I wrote several times about Tanjung Offshore: here, here and here.
The Independent committee announced its findings.
The Maritime Executive wrote the following commentary:
Malaysia’s Tanjung Offshore has suspended three top executives after an internal inquiry into possible misconduct.
The company released a statement saying the suspensions were made on the recommendation of an independent committee.
Tan Sri Tan Kean Soon and Muhammad Sabri bin Ab Ghani have been suspended from their executive roles with immediate effect, but remain as directors of the company. Non-Independent Director Tan is a paid advisor of Tanjung, while Sabri is Executive Director.
Dato Harzani bin Azmi’s services as a paid advisor to the company have also been suspended with immediate effect. His earlier nomination to the board of directors shall not be considered, the company said in a statement.
Tanjung will hold further investigations into the findings of the independent committee which included several instances of possible conflict of interest and breach of fiduciary duty by Tan and Sabri, both individually and together, and possible breaches of procedure and limits of authority by Harzani among other matters.
The independent committee was formed on January 8, 2015 by the board to conduct an internal review following speculative media articles and purported complaints to the authorities against the company.
The possible conflicts of interest and breaches of fiduciary duty may have resulted in, among others, loss of business opportunity and potential income stream related to the Bourbon deal. A proposed asset injection by Bourbon Offshore Asia Pacific was mutually terminated in December 2014, following changes in the prevailing economic, financial and market conditions including declining oil prices.
The possible conflicts and breaches may also have resulted in disadvantageous and lopsided terms for a contract under negotiation, and potential future loss related to a Construction Work Request (CWR) project worth about RM250 million ($69 million).
These possible conflicts and breaches also may have been the cause for the dissemination of confidential company information to third parties related to both the Bourbon deal and the CWR project. These could also be potentially jeopardizing the company’s relationship with CNPC Offshore Engineering (CPOE) in China in on-going negotiations for a drilling contract in Malaysia.
The board will seek legal advice on its next course of action, and will make the appropriate reports to the authorities wherever necessary, said Tanjung.
It must be noted that in the official announcement of the company the link between the three suspended directors and the alleged misconduct is not made, most likely because of legal issues (everyone is presumed innocent until proven guilty).
We can safely assume that the authorities (SC and/or BM) are also on this case, possible conflict of interest (without announcing it) and breach of fiduciary duties of directors are quite severe.
Friday, 30 January 2015
Thursday, 22 January 2015
"Iskandar Malaysia is Only Going One Way – Down"
Quite good article from a Singaporean website, I thought might be relevant for Malaysians also.
Although I am not exactly a property expert, I did echo similar concerns in the past, for instance here:
"Two Iskandar developers (to IPO in 2014), I am scared all the clever money has been made already, and the property market is way too hot and might already be cooling"
Some snippets from the article at DrWealth's website:
When you drive around Iskandar Malaysia, it’s not uncommon to see swathes of empty apartments with no one living inside. Therein lies perhaps the main issue with the region – the lack of a critical mass of people, especially locals, staying in the area.
In the beginning, the majority of property purchases were made by foreigners, particularly Singaporeans, who were seduced by the attractive price tags.
Unfortunately, the property cooling measures announced in Malaysia’s 2014 Budget have thrown a spanner in the plans of many of these potential investors. Since the beginning of the year, foreigners can only purchase property worth at least RM1 million, have to pay more in Real Property Gains Tax, and must contend with a 2 percent property levy. These moves have whittled the number of potential property investors in Iskandar.
Couple this with the glut of housing development projects being launched by big Chinese developers such as Country Garden and Guangzhou R&F and you’re looking at the classic problem of unchecked growth – supply outrunning demand.
Although I am not exactly a property expert, I did echo similar concerns in the past, for instance here:
"Two Iskandar developers (to IPO in 2014), I am scared all the clever money has been made already, and the property market is way too hot and might already be cooling"
Some snippets from the article at DrWealth's website:
When you drive around Iskandar Malaysia, it’s not uncommon to see swathes of empty apartments with no one living inside. Therein lies perhaps the main issue with the region – the lack of a critical mass of people, especially locals, staying in the area.
In the beginning, the majority of property purchases were made by foreigners, particularly Singaporeans, who were seduced by the attractive price tags.
Unfortunately, the property cooling measures announced in Malaysia’s 2014 Budget have thrown a spanner in the plans of many of these potential investors. Since the beginning of the year, foreigners can only purchase property worth at least RM1 million, have to pay more in Real Property Gains Tax, and must contend with a 2 percent property levy. These moves have whittled the number of potential property investors in Iskandar.
Couple this with the glut of housing development projects being launched by big Chinese developers such as Country Garden and Guangzhou R&F and you’re looking at the classic problem of unchecked growth – supply outrunning demand.
QE in Europe is doomed to failure
Article in The Telegraph about William White, "The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world's financial system going into 2015. Mr White is a former chief economist to the Bank for International Settlements - the bank of central banks - and currently an advisor to German Chancellor Angela Merkel."
Some snippets below. The bold paragraph looks relevant to Asia. It does remind me of 1997/1998 when the roof came down and so many companies got hurt because they had borrowed in USD. It appeared to make sense, the RM was more or less fixed to the USD at 2.5 to 1, while the interest rate on the USD was lower. But there is no free lunch here, as many would find out, the RM crashed versus the USD and companies were sitting on huge one-off losses. For Jusco (Aeon) it would be the only year since listing that they lost money.
Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West.
He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20pc of GDP higher today. "We are holding a tiger by the tail," he said.
He warned that QE in Europe is doomed to failure at this late stage and may instead draw the region into deeper difficulties. "Sovereign bond yields haven't been so low since the 'Black Plague': how much more bang can you get for your buck?"
"QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies (SMEs) and they get their money from banks, not from the bond market," he said.
"Even after the stress tests the banks are still in 'hunkering down mode'. They are not lending to small firms for a variety of reasons. The interest rate differential is still going up," he said.
"The emerging markets got on the bandwagon by resisting upward pressure on their currencies and building up enormous foreign exchange reserves. The wrinkle this time is that corporations in these countries - especially in Asia and Latin America - have borrowed $6 trillion in US dollars, often through offshore centres. That is going to create a huge currency mismatch problem as US rates rise and the dollar goes back up."
Mr White said central banks have been put in an invidious position, compelled to respond to a deep economic disorder that is beyond their power. The latest victim is the Swiss National Bank, which was effectively crushed last week by greater global forces as it tried to repel safe-haven flows into the franc. The SNB was damned whatever it tried to do. "The only choice they had was to take a blow to the left cheek, or to the right cheek," he said.
He deplores the rush to QE as an "unthinking fashion". Those who argue that the US and the UK are growing faster than Europe because they carried out QE early are confusing "correlation with causality". The Anglo-Saxon pioneers have yet to pay the price. "It ain't over until the fat lady sings. There are serious side-effects building up and we don't know what will happen when they try to reverse what they have done."
The painful irony is that central banks may have brought about exactly what they most feared by trying to keep growth buoyant at all costs, he argues, and not allowing productivity gains to drive down prices gently as occurred in episodes of the 19th century. "They have created so much debt that they may have turned a good deflation into a bad deflation after all."
Some snippets below. The bold paragraph looks relevant to Asia. It does remind me of 1997/1998 when the roof came down and so many companies got hurt because they had borrowed in USD. It appeared to make sense, the RM was more or less fixed to the USD at 2.5 to 1, while the interest rate on the USD was lower. But there is no free lunch here, as many would find out, the RM crashed versus the USD and companies were sitting on huge one-off losses. For Jusco (Aeon) it would be the only year since listing that they lost money.
Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West.
He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20pc of GDP higher today. "We are holding a tiger by the tail," he said.
He warned that QE in Europe is doomed to failure at this late stage and may instead draw the region into deeper difficulties. "Sovereign bond yields haven't been so low since the 'Black Plague': how much more bang can you get for your buck?"
"QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies (SMEs) and they get their money from banks, not from the bond market," he said.
"Even after the stress tests the banks are still in 'hunkering down mode'. They are not lending to small firms for a variety of reasons. The interest rate differential is still going up," he said.
"The emerging markets got on the bandwagon by resisting upward pressure on their currencies and building up enormous foreign exchange reserves. The wrinkle this time is that corporations in these countries - especially in Asia and Latin America - have borrowed $6 trillion in US dollars, often through offshore centres. That is going to create a huge currency mismatch problem as US rates rise and the dollar goes back up."
Mr White said central banks have been put in an invidious position, compelled to respond to a deep economic disorder that is beyond their power. The latest victim is the Swiss National Bank, which was effectively crushed last week by greater global forces as it tried to repel safe-haven flows into the franc. The SNB was damned whatever it tried to do. "The only choice they had was to take a blow to the left cheek, or to the right cheek," he said.
He deplores the rush to QE as an "unthinking fashion". Those who argue that the US and the UK are growing faster than Europe because they carried out QE early are confusing "correlation with causality". The Anglo-Saxon pioneers have yet to pay the price. "It ain't over until the fat lady sings. There are serious side-effects building up and we don't know what will happen when they try to reverse what they have done."
The painful irony is that central banks may have brought about exactly what they most feared by trying to keep growth buoyant at all costs, he argues, and not allowing productivity gains to drive down prices gently as occurred in episodes of the 19th century. "They have created so much debt that they may have turned a good deflation into a bad deflation after all."
Wednesday, 21 January 2015
Malaysia net oil importer, surprise?
Article in The Star: "Govt reveals M'sia net importer of crude oil, petroleum products since 2014", some snippets (emphasis mine):
"In a surprise turn of events, the Government has disclosed that Malaysia is a beneficiary of declining crude oil prices because the country is a net importer, and not exporter, of the commodity and petroleum products, if liquefied natural gas (LNG) was not in the equation."
Surprise turn of events?
Anyone who had the data from the past and extrapolated it within reason should have suspected this.
If this was properly communicated to the public is another matter.
I wrote in the past the posting "Malaysian oil statistics are puzzling" based on an article of Claire Barnes.
I wrote: "Luckily for Malaysia, it is still a net exporter in gas, although production seems to have slowed down a bit in recent years:"
The price of Natural Gas has however also come down a lot, in tandem with the price of oil and other commodities.
"In a surprise turn of events, the Government has disclosed that Malaysia is a beneficiary of declining crude oil prices because the country is a net importer, and not exporter, of the commodity and petroleum products, if liquefied natural gas (LNG) was not in the equation."
Surprise turn of events?
Anyone who had the data from the past and extrapolated it within reason should have suspected this.
If this was properly communicated to the public is another matter.
I wrote in the past the posting "Malaysian oil statistics are puzzling" based on an article of Claire Barnes.
I wrote: "Luckily for Malaysia, it is still a net exporter in gas, although production seems to have slowed down a bit in recent years:"
The price of Natural Gas has however also come down a lot, in tandem with the price of oil and other commodities.
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