: The need for alt media

For the record, I don’t think Terry deserves to be charged for criminal defamation because he took down the offending article when the authorities told him they were unhappy. But given the fake news propagated by Danisha Hakeem in his articles (too many to recount and rebut), one can understand the desire to rough up Terry.

Jokes’ aside, legally there is good reason to suspect that Danisha Hakeem’s trying very hard in this artcle

to bring into hatred or contempt or to excite disaffection against the Government

Sedition Act: https://sso.agc.gov.sg/Act/SA1948

And given TOC’s track record, ill intent on his part is easy to prove. Not that the prosecution has to prove intent in any of the following offences.

4.—(1)  Any person who —

(a)	does or attempts to do, or makes any preparation to do, or conspires with any person to do, any act which has or which would, if done, have a seditious tendency;

(b) utters any seditious words;

(c) prints, publishes, sells, offers for sale, distributes or reproduces any seditious publication; or

[…]

shall be guilty of an offence and shall be liable on conviction for a first offence to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both, and, for a subsequent offence, to imprisonment for a term not exceeding 5 years; and any seditious publication found in the possession of that person or used in evidence at his trial shall be forfeited and may be destroyed or otherwise disposed of as the court directs.

Or maybe he’s trying to defame the central bank, hoping that the chairman or MD sues him for defamation that that the AG prosecutes him for criminal defamation.

But maybe he really wasn’t trying to propagate fake news or subvert the govt or defame the central bank, but was smoking ganja or ingesting other illegal substance when he wrote the piece?  Or is he a visitor from an alternative S’pore where the Men in White are the Men in Black?

(Related posts

PM visiting from Bizarro S’pore?

Tharman also from Bizarro S’pore?)

Whatever with Danisha Hakeem churning out articles for TOC (I’ll denounce another one of his pieces soon), the PAP govt doesn’t need to worry. Using TOC as a platform, he discredits all those rational, fair-minded S’poreans (self included) who oppose PAP hegemony. But then maybe that’s his real agenda? He gets thirty pieces of silver?

igNoble Hse omnishambles puts spotlight two int’l accounting firms

In the coming yr, investors, creditors and S’porean regulators of Noble will be singing

Fee-fi-fo-fum,
I smell the blood of an accountant from Ernst & Young or PricewaterhouseCoopers,
Be he alive, or be he dead
I’ll grind his bones to make my bread.

The back story

Noble Group is facing insolvency after authorities in Singapore said the crisis-hit commodity trader would not be able to list shares in a new entity, dealing a potentially fatal blow to its emergency debt restructuring.

Singapore’s white collar crime agency, its de facto central bank and the regulatory arm of the country’s stock exchange said they had “significant uncertainties about the financial position of ‘New Noble’”.

In a statement they said “New Noble’s” net asset value could be as much as 45 per cent lower than stated by the company when local standards stipulated by Singapore’s Accounting and Corporate Regulatory Authority were applied.

“It would be imprudent to allow the re-listing as investors will not be able to trade in New Noble’s shares on an informed basis. Monetary Authority of Singapore and Singapore Exchange will therefore not allow the re-listing of New Noble to proceed.”

FT a few weeks ago

The auditors were and are the Hong Kong arm of Ernst & Young

But they are not the only ones facing questions.

Noble Group’s Chief Executive Yusuf Alireza sought to draw a line under a long-running accounting dispute after a report by board-appointed auditor PricewaterhouseCoopers (PwC) found no wrongdoing in the company’s accounting practices.

https://www.reuters.com/article/us-noble-group-accounts/pwc-says-noble-groups-accounting-practices-comply-with-rules-idUSKCN0QF0Y420150810

 

The Hard and Harder Truths about Uber, Grab or Go-Gek

They got the funding to burn dollar notes, others don’t.

“Tens of others had technology just as good as Uber that never went anywhere. The difference is Uber has been heavily financed by Wall Street and they’ve raised more than $13bn. We didn’t have the same access to capital.”

He says building Uber’s app might have cost something like $30m but the rest of its huge pile of cash has gone on subsidising rides, offering discounts, effectively buying up the market.

CEO of Autocab talking to BBC: https://www.bbc.com/news/technology-46151994

As Autocab had been providing various services to cab firms for 20 years and was developing apps back before Uber got off the ground, the BBC reporter asked the CEO (Safa Alkateb) the obvious question: why wasn’t this Manchester firm heading for a $120bn (£92bn) IPO and global domination and not the start-up born in San Francisco?

Safa Alkateb, who spent a career in Silicon Valley before coming home to run Autocab, had a simple answer – money.

The Harder Truth: Uber raised the white flag in S’pore and the region, the winner Grab stopped subsidising fares. Fares rose while incentives for drivers were scaled back.

The throwing of money is aimed at securing a monopoly or near monopoly position.

South-east Asian authorities gained valuable experience as they scurried to respond, suggested Toh Han Li, chief executive of the CCCS* and this year’s chair for Asean’s competition agencies group. The Grab-Uber case “can be considered as the first significant case involving co-operation among Asean competition authorities”, he said.

Nikkei Asian Review

*Competition and Consumer Commission of Singapore

 

StanChart: Yet more problems for “rogue bank”

FT reported that US prosecutors have told StanChart that they are preparing to bring criminal charges against two of the bank’s former employees over alleged sanction breaches involving Iran-linked companies.

Related posts:

HoHoHo: StanChart gets into more trouble

Double confirm StanChart’s rogue bank & PAP apologist is a fool

HoHoHo: StanChart gets into more trouble

StanChart is expecting a potential penalty of around US$1.5 billion from U.S. authorities for allowing customers to violate Iran sanctions.

https://www.bloomberg.com/news/articles/2018-10-01/stanchart-said-to-brace-for-new-iran-fine-of-about-1-5-billion

StanChart hasn’t been able to clean up its dirty linen despite a 2012 deferred prosecution agreement (DPA) in which it admitted secretly moving billions of dollars through the U.S. on behalf of Iranian clients, in violation of sanctions.

As part of the DPA, the bank agreed to have an outside, independent monitor to scrutinize its business practices and the U.S. agreed to eventually dismiss charges once the bank has complied. A failure to comply would typically allow prosecutors to reopen the case.

The DPA has been extended multiple times, including as recently as this summer, and will now run until the end of 2018. Authorities said the bank’s sanctions-compliance program “has not yet reached the standard required.”

Naturally the price came off when the mkts heard this. Ho Ho Ho

Related post: Double confirm StanChart’s rogue bank & PAP apologist is a fool

Reminder to auditors and listcos

The directors of listcos especially.

The judge said the purpose of publishing accounts was to provide the market and the public with information about the state of the company so “informed decisions” can be made by interested parties about their financial affairs.

FT report on the MD of a bank jailed for falsifying accounts

 

Airnnb: More arrogant than Uber

This

the Urban Redevelopment Authority (URA) has proposed in a regulatory framework for using private homes as short-term accommodation (STA).
Read more at https://www.channelnewsasia.com/news/singapore/airbnb-accommodation-proposal-ura-rental-cap-consent-rule-10141664

reminded me that Airnnb thinks ang moh tua kee

Home-booking company Airbnb is willing to make some concessions on short-term rentals in Singapore in an attempt to appease concerns of the government, a top executive said on Monday (Mar 5).

Read more at https://www.channelnewsasia.com/news/singapore/airbnb-willing-to-make-concessions-in-singapore-policy-chief-10015636

This show of arrogance came after two Singaporean Airbnb hosts pleaded guilty to unauthorised short-term letting in the first such cases under new rules introduced in Singapore last year on short-term property letting. They were fined a total of S$60,000 each.

Well going by URA’s tots, Airbnb’s ang moh tua kee attitude is not helping them because

— Private apartment and condominium owners who want to rent out their homes for short-term accommodation will be able to do so for 90 days a year provided they fulfil several requirements, including obtaining 80% consent from owners within a development and registering their guests’ details.

— URA has already stated that it is unlikely to approve landed properties

Never mind I’m sure Kirsyen Han and other S’porean ang moh tua kees can be counted on to champion Airbnb’s continued flouting of our laws.

A New Zealand family of four who turned up at Caribbean at Keppel Bay expecting to pick up apartment keys for a four-night stay booked on Airbnb were devastated when they were told such short-term rents were outlawed.

“We proactively encourage all hosts to consult local laws and regulations before listing their property on Airbnb,” said its head of public policy for South-east Asia, Ms Mich Goh.

Err Ms Goh why doesn’t Airbnb juz not list accomodation here? Instead of putting the blame on the govt

On the Haynes family’s case, Ms Goh said: “This is further evidence of the need for a regulatory framework that reflects how people increasingly want to travel.

“We are optimistic that our community of hosts and guests will get the clarification it needs within the next two weeks when the Government publicly shares its proposed short-term rental rules and begins its public consultation on the matter.”

Maybe the govt should throw Ms Goh into prison and let Kisten Han KPKB.

Because maybe Airnbnb is a friend of those who want to see an end what they see as illiberal democracy or worse here: S’pore: An illiberal democracy?.

ISD should call in Ms Goh for an interrogation.

Welfare for insurers (cont’d)

Here in Welfarism the PAP way I gave an example (share of taxes paid) that the PAP did welfare: corporates get welfare, not the people

Here’s another: the new requirement that Integrated Shield Plans (IPs) with riders have a co-payment portion of at least 5%.

When the PAP introduced this welfare scheme for insurers, a minister talked about “buffet syndrome” of policyholders.

Well the insurers should have allowed to wallow in their own urine and shit.

The problem was self-created. The “free” riders were created to increase their profits, or so they tot. Now that it was not working for them, the PAPpies should not be riding to their rescue. They should simply stop marketing the products. And start increasing the premiums for existing holders to reflect previous pricing mistakes.

But to be fair to the corporate loving PAP govt: the change has not mandated any change for the 1.1m people who already have full riders for their Integrated Shield Plans (IPs) – which means they still will pay nothing for hospital bills.

But the freeloaders and scroungers that are the insurance industry will not stop lobbying for this to change. They had wanted the co-sharing to apply to the existing contract, or so Secret Squirrel and Morroco Mole tell me.

But the PAP govt didn’t want another public row what with its plans to raise GST after the next GE.

 

Chinese fraud in US executed from S’pore

Bank of America Merrill Lynch recently agreedto pay US$1.4 million to settle S.E.C. allegations that it didn’t do enough to investigate red flags at a Chinese company Longtop Financial Technological, a Chinese software company accused of fraud in 2011 whose unregistered securities it sold.

The sales occurred in a brokerage account opened in a Singapore branch of BofAML and were executed by traders in New York at the direction of the Singapore office, according to the SEC. In 2013, BofAML sold Merrill Lynch’s international wealth management business, including the Singapore branch office.

Ever wondered about how banks detect money laundering?

If u like me have faced questions when u wanted to deposit a S$1000 note into yr bank account, then read https://www.economist.com/blogs/economist-explains/2017/11/economist-explains-16.

Software and data bases are the front line, not the teller.

Btw, my standard answer to the teller, “If PAP issues S$1000 notes, cannot use them isit? Not happy, tell PAP to stop printing them.”

Head of research paid peanuts?

He took a $3000 bribe. What a cheapskate.

MAS also served notice of its intention to issue POs against the Chief Executive Officer of NRA Capital (NRA), Mr Kevin Scully, and its former Head of Research, Mr Lee Chee Waiy.

Through Mr Ang*’s introduction, NRA was appointed to perform the valuation of PetroSaudi Oil Services Limited (PSOSL). On 24 May 2017, Mr Ang was convicted of an offence under the Prevention of Corruption Act for bribing Mr Lee with S$3,000 to expedite the preparation of the valuation report on PSOSL.

MAS said Mr Lee had been the primary person in NRA working on the valuation. Apart from accepting the bribe, he was also found to have applied inappropriate methodology and assumptions in the valuation of PSOSL. As CEO of NRA, Mr Scully had failed to ensure that his analyst, Mr Lee, had exercised sufficient care, judgment and objectivity in the valuation of PSOSL, MAS added.
Read more at http://www.channelnewsasia.com/news/singapore/financial-penalties-imposed-on-credit-suisse-and-uob-for-1mdb-8894194

*Mr Ang Wee Keng Kelvin, a former remiser at Maybank Kim Eng Securities.

Related post on financial people doing risky but unluctative things that have negative consequences for their careers. 

Wells Fargo misdeeds were peanuts

Only $5 million had to be set aside to compensate customers and the $185 million in fines are a rounding error.

But its top executive had to go.

More on StanChart’s latest problem with the US

From NYT Dealbook Standard Chartered Under Investigation

Standard Chartered has been accused of potential wrongdoing by officials at an Indonesian power company in which it is an investor.

The United States Justice Department is looking into the accusations, a person briefed on the matter said. The investigation was related to accusations that officials at the company, MAXpower, had paid bribes to win contracts, according to The Wall Street Journal, which earlier reported the inquiry.

A recording of a conversation with the company’s chief executive, who used to work at Standard Chartered, featured discussions about illicit payments and joking references to soccer balls stuffed with cash, The Journal reports.

The situation is particularly tricky for the bank, which is based in London but does most of its business in Asia, because of the settlement it reached after an investigation into accusations that it had transferred money for countries affected by United States sanctions.

Misconduct could prompt prosecutors to re-evaluate whether to revoke the deferred-prosecution agreement and force the bank to plead guilty.

It’s also a blow to William T. Winters, the chief executive who has been trying to overhaul the bank.

Feds treat as bribery US bank’s programme for PRC White Horses

JPMorgan’s efforts to hire the children of China’s ruling elite seem to keep coming back to bite it. NYT Dealbook (JPMorgan hired friends and mamily of leaders at three-quarters of major Chinese firms it took public in HK under the Sons and Daughters program, which ran from 2004 to 2013, JPMorgan took referrals from a broad spectrum of China’s business and political elite, according to a document compiled by the bank as part of a federal bribery investigation) NYT Dealbook continues

The bank is preparing to settle with federal prosecutors and the Securities and Exchange Commission after being the subject of a federal bribery investigation.

But it is now also facing scrutiny from the Federal Reserve and the Office of the Comptroller of the Currency, two agencies that were not previously known to be involved.

The Fed is seeking a $62 million fine, while the Office of the Comptroller of the Currency will seek to mete out its own punishment, according to people briefed on the investigations. The two regulators are focusing on a breakdown in controls and practices that allowed the improper hiring to take place, rather than the bribery aspect.

JPMorgan is expected to pay federal prosecutors and the S.E.C. about $200 million.

How managers encourage abusive behaviour

but ensure that their staff suffer the consequences Wells Fargo Warned Workers Against Sham Accounts, but ‘They Needed a Paycheck’ By MICHAEL CORKERY AND STACY COWLEY Former employees say that their managers warned them not to bend the rules, but they felt pressured by the bank’s aggressive sales culture to create fake accounts anyway. NYT Dealbook

Buffett: Bank fines like speeding tickets

Warren Buffett on Driving Violations, Baseball and Jamie Dimon Warren E. Buffett offers an unusual defense of Jamie Dimon, comparing the billions of dollars that JPMorgan Chase has paid in fines to state troopers handing out a speeding ticket.

• DEALBOOK

Why Dodge City’s marshall upset with HSBC

From NYT Dealbook

How Traders Use Front-Running to Profit From Client Orders Federal prosecutors charged two HSBC employees on Wednesday with “front running.” But how do traders use this practice to maximize profits?

• NYT »

DoJ connects 1MDB bonds’ proceeds to Najib personally

[B]etween 2012 and 2013 Goldman helped 1MDB raise $6.5 billion by issuing three bonds. The Justice Department suggests that around 40 percent of that money was siphoned off, and indicates that $681 million ultimately found its way into Najib’s personal bank account, though the prime minister is not directly named.

http://blogs.reuters.com/breakingviews/2016/07/22/malaysia-fiasco-undercuts-goldmans-standards-push/

OK OK, The DoJ alleges thattransferred into an account belonging to a Malaysian official whose description matches that of Najib.

Seriously it’s either black comedy or farce when Switzerland, S’pore and the DoJ allege that monies was stolen from 1 MDB but “There has been no evidence from any investigation conducted by any law enforcement agencies in various jurisdictions which shows that money has been misappropriated from 1MDB,” says M’sia’s AG.

Why HSBC owed UK one cont’d

As I reported earlier many shareholders were disappointed that HSBC decide to remain HQed in the UK, and not retuen to HK.

Then it emerged that in 2012 Mr Osborne, the then UK Chancellorm interceded in the US Justice Department’s investigation into HSBC over money laundered through its American branches by Mexican drug lords. The DoJ was considering bringing charges on top of the fines it imposed on the bank, Britain’s biggest, but Mr Osborne argued that this would destabilise a “systemically important financial institution” and lead to “contagion”.

Now NYT Dealbook tells us more about how this intervention affected the DoJ’s decision to go easy on the maeco-bank

A BANK TOO BIG TO JAIL If you’ve ever wondered why the 2008 financial crisis generated almost no criminal prosecutions of large banks and their top executives, you should read the congressional report, “Too Big to Jail,” Gretchen Morgenson writes in Fair Game.

The report examines the Justice Department’s settlement with HSBC in 2012 after accusations that it laundered nearly $900 million for drug traffickers and processed transactions on behalf of countries subject to United States sanctions. It shows how regulators and prosecutors turned a potential criminal prosecution of HSBC into a watered-down settlement that insulated its executives and failed to take into account the full scope of the bank’s violations.

The bank and its American Subsidiary, HSBC Bank USA, agreed to pay almost $2 billion under the settlement, striking a deferred prosecution arrangement that remains in place. Under such deals, the government agrees to delay or forgo prosecution of a company if it promises to change its behavior.

The report concluded that the Justice Department’s leadership overruled an internal recommendation to prosecute HSBC, citing concerns “that prosecuting the bank ‘could result in a global financial disaster.'”

Peter Carr, a spokesman for the Justice Department, said it was “committed to aggressively investigating allegations of wrongdoing at financial institutions, and, along with our law enforcement partners, holding individuals and corporations responsible for their conduct.”

The facts outlined by prosecutors were damning enough to raise questions about why the bank had not been subject to harsher treatment and fueled the view that large financial institutions are not only too big to fail, but also too significant to be prosecuted criminally.

“The fact that so many of these cases are settled rather than going to court means we don’t get an airing of facts and challenges of facts,” said Edward J. Kane, a professor of finance at Boston College and an authority on regulatory failures. The report should be viewed as “evidence of an abuse of the regulatory system,” he added. “And unless proven otherwise, this is just the tip of the iceberg.”

1MDB: Worth it Goldmans?

Top US gun-slinging marshall is shaking down Goldie.

The asset forfeiture and money laundering division unit in the Justice Department is investigating the above deal according to the FT. Goldman could be fined US$1bn or worse, managers involved could get indicted.

The division’s main hallway is lined with framed testimonials to the corporate scalps it has collected over the years, including those of companies such as Enron and Bank Credit and Commerce International.

Btw, Goldmans become a pariah in KL: can’t get mandates. FT reports that a source said it was not invited to pitch on government bond issuances in April, or for recent debt and equity-raising deals for Khazanah

Wayang only, our banking secrecy laws

In the case reported below, MAS was quoted as saying by ST that “Banking information could be disclosed through client’s consent or via Singapore mutual legal assistance.”

MAS seems to suggest that consent or mutual assistance are the main channels for disclosure.

So where got banking secrecy? All wayang.

From NYT Dealbook:

UBS Gives I.R.S. Records on U.S. Citizen’s Account in SingaporeUBS ended a legal fight with the Internal Revenue Service, agreeing to hand over records on an American client’s account in Singapore as the authorities seek to move beyond Switzerland in their fight against offshore tax evasion.

• BLOOMBERG

“UBS confirms that it complied with the summons based on client consent in accordance with Singapore law,” Marsha Askins, a UBS spokeswoman, said in an e-mail.

IRS agents served a summons on UBS in 2013 for the records. Hsiaw had $990,351 in his UBS account in Switzerland in 2001, and closed that the next year, transferring $194,356 to his Singapore account in 2002, according to the IRS petition. The bank said it couldn’t produce the information because Singapore’s bank-secrecy laws prevent disclosure without permission from Hsiaw, which he hadn’t provided, according to a court filing.

Singapore’s laws and regulations don’t prohibit sharing of information for investigations into possible tax offenses, and banking information could be disclosed through client’s consent or Singapore mutual legal assistance, according to the city state’s central bank.

“Even if Singapore’s bank secrecy laws, as UBS contends, precludes disclosure of the summoned bank records relating or pertaining to Hsiaw’s Singapore account(s), international comity requires that the records be disclosed,” IRS revenue agent James Oertel said in the Feb. 23 petition.

 

Fall of BSI and Goldie rainmaker: From heroes to zeroes

How a 143-Year-Old Swiss Bank Took a Quick Road to Ruin in Asia When a rainmaker left RBS Coutts with 70 colleagues for BSI, a small Swiss bank looking to get big in a hurry, it set off a chain of events that thrust the bank into the center of the financial scandal involving 1MDB.

• BLOOMBERG

NYT Dealbook

And here’s how a Goldman Sacks partner, whose wife called Rosmah Najib (FLOM or self-styled First Lady of M’sia) a friend, became a zero

http://www.bloomberg.com/news/articles/2016-03-30/the-rise-and-fall-of-tim-leissner-goldman-s-big-man-in-malaysia

Will the Feds kill a chicken to frighten the monkeys?

Panama law firm caught with pants downMight go the way of Arthur Andersen if the US decides to kill a chicken to frighten the monkeys.

From NYT Dealbook

PANAMA PAPERS SHOW HOW RICH U.S. CLIENTS HID MILLIONS ABROAD The New York Times’s examination of the Panama Papers has found that Mossack Fonseca had at least 2,400 United States-based clients over the past decade and set up at least 2,800 companies on their behalf in the British Virgin Islands, Panama, the Seychelles and other jurisdictions that specialize in helping to hide wealth. The trove of internal documents from the law firm were obtained by the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, and has now been shared with The Times.

The documents show that Mossack Fonseca did much more than create offshore shell companies and accounts, Eric Lipton and Julie Creswell report. For many American clients, the firm offered a guide to skirting or evading United States tax and financial disclosure laws.

The methods included locating an individual from a “tax-convenient” jurisdiction to be the straw man owner of an offshore account or encouraging a client to use his foreign passports to open offshore accounts and avoid regulatory scrutiny. If the compliance department at one foreign bank contacted by Mossack Fonseca asked too many questions, the firm simply turned to other, less inquisitive banks. The firm’s clients included people with criminal records, in spite of its public stance of not working with individuals convicted of crimes.

Federal law allows United States citizens to transfer money overseas, but these foreign holdings must be declared to the Treasury Department, and any taxes on capital gains, interest or dividends must be paid. Federal officials estimate that the government loses $40 billion to $70 billion a year in unpaid taxes on offshore holdings.

Experts who examined the documents were reluctant to declare that the law firm or its clients had broken any laws given that no charges had been filed, but they did say that they were surprised at how explicitly Mossack Fonseca had offered advice that appeared carefully crafted to help clients avoid United States tax laws.

Mossack Fonseca has said repeatedly that it had honored international tax and banking laws, but presented with summaries of several cases by The Times, it did not try to explain its actions. “Our significantly expanded compliance office today not only evaluates new client candidates, but also existing accounts, and especially those that were established prior to the new international regulatory regime coming into effect,” a representative said in a written statement, referring to a 2010 law passed by Congress. “It wasn’t always this way.”

The American client list does not appear to include the sort of high-profile political figures that have emerged in other parts of the world, but Mossack Fonseca’s services were in high demand by the rich and famous in the United States. Read more about them here.

SGX washes dirty underwear in public

SGX recently released a report detailing for the first time the number of listed-companies which have had their stocks suspended from trading for 12 months or more. This report will now be a yearly affair.

Of the 20 companies, 17 are S-chips (companies which have their operations in China but are listed on SGX), two are Indonesian companies listed here, and only one is a local company.

Surprising that SGX washes its dirty underwear in public.

In the late 90s and noughties, SGX became the place for PRC companies to be listed because SGX requirements were less stringent than those of the Hong Kong stock exchange.

Problems with S-chips soon surfaced which included loan defaults and fraud (missing cash, long-overdue receivables, or significant over-payments to suppliers only to have these amounts written-off later.) In 2009, the Singaporean authorities even appealed to their Chinese counterparts to maintain ‘stringent supervision’ over their companies that list on the SGX. I’m sure they were told to F-off: “SGX collects the fees, SGX’s problem”, I’m sure the S’porean authorities were told.

Retail investors lost serious money, something that even the constructive, nation-building media reported.

Yet despite continuing problems with S-chips (missing cash, long-overdue receivables, orsignificant over-payments to suppliers only to have these amounts written-off later still occur), and London’s nasty experience of Chinese listings on AIM (eg London-based directors not hearing from the China-based CEO, or the corporate “chop” going AWOL after the China-based CEO was sacked), SGX’s plans for the future include attracting  more S-chips.

WTF!

Fed Warned Goldman on Malaysian Deals

Federal Reserve regulators had raised concerns with Goldman Sachs that deals that it helped put together for a Malaysian government investment fund, 1Malaysia Development Berhad ( 1MDB), could have put the firm’s reputation at risk, The Wall Street Journal reports, citing people familiar with the matter.

• THE WALL STREET JOURNAL

Best place to incorporate shell co

NYT Dealbook

Need to Hide Some Income? You Don’t Have to Go to Panama Setting up a shell corporation in the United States is simple – especially in states like Delaware, Wyoming and Nevada.

• NYT »

Obviousl NYT is a constructive, bation-building newspaper like ST.

Panama Papers: Chinese really tua kee

The files suggest that China is Mossack’s most important market. The firm’s Hong Kong office has been its busiest, and it has outposts in eight other Chinese cities. These nine offices set up 29% of all the firms Mossack had on its books at the end of 2015, according to the ICIJ.

Although there is no evidence of illegality, obeying the law is not the only requirement for Chinese officials. Almost all of those involved are Communist Party members, who must abide by the party’s code of conduct. This bans them from registering or investing in companies abroad. So they may have broken rules, if not the law. High-ranking officials in China can also be held responsible for the business dealings of relatives.

http://www.economist.com/news/international/21696497-huge-trove-documents-has-revealed-secrets-offshore-business-presaging-tougher

 

Never a gd idea to try to play both sides

In the u/m story, the journalist implies that the authorities were wrong to investigate Citic for short-selling. Truth is that it’s never a good idea to Run with the hares, and hunt with the hounds”. Got to choose. Most probably senior mgt was clueless about what the sales team selling to ang mohs.

Citic Short-Selling Offer to Hedge Funds Led Police to Its DoorAn initial police investigation of Citic Securities focused on whether the firm was giving foreigners a way to short stocks on the so-called A-shares market in China at the same time that it was engaged in government-sponsored plans to prop up the market, Bloomberg News reports, citing a person familiar with the events.

• BLOOMBERG NEWS

(NYT Dealbook)

Insider trading: The long reach of MAS

This case surprised me because all that happened was that a bank account here was usedto buy the shares. Otherwise everything was done overseas.

The Monetary Authority of Singapore (MAS) said in a statement on Wednesday it fined Rajiv, a former Indonesia investment banking head of UBS, S$434,912 (US$313,857) in the 2012 insider trading case. It sweems the guy juz lost his job at Caryle as head of its Indon division.

The MAS said Rajiv bought 1 million PT Bank Danamon shares in March 2012 through his wife’s bank account in Singapore after he possessed price-sensitive and non-public information on a proposed acquisition of Danamon by Singapore’s DBS Bank.

DBS announced the proposed acquisition in April 2012 and MAS said Rajiv made a profit of S$173,965 from his insider trades when he was with UBS. Due to regulatory issues, DBS subsequently pulled the plug on the Danamon deal.

The MAS said Rajiv admitted breaking the securities law and paid MAS the civil penalty without court action.

HoHoHO: StanChart upsets US again

Documents seen by the FT suggest that the bank continued to seek new business from Iranian and Iran-connected companies after it had committed to stop working with such clients in 2007.

The US authorities are looking into the matter.

Rogue bank strikes again? Think got Temasek as major shareholder can be as yaya papaya as Amos Yee?

US Marshalls make Christ’s vicar bow down

Vatican to Comply With U.S. Tax Evasion Law. The Vatican has agreed to comply with Foreign Account Tax Compliance Act, which means banks operating there will have to transmit information on accounts held by American taxpayers to American authorities,

NYT Dealbook

What Citi and UBS pleaded guilty to

Below is a summary of what Citi and UBS (Harry’s “forever” investments) pleaded guilty to from NYT’s Dealbook

HEAVY FINES FOR FOREIGN EXCHANGE COLLUSION At big banks, foreign exchange trading seemed like the ideal business – relatively low risk for solid revenues. But “what seemed like the perfect business turned out to be the perfect breeding ground for crime,” Michael Corkery and Ben Protess write in DealBook. Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland pleaded guilty to a series of federal crimes over a scheme to manipulate the value of the world’s currencies, the Justice Department said Wednesday. A fifth bank, UBS, was also accused of foreign currency manipulation but was not criminally charged because it had alerted the Justice Department to possible misconduct. However, the accusations cost the bank an earlier nonprosecution agreement related to the manipulation of the London Interbank Offered Rate, or Libor.

Prosecutors said traders at the five banks colluded from at least 2007 to 2013. “To carry out the scheme, one trader would typically build a huge position in a currency, then unload it at a crucial moment, hoping to move prices. Traders at the other banks would play along, coordinating their actions in online chat rooms,” Mr. Corkery and Mr. Protess write. The foreign exchange business may have been particularly susceptible to manipulation because it can be less profitable than other forms of trading, which increases the pressure for the traders to look for alternative ways to pad their returns, analysts said. Also, no one government agency is responsible for policing the currency market, creating a regulatory void.

The five banks, which also struck civil settlements with the Federal Reserve, the Commodity Futures Trading Commission, a British regulator and New York’s financial regulator, agreed to pay $5.6 billion in penalties. That is in addition to the $4.25 billion that some of these banks agreed to pay in November to many regulators. Together, the amount nearly equalsthe foreign exchange revenue generated at 10 of the world’s largest banks last year, which was $11.6 billion, according to Coalition, a financial analytics provider.

WILL PENALTIES CHANGE BANKS’ BEHAVIOR? What’s notable in the currency manipulation case is the ethos articulated by the traders involved. They called themselves “the mafia” and “the cartel,” and one Barclays trader wrote in an online chat room, “If you aint cheating, you aint trying.” In the White Collar Watch column, Peter J. Henning asks whether the guilty pleas and penalties will make a difference in how banks do business, noting that “even as penalty after penalty is paid by big banks in various cases, it seems as though the same cast of corporate characters keeps reappearing.”

He notes that guilty pleas from the big banks are “noticeably tougher” than the enforcement actions of the past, when violations drew only deferred or nonprosecution agreements. Yet the act of pleading guilty doesn’t carry the same stigma as it did in the past, Mr. Henning writes, because the government has tried to keep a guilty plea from hindering a bank’s operations. The Justice Department has also been demanding the identities of the employees behind the violations, but it’s unclear whether it will actually prosecute those people. “To change corporate culture and prevent violations from happening in the future, prosecutors may have to go beyond just demanding cooperation and threatening ever larger fines,” Mr. Henning contends.

Two of LKY’s “forever” banks are criminals

Shortly before Temasek sold, MM had said that S’pore Inc’s investments in Citi, UBS, and Merill Lynch had a time-frame of 30 yrs. Temasek held its ML investment for over a yr. GIC still owns shares in Citi (profitable), and UBS (big loss). https://atans1.wordpress.com/2011/01/17/mm-got-it-right-temasek-got-it-wrong/

UBS and Citi are still owned by GIC are now big time crooks. Recently, JP Morgan, Barclays, Citigroup and Royal Bank of Scotland – pleaded guilty to criminal charges in the US relating to the rigging of currency markets.

The four, and Switzerland’s UBS, which pleaded guilty to a different charge, agreed to pay $5.7bn (£3.6bn) in fines.

 

Govt sees StanChart as risky?/ LKY’s 30-year investments revisited

The Hong Kong Monetary Authority says that it “takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong”, where it is the largest bank.

HSBC WEIGHS MOVE FROM LONDON HSBC was established in Hong Kong 150 years ago and moved its headquarters to London in 1993. Now it is considering a return trip. Citing changes in regulation, HSBC says it will study whether to relocate its headquarters out of London, reports Chad Bray in DealBook.

A big part of the issue is Britain’s bank levy, which was instituted in 2010 to help pay for the government’s financial crisis bailouts. While all banks operating in Britain pay the tax, Mr. Bray writes that “The levy hits British-based banks particularly hard, however, as they are taxed on their global balance sheets.” HSBC’s announcement could become a political issue as Britain nears a general election on May 7.

(NYT’s Dealbook)

Hongkong Bank is a HK quitter. It moved to UK in 1993, juz before PRC regained HK in 1997. But all is forgiven.

Both HK have S’pore have similar sized economies (about US$300bn in GDP).

HK is willing to be lender-of-last-resort to HSBC a bank with US$2,6 trillion in assets, despite HSBC being almost 9 times bigger than HK’s GDP.

Yet the S’pore authorities, it’s clear from hints in the FT, are unwilling to have StanChart HQed here (only 1.1 trillion in assets), despite Temasek being the largest single shareholder (which will benefit from reduced tax: HSBC shares were up 6% in HK yesterday), and despite many of StanChart’s operations being run from here.

The PAP administration is afraid of another of Temasek’s investments blowing up? After all StanChart is not as safe as our local banks: https://atans1.wordpress.com/2015/03/25/stanchart-not-as-solid-as-local-banks/

It also has weaker capital ratios than HSBC and the big US banks. So weak that the new CEO is expected to call for yet another massive rights issue.

Remember LKY and his bank investments that are forever? OK 30 yrs leh) Even longer than Buffett’s investments, he once said

In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.

We lost serious money in two of the 30-yr investments by 2009.

— Estimate of Temasek’s realised losses on ML and Barclays:

https://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

— Estimate of GIC’s loss on UBS as at 2011:

https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:

https://atans1.wordpress.com/2012/07/22/third-time-lucky-temasek/)

 

 

 

Retail punters suffer ’cause SGX, MAS dysfunctional?

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.

Why S-Chips no hew our laws

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/

No such thing as a “safe” investment

Savers looking for ways to earn the kind of income once reliably available from traditional investments, will end up buying “unsafe” products.

Let’s hope the authorities are more vigilant now that the FT that was responsible for products like “minibonds” has moved on. What annoys me is that while MAS found that banks like DBS had failed to appreciate the risks to customers, it only slapped them lightly. In the UK, heavy fines are levied and banks are expected to reimburse customers, even sophisticated ones http://www.bbc.co.uk/news/business-21423831.

.”UBS’s conduct fell far short of what its customers deserved”.

FOR SAVERS, RISKY INVESTMENTS TURN SOUR Americans whose stock portfolios lost money in the financial crisis have turned to speculative investments promoted by aggressive financial advisers – leading to steep losses and accusations of fraud. “Those alternative investments have now had time to go sour in big numbers, state and federal securities regulators say, and are making up a majority of complaints and prosecutions,” The New York Times’s Nathaniel Popper reports. “Last Wednesday, Mr. Galvin’s office ordered one of the nation’s largest brokerage firms, LPL Financial, to pay $2.5 million for improperly selling the real estate bundles, known as nontraded REITs, or real estate investment trusts, to hundreds of state residents from 2006 to 2009, in some cases overloading clients’ accounts with them.”

“Brokers promoting bad investments to unsophisticated investors is nothing new. But while the easy prey used to be people looking to get rich quick, the pool has widened to include savers looking for ways to earn the kind of income once reliably available from traditional investments. Regulators are warning investors that the dangers are unlikely to recede, given the Federal Reserve’s pledge to keep interest rates near zero and the push among financial firms to earn more revenue from so-called alternative investments marketed to retail investors.”

Even pros don’t read to fine print

So the call for more transparency and disclosure is BS!

Sophisticated investors are supposed to read the documents. We all know that retail investors don’t often take the time to read disclosure, but the securities laws are based on the idea that information is filtered into the markets through disclosure to sophisticated investors who then set the real price of the security … If sophisticated investors can’t be bothered to read the documents and act on them, then we have a real gap in the entire disclosure regime and asset pricing generally.

Unfortunately, this is what the evidence from the C.D.O. market before the financial crisis shows. And because of this, the idea that requiring still more, better or clearer disclosure is likely to be unfruitful in many cases … Until we better understand how sophisticated investors process and read disclosure, regulators should be wary of trying to solve the problem by simply requiring more disclosure.

---

Independent directors can continue sleeping on the job

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!

StanChart: A buy for the bold & canny?

Looks like Jewish-American NY regulator is a “rogue regulator” in it for the publicity (new boy in town) or to shake down StanChart for US$700m.

Meanwhile some combination of a massive fine (say US$1.5bn),  mgt changes (both looking unlikely as is the  loss of US licence) or Temasek doesn’t want to be on the wrong side of the allegations and wants out (unlikely too), someone like JP Morgan or BoA who covets StanChart’s trade financing biz in Asia and other emerging markets might bid http://www.breakingviews.com/standard-chartered-selloff-has-gone-far-enough/21034299.article

Anyway it is cheap. Trading at about 1.17x book (HSBC trades at 1x book) even after its recovery. It usually trades usually at 1.3x book.

Hurry, hurry before the discount disappears. Buying at this level gives exposure to S’pore and HK where banks trade at around 1.3x book), and Msia and Indonesia (where banks trade at around 2x book minimum) at a discount.

Investor protection:HK going one up on S’pore

Hong Kong, where the securities regulator in May proposed introducing civil liability for banks working on initial share sale prospectuses (we got this here but kinda useless deterrent: look at the S- Chips that were listed), is thinking of allowing class-action lawsuits to help investors seek damages.

The city’s Law Reform Commission in late May recommended legislation to allow a group with a common complaint to sue through a representative. Initially, the class actions should only be for cases such as product liability and consumer fraud, which can be financed by an existing public fund.

Hong Kong currently allows multiparty proceedings under rules that the city’s then-chief justice Andrew Li criticised as restrictive and inadequate in 2004. Losing parties must pay all or part of their opponent’s legal fees under Hong Kong law, a deterrent for individual investors seeking damages. S’pore has shumething similar though our CJ never ever criticised the law on multiparty suits.

The inability to bring class action suits and the issue of costs hindered the mini-bonders, and other similar structured product investors from pursuing their claims here. Some DBS HN5 holders failed in very their technical law-suit. Some Pinnacle note investors are suing Morgan Stanley in the US.

Corporate governance: Better value elsewhere in region?

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.

S-Chips are not the only Chinese junk exports, ask the US and HK

The 180 Chinese companies that went public around the world since the beginning of 2010 are trading at an average of 21%  below their IPO prices, Bloomberg News reports.

In Singapore, the third-biggest market for such listings after Hong Kong and New York, eight Chinese companies that went public in 2010 have declined an average of 47 percent from their offer prices, the data show. That compares with a drop of 15 percent for the 23 non-Chinese firms that had IPOs in 2010.

And trading volumes are shrinking. In the last 12 months, trading volumes in S-Chips have halved. [Update on 24 April 2012 at 7.20pm]

But HK and the US are doing something. Regulators in Hong Kong are set to propose rules that would make banks liable for faulty IPO documents, Reuters reports. And earlier today, Hong Kong’s securities regulator fined a brokerage firm and revoked its corporate finance licence. Mega Capital (Asia) has been fined HK$42m (US$5.4mfor “inadequate and sub-standard” diligence work and “failure to act independently”. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. BBC Online

In the US, the SEC and FBI have been investigating people allegedly involved in fraud in China-based companies listed on US exchanges. Latest [25 April 2012] SEC investigations and analysis of the complicated structure that overseas listed Chinese cos (including S-Chips) have to adopt to list overseas which makes malpractice easier..

Err waz happening here? We are told by an SGX non-executive director that SGX is “a private club” despite it regulatory role. He said this recently when representing SGX in court as SGX’s lawyer in a case involving a S–Chip. Article 14 analyses the case.

When will this happen to a S-Chip?

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.