Kalimullah and Kian Onn are back at the helm of ECM Libra

Kalimullah and Kian Onn to drive ECM’s next leap

By ANITA GABRIEL, Saturday April 28, 2007

MAIN drivers and founders of ECM Libra group Datuk Kalimullah Hassan and Lim Kian Onn are back in the saddle at investment holding company ECM Libra Avenue Bhd (ECM).

Barely nine months after Kalimullah sold down his stake in ECM and both he and Kian Onn relinquished their executive positions in the company – a move which was perceived by many as the former having succumbed to the pressures of relentless vilification on his business involvements – they appear all set to take up the reins once again.

Although Kian Onn stayed on as director and didn't sell down his stake in the company, he too had taken a back seat in the group.

Lim and Kalimullah’s ‘return’ to ECM signals that there are bigger plans waiting to unfold for the group in which the two personalities will play a major role

Late Friday, the company announced that Kalimullah, who was appointed as non-executive chairman on June 16 2006, will be redesignated as executive chairman and CEO while Lim, who is currently non-executive director, has been redesignated as managing director.

The appointments are effective May 1st.

The move has piqued the interest of market watchers as the group has assembled a strong team following an aggressive recruitment drive to run its investment banking operations. “The key players to drive the financial business of the group are all in place. Since they are coming in once again on executive positions, it could signal that more things are brewing at ECM,” says an industry wag.

That appears to be closer to the truth than one thinks.

Raja Ali and Jeyaratnam (below, right) have a wealth of experience in the field of investment banking

According to sources, negotiations are being pursued at the moment, which are close to fruition and when completed, will result in ECM adding a new major core business to its current single staple of financial services activity, which will see its business transcend domestic boundaries.

“The new business is involved in a global high growth sector,” says a source. As a result of the deal, it is also believed that ECM will see the entry of a couple of key shareholders who are notable and prominent personalities in the international corporate stage.

It is further believed that Datuk Tony Fernandes of AirAsia Bhd fame will also emerge as one of the key investors in the newly enlarged group.

Sources say that Kalimullah and Lim's `return' to ECM signals that there are bigger plans waiting to unfold for the group in which the two personalities will play a major role. At this juncture, no one is quite ruling out the possibility that it may eventually result in them raising their stake in ECM.

Also interesting is that the rumour mill has been churning out speculation that ECM's investment banking business is up for grabs. However, sources close to the company deny such talks, saying that until the group manages to maximise the value and grow its investment banking business in terms of scale and profitability, it is not likely to be divested.

ECM, borne out of a highly publicised merger between ECM Libra Bhd and Avenue Capital Resources Bhd (ACRB) last June, provides a whole array of financial services namely investment banking, stockbroking, asset management and principal finance and investments.

The holding company of the enlarged group was incorporated on October 24 2005 as Avenue International Capital Bhd to facilitate a reorganisation exercise of ACRB Group, which saw the listing status of ACRB on Bursa Malaysia's main board transferred to ECM Libra Avenue on June 28 2006.

The shocking exit

In August last year, Kalimullah, ECM co-founder David Chua, as well as Khairy Jamaluddin, son-in-law of Prime Minister Datuk Seri Abdullah Ahmad Badawi, disposed of their stakes in the company. Both Chua and Khairy sold off their entire interest in the group while Kalimullah retained a stake of just under 5%.

At that point, tensions were running high, and there appeared to be much scrutiny among a pocket of society over the individuals' business involvements, more so in relation to the merger deal that was proposed between ECM Libra and Avenue Capital Resources Bhd.

Both Kalimullah's and Khairy's stakes were acquired by Amcorp Group Bhd while Chua disposed of his entire shareholding to a foreign fund management company.

“I am giving up to protect ECM,” Kalimullah had then said in an interview with a business magazine.

However, there appeared to be some disappointment among investors of ECM who bought into the company's shares on the potential that these well-connected and influential businessmen would be able to drive ECM to greater heights, more so because the investment banking business is very much one that thrives on relationships and networking.

“For as long as these individuals were in the driver's seat of ECM, investors thought there could be upside to be gained from investing in its shares. But when they left, some investors were nonplussed,” says an observer.
It appears that these individuals, or at least two of them, will soon be back in ECM to make good that promise of potential.

Yet, thus far, ECM has made some good strides and progress in the financial services sector.

For the year ended January 2007, sales rose by about 55% to RM121mil from the previous financial year. Group sales for the fourth quarter increased to RM41mil from RM16mil in the preceding year's corresponding quarter.

The improvement was largely attributed to better performance of the group's stockbroking business given the much-improved trading volume in the local bourse and higher placement fees.

Higher operating cost for the year, largely due to the combined costs of the merger (with ACRB), however led the group to post a lower pre-tax profit of RM19mil for the year against RM54mil previously. The decrease was also due to rationalisation expenses of RM17mil.

Considering the market's euphoric performance so far this year, ECM's performance for the first quarter of the year is likely to see further improvement, says an analyst.

In addition, the group's stockbroking subsidiary ECM Libra Avenue Securities Sdn Bhd is awaiting the approval of Bank Negara for an investment banking licence, which analysts reckon will materialise pretty soon and will allow the group to offer a more comprehensive range of investment banking activities which it currently is not able to do namely deposits taking.

According to global deal flow data provider Dealogic ECM Analytics, ECM Libra Avenue Securities ranked top spot in book runners for share placements (in terms of deal value and number of shares) in the primary and secondary market (refer to table).

Beefing up the IB team

The IB team of ECM is currently run by group deputy CEO T. Jeyaratnam who left Aseambankers to join the group in October last year. He replaced Cheah Teik Seng, who stepped down as CEO and is currently involved in a private equity firm.

With over 20 years experience in the field of investment banking, Jeyaratnam brings to the group a wealth of experience in corporate finance knowledge and skills. Chartered accountant Raja Ali Raja Othman, the deputy chief executive officer of the group's investment banking business, also has a sound knowledge and experience in both financial and corporate advisory services.

“The group has hired many skilled and experienced personnel to drive its IB and equity capital markets business. It's still on a recruitment drive. Almost everything is in place,” says a source close to the company.

The group has also been in the corporate limelight recently with the emergence of Tan Sri Azman Hashim as the single largest shareholder. He raised his interest in the company from 7.4% to over 22% after acquiring a block of shares in ECM from Aroma Teraju Sdn Bhd – a vehicle of the Minister of Finance Inc in late February this year.

While this has led to speculation that Azman has plans to play a bigger role in the company, other astute market observers say it may more likely be a pure investment opportunity for the banker.

The slew of changes in ECM has also attracted significant interest in the counter. Year to date, ECM shares have fared relatively well and have gained over 40%. It emerged as the third most heavily traded counter on Friday, gaining 7 sen to close Friday at RM1.04.

MAKING MALAYSIA CORRUPTION FREE

MAKING MALAYSIA CORRUPTION FREE
By Mohamed Jawhar Hassan*

The 2Ms attempted it 25 years ago. They launched the Bersih, Cekap dan Amanah initiative. They tried their best, but they did not succeed. Though the situation in Malaysia was much better than in most of the rest of the world, corruption continued unabated. Many even think that the problem grew worse.

Abdullah Badawi took over the reins and won the general elections that followed on a promise to wipe out corruption. Some felt that while it was laudable, the solemn pledge to eradicate corruption was politics, corruptionally unwise.

Corruption was too embedded and endemic to easily root out. The Mahathir administration had failed. The challenges were formidable, and there was every likelihood that the Abdullah administration too would fail. This would seriously undermine the new Prime Minister’s credibility, and dim his political star.

Progress

That Abdullah does mean business is shown by the fact that in the last three years there has been a record increase in the number of arrests made by the Anti Corruption Agency. From a total of 339 arrests in 2003, the number mounted to 497 in 2004, 485 in 2005 and 433 until October last year. The number of successful convictions has also increased substantially. A highly commendable 75 percent conviction rate is expected for 2006.

Further, the ACA was also beefed up, a National Integrity Institute was established, and a clear strategy to curb corruption is in place.

Scepticism

The public however has remained generally unconvinced despite this significant progress. Occasional reports of abuse of power and corruption and ineffectual enforcement have contributed to this sentiment. The 2006 Corruption Perception Index released by Transparency International appeared to reinforce negative perceptions. Malaysia slipped five ranks in the global survey of 163 countries, from 39 in 2005 to 44 in 2006, though in terms of score there was hardly any difference (from 5.1 to 5.0). Clearly, the progress achieved on the anti-corruption front did not register on perceptions. Perhaps it was a failure to effectively communicate the positive news. It must be noted too that despite the slip in ranking, three-quarters of the world is still behind Malaysia.

Political risk and courage

Pak Lah has also embraced other difficult “soft” development issues – transparency, accountability and more space for the media, besides greater credibility for political institutions. Notwithstanding that there is a compelling need to address all these issues if Malaysia is to become a fully developed country by 2020, the Prime Minister is further compounding his political risks, for the hardest issues to address are the soft issues. His administration becomes more vulnerable, because it is exposed to keener scrutiny and subject to higher standards. Governance is much easier in a more closed environment.

This risky course adopted by the Prime Minister suggests either political courage or political naiveté of the highest order. In the case of Abdullah it cannot be the latter, for he has been through too much. His courage deserves the full support of everyone – his colleagues in the cabinet, the political parties both in government and the opposition, public interest groups and the person in the street. For leaders like him are few and far between. His failure will be our failure.

A campaign by all

The campaign against corruption is one in which we all have a direct and important stake. It is easily one of the nation’s most formidable challenges, for corruption exists, to a greater or lesser extent, in the political structure, the bureaucracy and the business sector. The ordinary citizen too is implicated, by virtue of occasionally being the giver.

The government is presently consulting with a wide cross-section of business, public and private stakeholders on how best it can substantially enhance the effectiveness of the campaign against corruption. The outcome is eagerly awaited by all, not least the international community.

20 ideas

There are many critical and important things the government with the cooperation and participation of the major stakeholders can do, or do better. The following 20 ideas, some of them not entirely new, are perhaps worthy of consideration.
• The campaign cannot be a one-man mission. The Prime Minister must receive dedicated support and active participation at all levels and in all sectors.
• Designate the eradication of corruption as among the highest priorities of the nation.
• Adopt a no-nonsense, zero-tolerance approach to corruption eradication. A single-minded purpose should be inculcated at all levels and in all sectors.
• Set a realistic target, one that pushes the envelope, but is not impossible to accomplish. The present target of a ranking of 30 and score of 6.5 in 2008 cannot be achieved. Hong Kong, an oft-quoted success story, took a little more than 20 years to reach its 2006 ranking of 15 and score of 8.5, and Hong Kong is arguably a smaller and less challenging environment. Malaysia should aim for a minimum ranking of 20 and score of 8.0 by 2020, when it aspires to be fully developed. The score is more meaningful than the ranking. There should also be appropriate pragmatic annual, 2010 and 2015 intermediate targets. An annual increment of 2 ranks and score of 0.3 is perhaps desirable.
• Supplement the national target with corresponding state and institutional or departmental targets. It cannot be campaign by the centre alone, with the states neither seen nor heard.
• Apply key performance indicators at all levels and institutions.
• Strengthen a culture of integrity and abhorrence for corrupt practices in formal education, training programmes and public sensitisation campaigns.
• Raise investigation standards through better training and oversight among ACA and police officials as well as DPPs.
• Expedite court hearings of corruption cases.
• Make government services generally more transparent and accountable.
• Replace the Official Secrets Act with a Freedom of Information Act that ensures access to information that is of public interest, but which nevertheless provides for confidentiality on matters of national strategic and security interest.
• Reduce layers of bureaucracy and multiple tiers of approval without undermining efficiency and need for minimum check and balance.
• Provide more government services on-line, so that opportunities for corruption are reduced. On-line services should enable tracking of progress and stipulate minimum response times for enquiries.
• Consider increase in remuneration for low-wage groups especially for those working in urban high cost of living areas (for example through an increase in COLA or other benefits).
• To reduce the human factor, select and emplace only men and women of integrity for key high (corruption) risk positions (heads of service; heads of departments; oversight and investigation units; assessment agencies; and payment and collection units). The selection process must provide for this.
• Implement periodic rotation of officers in corruption-risk departments and positions, except for top key personnel of manifest integrity.
• Launch a high-impact drive against corruption with highly publicised arrests and disciplinary/legal action. The ACA now has increased manpower and resources for this purpose.
• Raise the penalty for offences under the Anti-Corruption Act and departmental regulations.
• Encourage whistleblowing and provide protection, incentives and non-monetary rewards for whistleblowers.
• Establish an independent Public Services Complaints Commission by Act of Parliament that is empowered to receive complaints and investigate corruption and misconduct in all branches of the public services as listed in the Federal Constitution – the general public service, the judicial and legal service, the police and armed forces, and others. The Commission should function as a complement to the ACA and departmental disciplinary bodies.

The exercise to reduce corruption will mutually complement and reinforce the other major initiative to improve delivery of services launched by the Abdullah administration. Both are sorely needed. They are part of the overall effort to improve governance and competitiveness, and position Malaysia firmly on the road to becoming a fully developed country by 2020.

They deserve our total support.

* The writer is Chairman and CEO of ISIS Malaysia. The views expressed are his own.

Dayaks Lead Lives of Quiet Desperation

Dayaks lead lives of quiet desperation
By Terence Netto
Malaysiakini

PKR (People's Justice Party) advisor Anwar Ibrahim described the arrests of Iban landowners for alleged arson in the interior of Sarawak as "the latest chapter in the continuing saga of Dayak desperation" over native customary rights (NCR) land whose ownership is imperiled by logging and plantation agriculture companies.

The arrests of land rights activist Jacob Emang, Ziglar anak Kasau, Edward Ungga and Gerah ak Gugat in the Sri Aman division on April 12 followed police reports by a logging company that their mobile camps in Silantek had been torched. The four have been remanded until April 23.

Anwar described Dayaks in the interior of Sarawak as "living lives of quiet desperation that now and then flares up in action that invites police attention, not to mention the notice of the rest of Malaysians who don't quite know what it is to be under the tyranny of geography."

"Hence we in Semenanjung (peninsula) have little empathy for the plight of the Dayaks in the Sarawak interior," said the former deputy premier in remarks to malaysiakini on the arrests.

Anwar said the amendments to the land code in Sarawak in 2000 and 2001 had stoked fear among Dayak owners of NCR land that they were going to lose their inheritance to logging and plantation agriculture companies.

The 1958 Land Code: The Sarawak Land Code was implemented in 1958. Under this code, land in which native customary rights (NCR) had lawfully been created prior to 1st January 1958 is termed Native Customary Land (NCL). However, section 5(3) of the Land Code states that "any native customary rights may be extinguished by direction issued by the Minister" for "public purposes" or to facilitate alienation of land, which under Section 15A must be for the purpose of any undertaking that would, in the opinion of the Minister, be for the benefit of the State. In effect, as of 1958, NCL became a part of State land, and NCR can easily be disposed of. The indigenous people lost real control over their land.

The Land Code does state that any order to extinguish NCR must be accompanied by the payment of compensation to any person who can claim NCR on the land. However, claims for compensation must be made within 60 days of the order. After this time period, "native customary rights shall cease and be extinguished and the land held under such rights shall revert to the Government." As the indigenous people have limited access to legal resources, 60 days is often not enough for them to file their claims. Also, a 1996 amendment to the Land code removed the requirement that the indigenous people must be notified of any directions of extinguishments of NCR. This means that if the people do not have access to the District Office during the sixty-day period, they may lose their land without even knowing it.

Land the 'last bastion'

He said state government assurances that NCR land was not being threatened and that putting such land to economic use via logging and plantation agriculture did little to assuage Dayak fears of disinheritance. He described Dayak ties to NCR land as "mystic" and thus impervious to the market savvy calculations of planners for whom rising commodity prices made the sight of idle or poorly cultivated land a travesty of economics.

He said sources had told him that the four who were arrested owned NCR land in Abok in Sri Aman and that the logging company with a permit to extract timber had encroached on durian planted land belonging to the arrested NCR owners. The encroachment was by way of a path carved by the company enroute to the timber concession.

Anwar said the Dayaks' meagre educational opportunities, low skilled labour, and fragmented political leadership had conduced to poverty and made them regard their NCR land as the "last bastion" of their legitimacy as a people.

"They are the poorest community in Malaysia today and so the land issue has become an emotive one for them," he said.

Sarawak Chief Minister to sue Malaysiakini

Taib Mahmud, Sarawak CM to sue Malaysiakini
Apr 20, 07 1:56pm

Sarawak Chief Minister Abdul Taib Mahmud has demanded malaysiakini to remove several articles concerning accusations of corruption allegedly linked to him and his family. Taib, who has been the Sarawak leader for 26 years, said he would take legal action should malaysiakini refuses to do so in 48 hours. In the letter which was hand-delivered late yesterday to the malaysiakini office in Kuala Lumpur’s Bangsar Utama, Taib identified eight articles which he claimed were defamatory. These articles - published between April 6 and 14 - alleged that Taib has been implicated in a kickbacks scandal involving RM32 million in kickbacks paid by Japanese shipping companies for timber from the resource-rich state.

The eight articles cited by Taib were follow ups to the Japan Times news report on March 29 entitled ‘Wood carriers allegedly hid 1.1 billion yen income’.

According to the report, the multi-million ringgit ‘commission’ - made over a period of seven years - was paid to a Hong Kong company said to be linked to Taib - who is the country’s longest serving chief minister - and his family. This was uncovered by Japanese tax authorities who deemed the payments made by the shipping companies as ‘illegitimate expenses’ since the Hong Kong agency, believed to be a paper company, did little ‘substantive work’ to justify the payments. According to tax authorities, the shipping companies had tried to disguise the payments as ‘business expenses’ and were thus not taxed. Japan Times reported that the shipping firms were likely to be slapped with well over 400 million yen (RM11.6 million) in back taxes along heavy penalties for ‘hiding’ the funds from tax authorities.

ACA report lodged

Following this, several members of parliament have urged the Anti-Corruption Agency (ACA) to investigate their colleague as Taib is also MP for Sarawak’s Kota Samarahan, near Kuching.

"The words contained in the above articles clearly referred to our client and were highly defamatory of our client," read the letter from Shearn Delamore & Co, the legal firm representing Taib.

It stated that the published articles "amount to a very serious libel" against Taib and has caused him "considerable distress and embarrassment". "These baseless allegations have lowered our client’s reputation in the estimation of the public and exposed him to hatred, contempt and ridicule." "All the allegations made against our client are false and your attack against our client is wholly unjustified," added the two-paged letter. The letter demanded malaysiakini to do the following:
• Stop from publishing defamatory words or similar words to that effect.
• Immediately publish a full public retraction and apology according to terms approved by Taib.
• Provide Taib with a written undertaking within 48 hours that the website will refrain from publishing defamatory words or similar words to that effect.
• Nominate a substantial compensation sum within 48 hours for injury and damage to Taib’s reputation.
• Indemnify Taib of all costs incurred in this matter.

The letter also stressed that should malaysiakini fail to provide a satisfactory response to the demands, legal action will be taken.

Contacted this morning, a representative from Shearn Delamore said he was unable to reveal whether parties other than malaysiakini have been issued similar legal letters. Malaysiakini: We'll fight In an immediate response, malaysiakini editor-in-chief Steven Gan said the online news website intends to fight the law suit. "Over the past seven years, we have published numerous reports on corruption. Malaysiakini is not in the business of apologising every time we report on such scandals. As journalists, we have a duty to report on such matters, which is of public interest," he added.

Prime Minister Abdullah Ahmad Badawi had last Thursday said that the ACA could investigate the allegations if a report is lodged.

However, Gan said ACA need not wait for a report to be filed to launch a probe on the matter. "In any case, now that reports have been lodged, there’s no excuse for ACA not to open an investigation on Taib," he added. According to Gan, the law suit was aimed at muzzling malaysiakini.

"If by filing the law suit, Taib hopes to intimidate us, he is dead wrong. When we go to court, we have a long list of witnesses whom we plan to call - starting with the ACA and Japan’s tax authorities," he said. "This could turn out to be the mother of all court battles."

DEWANIAGA SARAWAK SCANDAL

Wood carriers allegedly hid 1.1 billion yen income
Kyodo News

Nine Japanese shipping companies that transport lumber from Sarawak, Malaysia, allegedly failed to report some 1.1 billion yen of income in total during a period of up to seven years through last March, sources said Wednesday, alleging the money constituted kickbacks to Sarawak officials via a Hong Kong agent.

Such tax irregularities have occurred as the Tokyo Regional Taxation Bureau determined the companies' remuneration payments to Regent Star, a Hong Kong agent, which has a connection with Chief Minister of Sarawak Taib Mahmud and his family, were rebates, not legitimate expenses, the sources said.

Although the Hong Kong agency did very little in the way of substantive work, the shipping companies are believed to have used rebates as a lubricant to facilitate their lumber trade, the sources added.

Lumber export is controlled by the Sarawak state government on grounds of forest resources protection.

Rejecting the tax authorities' conclusion, the shipping firms claim the transactions with Regent Star have been legitimate and deny wrongdoing.

The companies accused of the alleged tax evasion include Mitsui O.S.K. Kinkai Ltd. and NYK-Hinode Line Ltd. belonging to the Nanyozai Freight Agreement (NFA), a cartel formed in 1962 to avoid excessive competition in import of lumber from Southeast Asia. The 12-member group is exempt from the Antimonopoly Law.

The shipping firms will likely be slapped with well over 400 million yen in back taxes along with heavy penalties, the sources added.

According to NFA and other sources, the Japanese cartel concluded an agreement in 1981 with Malaysia's Dewaniaga Sarawak regarding lumber transport. Dewaniaga is a state-affiliated concern in charge of lumber export control and is headed by the Sarawak chief minister's younger brother.

Dewaniaga Sarawak (DNS), a company affiliated with the Malaysian state of Sarawak, instructed NFA members to pay so-called intermediation fees to the Hong Kong agent, Regent Star (RS). DNS is headed by Onn bin Mahmud, a brother of Sarawak Chief Minister Abdul Taib Mahmud. The Chief Minister's brother Onn bin Mahmud also sits on the board of CMS. Not only is Abdul Taib Mahmud Chief Minister, he's also the Resource Management and Planning Minister. That means he's also the Forestry Minister.

The Japan Times: Thursday, March 29, 2007
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