Follow the Money Trail of ECM Libra to SC
from Another Brick in the Wall
Bloggers are part of Government, as I say. We participate to elect the executive branch of Government and representatives. And, we are duty bound to remind them. When the channels to do so are inaccessible, we must ensure our reminder is accessible to them. Along the way, it happens to be available to the public. But, just like them in public office, our opinion is open for scrutiny.
This is exactly what the ECM Libra issue has demonstrated.
PAC and Parliamentarian
The first two PAC sessions on August 10th and October 16th, 2006, cleared Ministry of Finance (MoF) and Securities Commission (SC) officials as having followed procedures and Government seemed to benefit from the deal. Do you expect our MPs to ask questions on Company Law, Corporate Finance and Capital Market to MoF and SC Officials?
The third PAC session hearing on ECM Libra on 26th February, 2007 absolve the Minister of Finance II. I’d bet you would ask, where is MoF I?
Strangely, a hearing, that is supposed to talk of ECM Libra, end up covering a wider range of issues, thus diluting the focus of the enquiry. The 8 BN MPs members innocently or expectedly went along with Dato' Shahrir. Even the 4 opposition MPs fell for it. They were asking about SJER, Pantai Irama, KTM Kelantan, Synergy Drive, and such. Omigod…
If Jim Hacker in the TV Series, “Yes Prime Minister” belittled his Backbencher MPs, I’d bet he’d belittle both the Malaysian BN Backbenchers and Oppositions. God save Malaysia.
Even that, Tan Sri Nor Mohammed didn’t really answer quite a few questions raised. The Walls with my ears were telling that Shahrir told few PAC members he had a private long talk with Tan Sri Nor Mohammed. That could be Parlimentarian-speak for “hold off he’s innocent”. Should Shahrir alone be entrusted to determine MoF’s innocence?
Pak Lah’s Enron?
The ECM Libra-Avenue "Takeover" is a MAJOR financial scandal. It’s got so deep a ramification that MOST comments thus far exposed only the surface. The indiscretion and wrongful act is multi-layered and is practically at every step of the way. Its Enron in the manner of Collusion and Collaboration to Commit fraud.
The most talked about is the conflict of interest and insider’s trading. The technically savvy could spot the manipulation of goodwill, overvaluation of ECM Libra, market rigging of ECM shares, and undervaluation of Avenue. NTA, PAT, EPS, PER, and all those mumbo jumbo boils down to “ular lidi si-hitam” gobbled “ular sawa gomen”. And, everyone had their comments on Khairy’s sales of his share portion and doubting he lost money.
While Joe Public is yelling “Scheming Shahrir”, he had left many bed crumbs for us to follow.
Dato’ A Kadir Jasin commented that Dato’ Shahrir's press statement infer that the Cabinet were, either not doing its monitoring work, or a decision to not deem it to work. All one need to do is read his Press Conference on August 10th, 2006 from AgendaDaily below:
Wartawan: Jadi peringkat pegawai sahaja yang meluluskan penggabungan ini?
Shahrir: Nampaknya peringkat pegawai sahaja.
Wartawan: Dari keterangan yang diperolehi hari ini…siapa sebenarnya yang meluluskan penggabungan ini?
Shahrir: Ia diluluskan oleh para pemegang saham..
Wartawan: Tak... Dalam kerajaan …diperingkat mana ?
Shahrir: Itulah kita tak berapa pasti… sebab tu kita nak (dapatkan keterangan)… Proses tu kita tak berapa tahu… Kita tak jelas… Akhirnya kenapa ambil keputusan… Siapa yang bagi OK… Pasal Menteri Kewangan ni ada dua (orang) ada Menteri Kewangan Dua… Ada Menteri Kewangan Satu…
Wartawan: Apakah soal pengabungan ini ada dibawa ke dalam mesyuarat kabinet dulu?
Shahrir: Saya pun tak berapa pasti…..
Still the unnswered question. Who decide? Government Commitee? Government Officer? Minister? Names … we want names!!! The public wants to know.
He said that from Tan Sri Nor’s comment, the Government view the deal as legit because SC approved. Ah-ha, that’s blame language but its telling us to:
Follow the Money!
Tracing the Money Trail to SC
Lets start with the SC.
The role and power of SC is defined under the Securities Commission Act, 1993. They administer the SC Act, Securities Industry Act, 1983, and other related related industry Acts. The Bursa is under their purview. The power of SC is so wide and Part II Section 16 of the Act specifies the SC “shall have all such powers necessary”.
Part II Section 15 Para 1(i) of the Act provide for the function to “suppress illegal, dishonourable and improper practices”. The contravention to provide false and misleading statement in Section 32B Para (1) of the Act covers all “applicant, any of its officers or associates; a financial adviser or an expert; or any other person.”
SC allows for market-determined pricing of securities. However, it is not absolved from ensuring the issues of valuation of securities are fair and equitable and not FRAUDULENT.
In this case, SC’s prior approval was required for the Scheme of the Merger, its valuation, its prospectus, its appointment of Adviser to Minority and the advice given to Shareholders, Waiver for Mandatory General Offer, etc.
All roads lead to SC.
The Director of Avenue only recommend the deal as “fair” but Adviser K&N Kenanga could recommend deal as “fair and reasonable” to Shareholder. SC approved that recommendation? Isn’t it odd for K&N Kenanga to no more about the company than its Directors?
The Fraudulent Waiver at the EGM
Many have covered various aspect of the deal but few really touched on the Extraordinary General Meeting (EGM) of Avenue Capital.
The EGM was the final clincher to approve the “Takeover” (which the ECM Libra shareholders already did, why not?) and to give Waiver to ECM Libra from a Mandatory General Offer (MGO) for busting the 33% limit to 53.2%. A MGO would have been f**king costly because its buying control.
On paper, Avenue Capital originated the Merger. It is strange don’t you think, for someone to initiate a Merger and invite some small kucirat Company to have majority control? And, for cheap?
To avoid ECM shareholders paying through their ass for majority control, they applied for waiver under the Whitewash Procedure in Practice Note 2.9.1 of the Malaysian Code of Takeovers and Mergers. The requirement for exemptions such as approval from Independent Shareholders, appointment of an Independent Adviser, Circular of Independent Advice, and prior consultation with SC were met. Except for the following:
(5)(b) (iii) interested parties have abstained from voting at that meeting;
Para (7) of the Whitewash Procedure defines interested parties. To cut thing short, the SC allowed the interested parties of Government Company and Pantai Holding to vote.
In addition, there was another infringement under this procedure when there are ECM Libra executives present to vote under proxy. You want names? OK its Mr Lim Boon Soon, the ECM Libra CFO.
In the usual practise of Mergers & Takeover, the interested parties and those working in concert cannot vote in the EGM. It’s only the Minority Shareholders. Off course, they plant people to buy and vote for them but it’ll cost!
In this case, aren’t the major shareholders (represented on the Board) interested parties in this Merger? They want to see this deal they originated go through. In fact, they were in discussion with ECM parties. Sure they will deny but who turn up at … on … Is that not working in concert?
Why did the SC allowed them to vote as Independent Parties at the Avenue EGM? The Minority could have had a fighting chance. Even with Aroma Teraju (Government) voting for and Pantai Group “forced” to vote for, the majority was 60-70%, said the shareholders.
Lets Go For The Fish Head
Shareholders were telling me.
On Saturday May 20th, 2006, newly-appointed Securities Commission chief, Datuk Zarinah Anwar got news headline for giving a stern warning to market manipulators. Just two days earlier, this fraudulent EGM was happening. Off course, Iris was mentioned but not ECM Libra.
Who is Datuk Zarinah? The grapevine is saying Datuk Zarinah Anwar’s sister, Datin Marina is close to the late Datin Seri Endon. Husband, Dato’ Mat Abit is very close with Pak Lah. That’s an indirect family tie. She is cleared under the law. Rumours are saying her husband, Azizan is a business partner to Dato Kalimullah.
So much for conspiracy theory. What relevant credential does she have for the job? Any experience in Banking, Merchant Banking, Stockbroking, Fund Management, or as Regulator? I’m seeking information and not creating doubt.
I am asking this because she presented the case at the first two PAC Session and she was protected from questions. Perhaps, Shahrir had to work for boss, but what the f**k were the MPs doing, both BN and Opposition?
She was not asked why asset value was not considered? Why the manipulation of ECM Quarterly Financial Result announced on March 3rd, 2006 was amended from NTA per share of RM0.50 to Net Asset per share of RM1.34?
Why did she say “Avenue Capital Resources & ECM Libra akan mendapat manafaat” when Avenue shareholders end up buying over inflated ECM Libra and all the major shareholders now sold their shares?
Why did she say “Penasihat Bebas (K&N Kenanga Sdn Bhd) telah dilantik untuk menasihati pemegang minoriti” when all are independent shareholders and the advise was half truth?
Why did she say “Penilaian ke atas nilai ECM Libra dan syer balasan ECM Libra adalah munasabah” when SC was not curious of the market rigged value of ECM Libra?
Why did she say “Penggabungan tersebut adalah tertakluk kepada kelulusan pemegang saham kedua-dua syarikat” when the Avenue EGM was fraudulent?
Over and Under But It's Not Rugby
Why didn’t Dato Kris Azman Abdullah, Director of Issues and Investment Division accompany the Chairman for the presentation? She is newbie then. He could assist to answer the questions. The SC’s credibility is on the line. These days the market is saying there is no more under the table at SC but above the table. Its not the man on the street but those corporate people gossiping at Gourmet Cafes.
Now, Kris, you should be doing something about this. There were awful rumours saying Danaharta sold asset cheaply to friendly parties. Weren’t you at Danaharta (Read his resume here)? Can the experience there be useful to “help” SC?
So it seems there are Police reports made on ECM Libra. Since it is out of the Police area of expertise, it was referred to the SC. What happened to the investigation? Whose table is the file on now?
What happened post Merger? Still not relenting.
KeranaMu Negara Malaysia