Sunday, May 23, 2010

The Sime Darby Fiasco - who else should be held responsible.

In my last posting, I promised to name the senior management executives who should be held accountable for the losses incurred by Sime Darby Berhad.

My argument that the management had contravened the Company's Act and failed to comply to the principles of Corporate Governance is supported by Sime Darby Chairman Tun Musa Hitam in an interview which appeared in Mingguan Malaysia today.

This is what he said, and I quote:

"Semua laporan yang sepatutnya (sampai), tidak sampai kepada pihak Lembaga Pengarah. Kalau ada pun, ia tidak memberi gambaran sebenar. Kami tidak mempunyai laluan untuk maklumat sebenar."

In other words, Tun Musa is admitting that the management had misled the Board of Directors. Besides the President and Group Chief Executive of Sime Darby Datuk Ahmad Zubir Murshid, why were the rest of the management executives in the same chain of command spared? To me, this is mind-boggling.

Let me try and put in perspective what had happened earlier when Golden Hope Plantations Berhad incurred trading losses amounting to RM40 million due to overzealous trading activities by a rogue trader. The matter came to light between 2006 and 2007 and was accounted for in several financial statements. In other words, Golden Hope made it transparent.

Unfortunately due to the high palm oil prices, the amount was inflated to about RM60 million.

But when Golden Hope and Kumpulan Guthrie Berhad were merged with Sime Darby in 2007,the Sime Darby management led by Datuk Seri Ahmad Zubir Mushid insisted on the resignations of the former Group Chief Executive of Golden Hope Datuk Sabri Ahmad (who was absorbed into Sime Darby as Advisor, Plantations Division), the director of Oils and Fats Dr Anhar Suki, the Director of Finance Razidan Ghazalli (who was absorbed into Sime Darby as Group Chief Financial Officer), the General Manager of Trading Azmir Yahya and the General Manager of Golden Jomalina Sdn Bhd Muhammad Mohan Abdullah.

Datuk Sabri, Dr Anhar and Azmir chose to resign, but Razidan and Muhammad Mohan stood their ground and refused to do so. As a result, both Razidan and Muhammad Mohan were sacked on the same day. The two then took their case to the Labour Court. Months later, in an apparent admission of guilt, Sime Darby chose to settle the matter out of court and compensated both of them.

The fact is, Golden Hope did not keep the matter under wraps. The loss was reported in all its financial statements, and yet Datuk Sabri, Dr Anhar and Azmir were forced to resign while Razidan and Muhammad Mohan were given the sack. The decision to take action against the five was a Board decision headed by Tun Musa. He has to be consistent, but from what I have observed so far, he is not so.

In contrast to what Golden Hope did, the Sime Darby management tried to hide the losses incurred in Qatar and Bakun. Only one provision was made in the second quarter results of the 2009/2010 Financial Year - to a tune of RM210 million for cost over-runs in the Qatar Maersk Oil project. In actual fact, the amount was much higher.

It also made no mention of the losses incurred in the Bulhanine and Maydan Mahzam project with Qatar Petroleum as well as the cost over-run in the Bakun project.

In other words, not only did Sime Darby go against the principles of good governance but also breached the various laws.

So who among the management should be held responsible:

1. Sekhar Krishnan - The Group Financial Officer when Sime Darby ventured into Qatar and when the whole fiasco began.

2. Hisham Hamdan - The former Head of Group Stategy and Business - he vets through all investments. If he says no go, papers do not go to Board. All projects, including the Qatar projects and Bakun were okayed by him. He did not see the fact that Sime Darby was not ready for the projects in Qatar. It is strange that he is now tasked to lead Energy and Utilities Division.

3. Madam Tong Poh Keow who was appointed the Group Chief Financial Officer of Sime Darby Berhad on June 24, 2008 - She was Group CFO for year end June 2008 and June 2009 accounts - why did she failed to insist on provisions? Why did she sign the Statutory Declaration in the annual report saying that the accounts were correct?
In an Annual Report, the directors sign the Statement of Directors (s169(15)Companies Act). The CFO signs Statutory Declaration (s169(16) Companies Act) in accordance with Statutory Declaration Act 1960. So what is the CFO's legal position in making incorrect statutory declarations? In an Annual Report, the key sections are:
1) Corporate Governance Statement
2) Chairman's Statement - Nothing was mentioned in Tun Musa's statement in June 2008 and June 2009 in relation to E&U Division
3) Audit Committee Report
4) Statement of Internal Control - contains Board responsibility, risk management framework, etc
5) Directors' Report

Were the representations in the above sections accurate or misleading?

Since Annual Reports are tabled at the Annual General Meeting for shareholders, the Sime Darby shareholders, public at large, the Securities Commission, Bursa Malaysia, Minority Shareholders' Watchdog Group, etc were obviously misled. This is an obvious breach of the Companies Act.

4. Nik Muhammad Hanafi Nik Abdullah who was then Sime Darby's Head of Internal Audit. He failed to question the Finance and Accounts Department when it did not make provisions for the losses.

5. Abdul Rahim Ismail, who was then the Chief Financial Officer of the Energy and Utilities Division. He should have known all along the extent of the damage.

Sime Darby must act against those responsible, even if it means instituting legal action. Transferring them to another division like what it did in the case of Nik Muhammad Hanafi and Abdul Rahim, would not solve the problem. The problem will be merely shifted to another division.


Anonymous said...

I think you forgot to mention the removal of the Head of Sime Darby's Risk Management i.e FOO MARN HIN CPA(M),CA(M).Why is he soooo silent now?....why he not advise the Board of the risks on those projects.Are we wrong in saying he has FAILED in his fiduciary duties?


Anonymous said...

I don't agree with you on the removal of Nik Hanaffi.This executive is innocent,because he never had any prior exposure to internal audit prior to his appointment as Chief Auditor in Sime Darby.He was just a pawn in the devious corporate "game".I worked with him in Guthrie previously.

Tahir M.

Anonymous said...

Bravo ashraf! Don't worry bro, nothing will happen though...ponek ekau tulih jelo jelo tp tak ado apo. Suku sakat dio jugak buek duit berguni-guni ha ha ha

Seh Melayu

siamangagap said...

yo bro! good and intimate reporting by you. do send your commment here to MACC a copy, easier for them to investigate :-))

Wake UP! said...

Musa Hitam. We demand your resignation letter immediately.


Anonymous said...

Setuju !!!!

Itulah hidden agenda Sime for the merger. Easily kaut duit Golden Hope & Guthrie. Buang management GHope yang pass the Leadership Mapping Exam. Gantikan dgn orgnya or the yes man guy.

Just wonder, ada sesapa ke yg nak organise solat hajat utk mereka.

Ha ha.. solat hajat yg sgt ditakuti oleh Sime bila dibuat utk Mgmt Ghope yang teraniaya..

Yessssssss... this is what balasan Allah to Sime INCAPABLE but CUNNING Management. You LOST the BATTLE.


Anonymous said...

Aku nak cakap sekali lagi. MUSA HITAM tak akan berhenti kerana takut hidup tak bergaji dan elaun. Musa ni haprak. Masa Tun M dulu dia minta Tunship. Tak dapat dia bantai Tun. Lepas tu bodek Pak Lah dapat Tun dan dapat jadi Pengerusi Sime Darby. Musa kata Umno dah tua. Dia tak sedar diri dia pun dah tua bangka dan duk harap pegang jawatan dan nak tongkak langit. Sedar lah diri sikit.

A Voice said...

Already placed your blog in our list.

Good argument in Sime Darby.

Black Moses no saviour.

Why in the first place, did dogol Kaki Tidor placed him there?

He knows nuts about economics and business, and let alone being a Chairman of a PLC????

Anonymous said...

I heard that
Pltn HR is starting to log time in out and starting to run the Pltn Corp Offices like a factory.

Good luck guys

Dato Seri Z should not be sack it's the second layer that should.

Today ade Townhall, hope to hear some changes......Simers please post any news back here later.

Dato Azhar,
I have trust in you.


Anonymous said...

The trading losses suffered by Golden Hope occured when Golden Hope was still Golden Hope i.e. before the merger took place. What has the new Sime Darby then got to do with this loss?

Anyway, Golden Hope's Sabri Ahmad ended up being the Chairman of MPOB. Surely he is no dumb ass!

Anonymous said...

I don't agree with you on the removal of Nik Hanaffi.This executive is innocent,because he never had any prior exposure to internal audit prior to his appointment as Chief Auditor in Sime Darby.He was just a pawn in the devious corporate "game".I worked with him in Guthrie previously.

Er why was he appointed chief auditor?

Anonymous said...

let the comtt investigate.. jgn jd mcm anjing menyala bukit sure bukit takkan runtuh.. get the finding and table in parlimen c.c to macc, let people decide what action going to take agns them.. kalu tak UMNO berkubur PRU13.

buruh kasar
pltn upstrm

Habib RAK said...

You may wish to read about Wee Choo Keong, your 20yrs plus friend from another person who knows him for over 25yrs. Here is the link

Anonymous said...

Madam Tong and Nik Hanafi are both from Guthrie ... but shame on both of them. They just see thing happened right in front of them without doing anything.

Why Razidan got kick out? It has nothing to do with the overtrading .. its simply because he keep probing on Zubir's the dirty business:

1. Sime Darby Divisional HQ - constructed by Brunsfield - without approval!!! go check if dont believe me!!
2. All project approved under Brunsfield are all tarak approval.

All contract given to Brunsfield does not even go thru proper tender by the contract department!!!

Ini semua Nik Hanafi got no access. His auditors all got kick out from Brunsfield if they even try to enter!! Itu Dato Gan sudah kawtim awal2 lagi...

Moral of the story, makan gaji maa .. takut la kalau kena terajang macam Razidan...

Anonymous said...

The entire decision making team who were from Sime Tires as well as consultants employed to fill permanent positions should be asked to leave the company in the capable hands of Sime Darby employees .. starting with the head of plantation HR and the previous head of Group HR. Then you will see rather than hear about the performance of the company

Anonymous said...

To Anonymous of May 24 who wrote"Er why was he appointed chief auditor?".

It is pretty obvious that certain DEVIOUS PARTIES wanted his inexperience for their own gains,as he WILL NOT ASK ANY QUESTIONS!!!'s all part of the PLAN(I hope I'm wrong here)


Anonymous said...

What goes around comes around... be truthful to yourself and do not do evil unto others.

Anonymous said...

Saya di fahamkan yang "branding" jenama Sime Darby telah jatuh merudum,dan sekarang orang ramai mentafsirkan Sime Darby sebagai :
Syarikat Ini Memang Ego(S.I.M.E.) Dan Akan Rebah Bila-bila,Yahoo!(D.A.R.B.Y.)....inilah akibat memusnahkan warga GHope dan Guthrie yang lebih berwibawa.


Anonymous said...

Abang HishamH, ape citer? Aren't you the 'master strategist' and 'master advisor' to DSAZM...... emmmm.....