Saturday, 30 April 2016

AirAsia: why not a rights issue instead of a PP?

AirAisa announced that its founders Tony Fernandes and Kamarudin propose to increase their shareholding in the company by buying 559 million new shares in the company through a private placement.

The Star wrote an article about the issues at hand: "Who is bigger – Tony or AirAsia?"

First of all, I have never been a fan of private placements, rights issues are so much more fair, giving all shareholders a chance to participate. And if they don't want to participate (for instance because they don't have money at that moment), they can still sell the rights in the open market.

The rationale given in the prospectus is as follows (first paragraph):

I don't think the reasons given are strong: both the underwriting and the successful completion should be no issue since the 559 million shares to the founders are apparently already underwritten.

Secondly, it is stated that the issuance "indicates the continued commitment" of the founders "by making further substantial investments".

This would suggest that the founders have been doing this for a long time, increasing their stake in AirAsia by investing in new shares.

However, exactly the opposite has been the case, the founders have been disposing shares for a long, long time, and in huge quantities, more than 600,000,000 shares in total.

At the IPO Tune Air sold 86 million existing shares:

After the IPO in their 2005 annual year report they owned 1,045 million shares (44.8%), which they sold down in the open market to 529 million shares (18.9%) currently. Large disposals were made in 2005 and 2006, 2011 and 2014. There is not a single year in which the founders actually increased their shareholding.

That bags the question, why after twelve years of heavy selling do the founders now suddenly  want to increase their shareholding in AirAsia? Surely the minority investors, who will get strongly diluted by the proposed private placement, deserve a proper explanation.

Lastly, there is the following, rather remarkable issue:

"..... why Tune Air, which is their holding company, is disposing its stake in the market at about RM2 prior to the AGM? It does not look good for them to get placement shares at RM1.84 when Tune Air is reducing its stake at RM2. To be fair, in announcements to Bursa Malaysia, Tune Air has stated that the shares disposed were in favour of Datuk Abdul Aziz Abu Bakar, who is one of the founders of AirAsia. "

I would suggest to replace the private placement by a rights issue of comparable size, to shore up the balance sheet.

And if the founders of AirAsia want to increase their stake, well, they can go ahead and buy the shares in the open market. If they can sell hundreds of millions of shares in the open market then surely they can also buy those quantities at the same venue.

Wednesday, 27 April 2016

Sona Petroleum: a clear vote

It does not often happen that a proposal by the management of a Bursa listed company gets voted against by 77.4% of the votes, but that is what happened to Sona Petroleum:

With time running out, it seems extremely unlikely that Sona can propose an acquisition which will be approved by the shareholders.

"Yield seekers" seem to be a threat to the promoters of SPACs, it is therefore the duty off the management of these vehicles to:

  • Propose a really good deal
  • Communicate this clearly to the shareholders

Not an easy task.

With the promoters looking (again?) at a possible large loss of money, SPACs will most likely lose their shine.

Friday, 22 April 2016

SIAS to take legal action (2)

Interesting follow up article in the Business Times (Singapore) by Michelle Quah:

"Are class actions good for investors and Singapore markets?"

My answer on that question is simply "Yes!".

The share markets (both in Singapore and Malaysia) are too much in favour of the majority shareholders, class actions will help to bring more balance to the equation.

In my home country (The Netherlands) the VEB ("Association of share holders", a not-for-profit organisation) has won many class action suits on behalf of the minority shareholders against large (mostly) Dutch companies, some of them in the top 500 of the world.

Here are some of the current actions (in Dutch):
  • Volkswagen
  • Fortis
  • Ahold
  • BP

And here of the past, succesful examples:
  • KPNQWest
  • Shell
  • Unilever
  • Fokker
  • Philips

Some of the reasons for the suits:
  • Misrepresentation
  • Unfair treatment of a certain class of shares versus another class
  • Unfair valuation at a merger or acquisition
  • Sensitive information was given too late or was leaked
  • Mismanagement and/or fraud

To participate one only needs to become member of the VEB, which costs 60 Euro per year and one will receive (beside the possibility to participate in class action suits) a few more benefits, like a monthly magazine, expert advice, etc. It is therefore no surprise that the VEB has 45.000 members (on a population of about 17 million).

Wednesday, 20 April 2016

10 Largest Malaysian IPOs

Below is a list of the ten largest IPOs in the last ten years on Bursa Malaysia.

                              == Market Cap ==
Company          IPO date      IPO       Now     Change
Petronas Chem   26/11/2010    42,480    53,600     26%
Maxis           19/11/2009    40,650    44,836     10%
IHH             25/07/2012    24,891    54,855    120%
Felda           28/06/2012    19,335     5,363    -72%
Astro           19/10/2012    15,592    15,199     -3%
Bumi Armada     21/07/2011    12,124     4,165    -66%
Westports       18/10/2013     9,037    14,356     59%
Malakoff        15/05/2015     9,000     8,400     -7%
UMW O&G         01/11/2013     6,702     2,000    -70%
AirAsia X       10/07/2013     2,963     1,452    -51%

Some comments:
  • 6 out of 10 companies are still below their IPO price, that is not impressive at all
  • if one would put the same amount of money in each stock, then one would have a loss of 5%
  • on average the companies IPO-ed about 3.5 years ago
  • for international investors, the RM is down by about 20% versus the USD since 3.5 years ago, so the results are much worse
  • the market cap off all 10 companies together has risen though, since their combined IPOs
  • it is mostly IHH saving the day, with EPF continuing to buy IHH shares aggressively even at a rich PE of around 60
  • Maxis, Astro, Bumi Armada and Malakoff are all "listed-delisted-relisted" cases, Bursa should really take decisive action to discourage this kind of financial engineering which comes at the expense of the minority shareholders, it is long overdue
  • quite a few resource related companies on the list, they have not fared well lately

There was once a time when companies were listed at single digit PEs supported by profit guarantees, the valuation was set by the authorities. Needless to say, there was a lot of interest by investors, and some IPOs were oversubscribed by 100 times.

Those days are over, companies nowadays set their own price, which is of course correct. New, "sexy" terms were introduced by financial engineers, like "cornerstone investors", "greenshoe options" and "stabilising manager".

But from the above data, it seems the IPO price is often quite rich these days, and not much upside (if any) is provided in exchange for the risk that IPO investors take.

Combined with my previous posting about poor earnings growth for the Top 30 companies (not surprisingly there is quite some overlap), things don't look that impressive.

Bursa can hold as many international roadshows as they want, but at the end of the day, it is the fundamentals and valuations that count. And they really have to improve.

SIAS to take legal action

Article in the Business Times (Singapore): "SIAS says it will take errant companies to court if need be".

Some snippets:

SIAS president and chief executive David Gerald told The Business Times: "We will take legal action if the company doesn't want to come to the table, refuses to see reason and continues to do wrong."

.... the SIAS chief said he felt it was important to let SIAS members and retail investors know that they have the option of joining the association in a representative action - similar in vein to class-action suits filed in other jurisdictions - as not many investors are aware that such actions can be pursued here. "Investors must know they are protected," he said. "And I have been advised by our lawyers that SIAS can represent aggrieved shareholders. We can even set up a litigation fund, which minorities contribute to, even if they may not be involved in the legal action, to support the principle."

Mr Gerald took pains to stress, however, that while a representative action is an option for minorities, it should be their last one. "I sincerely hope we do not see the day when we launch a class-action suit against a company. I believe in resolving things in the boardroom, not the courtroom, in the interest of all parties."

Although I don't always agree with the actions of the SIAS, I fully support the above reasoning. It is very hard for minority shareholders to group together, while taking action individually doesn't make sense at all because of the costs involved (unless it involves a relatively large minority shareholder, like a fund).

SIAS and MSWG are ideal platforms to organize legal action for minority investors that have been disadvantaged.

Tuesday, 19 April 2016

MOL Global, Deutsche Bank's Buy recommendation

One reader has drawn my attention to a Buy recommendation on MOL Global from Deutsche Bank (dated 20 November 2014) with a 12 month price target of USD 12.

MOL's share price currently hovers around USD 0.24, 98% below the target price, in other words the price has to multiply by a factor 50 to reach the target. With the company being soon delisted, that looks rather unlikely.

It should be noted that Deutsche Bank was conflicted, but at least the company did announce that in the appendix:

Another example why readers should not take broker's research too serious. Although there might be interesting information in their reports, I personally never follow their specific buy/hold/sell recommendations.

Monday, 18 April 2016

Mol Global delisted from Nasdaq

I wrote before about Mol Global, the first Malaysian company to be listed on the Nasdaq exchange.

The company will be delisted, less than two years after its IPO. It's last traded price was USD 0.30, a 97.6% decline from it's IPO price of USD 12.50.

A good write-up including a chronology of the events that led to the delisting can be found on the website of Digital News Asia: "MOL Global’s short and bumpy Nasdaq journey".

Of interest is the last paragraph:

April 13, 2016: Announces delisting plan. Shares close at US$0.30. (Closing price on April 15: US$0.23). At such a level, this gives MOL Global a market capitalisation of US$15.5 million. In contrast and to recap, about US$75 million of the IPO proceeds went to selling shareholders.

Golden Plus: public reprimands, fined and delisted

I wrote several times about one of the "bad boys" of Malaysian corporate governance, Golden Plus.

Bursa Malaysia apparently had enough of it, and reprimanded and fined the directors and delisted the company.

Errol Oh from The Star wrote "From Golden Plus to black box", adding historical context and raising several issues, for instance:

"It’s one of the greatest mysteries of corporate Malaysia that a Main Market company’s minority shareholders — close to 5,000 of them — can be starved of updates on the company’s performance for years.

The last GPlus annual report was for a two-in-one edition covering 2008 and 2009, and after the release of the results for the fourth quarter ended December 2010, there has been little information about the state of the company’s operations and assets.

As remarkable as it sounds, a listed company worth about RM150mil (just before its shares were suspended in August 2009) has transformed into a black box."

And one final question:

"How do we make sure that there’s no way another listed company can leave its minority shareholders in the dark for years?"

Sunday, 17 April 2016

Linc Energy: from "20 Trillion" to Administration in 3 years time

Linc Energy was once the darling of the speculators. When the company was still listed on the ASX, valuations of 20 Trillion were mentioned.

.... two independent consultants estimated there was an ‘‘unrisked prospective resource’’ of up to 223 billion barrels of oil equivalent in three shale formations within its 100 per cent-held Arckaringa exploration permits.

Media outlets including the Adelaide Advertiser appear to have multiplied the resource estimate by the prevailing oil price - above $US95 a barrel - to arrive at the $20 trillion figure.

Even for Linc Energy, that sounded a "bit" too rich, so they added:

‘‘It’s a multi-billion barrel opportunity, and that’s a good news story. OK it’s not $20 trillion. But 3, 4, 5 billion barrel resources are virtually unheard of these days, so even stressing this number down to the minimum number the experts stress it down to, it’s still a big story.’’

The company subsequently dumped the ASX for the SGX.

Quite a scoop for the latter, but if they are still happy with their "catch" remains doubtful, since Linc Energy went into voluntarily administration last week:

Linc, which once boasted a market value of $2 billion when listed in Australia, was worth $US15 million when its Singapore-listed shares last traded on March 24. Former Australian listed market darling Linc Energy has entered voluntary administration with the oil- and gas-focused company buckling under an ongoing debt restructure and recapitalisation.

The above story shows the danger of those "consultants", especially the kind who come up with rosy valuations, without putting in one cent of their own money. Even Genting apparently believed in the story, they owned 10% of the shares of Linc. It also shows how quickly the fortunes of highly indebted commodity companies can change.

Wednesday, 13 April 2016

Proven Oil Asia in trouble? (3)

MAS (Monetary Authority Singapore) has added "Proven Oil Asia" to its "Investor Alert List":

I wrote the first post about this scheme almost two years ago. Should MAS have taken action more early? It all looks rather slow. Surely they must have known about my postings, they could have contacted me for more information, which they never did.

I often complain about the slow enforcement in Malaysia, but in this case they clearly beat Singapore (here and here), and the same applies to the media.

Tuesday, 12 April 2016

To Cliq or not to Cliq? (8)

A new development in this case, according to this announcement:

..... Best Oracle has filed a Judicial Review Application to the High Court of Malaya (“the High Court”) (“the JR Application”) in respect of the request/decision by the Securities Commission (“SC”) via a letter from Maybank Investment Bank Berhad (“Maybank IB”) on 7 January 2016 to CLIQ Energy Berhad (“CLIQ/the Company”) (“the Said Letter”).

In the JR Application, the SC was named as the first respondent and CLIQ was named as the second respondent. Best Oracle is a 20% shareholder of the Company and the shareholders of Best Oracle are the 5 members of the Management Team of CLIQ.

Best Oracle has the most to lose when the company will be liquidated, they put in the initial money. It will be interesting to follow the above JR Application, with CLIQ being the first SPAC being liquidated, we are in unchartered waters.

I have written a lot about SPACs in the past, here is a 2013 article from Investor Central about the IPO of CLIQ.

Sunday, 10 April 2016

Are SC/BM not involved in 1MDB probe? (2)

I wrote before:

“There are three agencies involved, comprising the police which deal with cheating, criminal breach of trust and so on; the MACC (Malaysian Anti-Corruption Commission) which deals with corruption; and the central bank, BNM, that deals with aspects relating to our financial system and what contravention there has been of our rules [and] regulations, and our laws."

I definitely hope that the Securities Commission and/or Bursa Malaysia are included in the probe as well. Although 1MDB is not a listed company, the following companies are or were listed on Bursa:

  • Utama Banking Group Bhd
  • Cahaya Mata Sarawak Bhd
  • Putrajaya Perdana Bhd
  • Loh & Loh Corp Bhd
  • RHB Cap Bhd

I definitely should add AmBank to that list. This bank paid a penalty of RM 53.7 Million to Bank Negara, although the exact reason for it ("non-compliance with certain regulations") is very vague (here and here).

With the shareholders of AmBank being hit by the penalty, are they not allowed to know the exact facts regarding the non-compliance? Later this year, at the AGM, they have to vote about the Board of Directors, should they not know who was responsible for this issue?

More news regarding the UBG deal has been revealed by The Australian: "Email trail links banks to Malaysian scandal", some snippets:

Together with other information compiled by police in neighbouring Singapore, they also raise concerns that the UBG takeover may have ultimately benefited 1MDB adviser and UBG director Jho Low, who is close to the family of Malaysian Prime Minister Najib Razak, at the expense of ordinary Malaysians.


While AmBank told the world, through the Malaysian stock exchange, that PSI belonged to Obaid, internal bank emails obtained by The Weekend Australian show it was told the secrecy was necessary because Saudi royals were behind the company.

“PSI, a privately held company of the Royal Family of the Kingdom Saudi Arabia, is governed by the strictest confidentiality,” Ambank officer Daniel Lee was told in a March 18, 2010 email.

“As such, it is with regret that we are not able to provide you with access to PSI’s financials.”

Adding to the secrecy shrouding the deal, the email to Lee came from an anonymous Gmail ­account “project.unicorn1@”, operated by a person or persons calling themself “Team Project Unicorn”.

Even now, five years after PSI took control of UBG and delisted it from the Malaysian exchange, the identities of the person or people operating the email account remain unknown.

Saudi Arabian documents obtained by The Weekend Australian show that when PetroSaudi was set up in 2007 it was half-owned by Obaid and half by Saudi royal Prince Turki bin Abdullah. However, there is no indication Prince Turki was ever involved in PSI.

The Weekend Australian was also unable to verify the existence and status of PSI. It’s not listed on the Seychelles publicly available company register, and yesterday the country’s Financial Services Authority had yet to respond to a request for a more detailed search.

It is sometimes hard to tell who was on whose side during Project Unicorn.

In UBG’s corner, Low sat on the board as a representative of the Abu Dhabi-Kuwait-Malaysia Investment Corporation or ADKMIC, which owned a little over half of UBG — a stake it had bought from the Taib family.

Even though ADKMIC carries a name that makes it seem a fund from the oil-rich Middle East, police in Singapore have told Malaysian authorities that Low actually sits behind the British Virgin Islands company.

However, in UBG’s 2009 annual report, Low declared he owned no shares in UBG, either directly or indirectly.


Later in the year when PSI was mopping up minority shareholders, this would be directly contradicted in a statement to Malaysia’s stock exchange, Bursa Malaysia, describing Obaid as “the sole shareholder and director or PSI Seychelles”.


On January 12, 2011, almost a year after Team Project Unicorn set out the outlines of the deal, the UBG takeover was complete. With all shareholders paid out and the company now solely owned by PSI’s Malaysian subsidiary, Javace, UBG was delisted from Bursa Malaysia and dissolved.

At 2.50 ringgit a share, ADKMIC was entitled to 658m ringgit, or about $US195m.

But who got that money? When the UBG takeover was announced at the beginning of 2010, Malaysian state-owned newsagency Bernama reported ADKMIC shareholders included “prominent Middle-Eastern investors”. But police in neighbouring Singapore tell a different story. In March last year, Singapore Police’s Commercial Affairs Department told Malaysia’s central bank that an account held in ADKMIC’s name at the Singapore branch of Swiss bank BSI was “beneficially owned by Jho Low”.

Singapore Police allege that between June 2011 and September 2013 almost $529m flowed into the ADKMIC account from an account at RBS Coutts’ Zurich branch held by another company allegedly associated with Low and embroiled in the 1MDB scandal, Good Star.

The SC should have investigated these claims by now, the above might implicate serious breaches of the listing rules.

AmBank was of course also involved with the (in)famous "donation" of RM 2.6 Billion in the accounts of the PM.

But there might be more. According to blogger "jebatmustdie", there are issues with a RM 5 Billion bond from 1MDB (the article can be found here, readers in Malaysia might need a VPN to access it):

The terms and conditions of this RM5 billion bond had been clearly spelled out and that it could only be used according to Shariah principles.

Is sending money to Good Star Ltd in compliance to Shariah principles? What does Good Star do?

Securities Commission is the controller of bond issuance process. It also ensures compliance to documents when the bond was offered as well as the continuous monitoring that the terms and conditions are always being complied with.

In it's 2015 annual report, there is no mentioning at all of 1MDB, the elephant in the room

Saturday, 9 April 2016

SFC reprimands and fines Moody’s over Red Flags Report

I have written many times (for instance here, here and here) about the need for negative viewpoints (on particular companies, or the market as a whole), to balance out the predominantly positive reports from brokers, research houses and journalists.

Relevant for this specific case: "Moody and its Chinese red flags".

Not everybody seems to share that stand, as witnessed by the decision of the SFC in Hong Kong:

David Webb wrote about this subject "SFAT's red flag on Moody's chills negative research".

His conclusion (emphasis mine):

Could the report have been better-written, and clearer in the limitations of its findings? Yes it could.
Could the flag-tests have been better than 98.8% correct? Yes, they could. Was the report of a lower standard than all the other pieces of (mostly positive) research that the SFC has allowed to circulate without interference? Certainly not. That's what makes a market - and research firms rise and fall based on the quality of their output.

We liked the Moody's report, and we want to see more of that kind of critical research - but what licensed firm will now dare to publish such a report if the regulator is going to pick it apart afterwards and then slam them with a fine and potential loss of licenses for the individuals involved?

If listed companies disagree with research reports, they are of course entitled to respond with rebuttals, clarifications of their past disclosures or explanations, to ask for corrections, or even to sue for libel or defamation. As far as we know, none of the companies involved has sued - the criticism wasn't that far wrong.

Not only has the SFC pursued a licensee's report, they have also gone after an unlicensed person in the Market Misconduct Tribunal for expressing his negative opinions about a company while putting his money where his mouth was and being short: Andrew Left, of Citron Research, writing about Evergrande Real Estate Group Ltd (3333). The verdict in that case (also Chaired by Justice Hartmann) is awaited. In our view, unless the SFC can show that Mr Left didn't believe what he was saying, then the statement of his opinion cannot be false - however wrong his opinion turned out to be.

The SFC, and now the SFAT, has done Hong Kong a disservice by chilling negative criticism of companies, thereby skewing the market even further towards positive research. "Sell-side" investment banks world-wide tend to withdraw coverage of a stock or use euphemisms rather than issue a sell note on a potential client. They will say "reduce", "hold", or "buy on weakness" (when it goes down) rather than say "sell". Hong Kong sits on the doorstep of a country which stamps out all forms of criticism. We need to strengthen and encourage, not weaken, freedom of debate and criticism of companies.

All very relevant also for the Malaysian and Singaporean markets.

Friday, 8 April 2016

Ranhill, Petronas and Keppel implicated in Unaoil's "bribery scandal"? (4)

And Petronas has also reacted according to an article in The Edge:

Petronas takes the allegations very seriously,” the statement read. “The company has a zero-tolerance policy against all forms of bribery and corruption and expressly prohibits improper solicitation, bribery and other corrupt activity by employees, directors and third parties performing work or services for or on behalf of companies in the Petronas group.”

It is by far the best statement of the three companies mentioned in the Unaoil scandal: Ranhill, Petronas and Keppel.

The journalists who have uncovered the scandal claim to have a treasure trove of hundreds of thousands of documents, emails etc. Even if a company has a zero-tolerance against bribery it can never be sure that each and everyone of its thousands of employees follows the code. So the only wise thing is to be open to allegations, to take them seriously and to investigate.

Keppel wrote: "Keppel has a code of conduct which prohibits, among others, bribery and corruption.".

But in the documents uncovered by the journalists it is written: "Unaoil regarded Keppel as an ideal client because Keppel had lax anti-corruption controls compared with Unaoil’s other multinational clients."

Keppel therefore should at the very least re-evaluate its anti-corruption controls, how they stack up against other multinational companies.

Regarding Ranhill, the full court case between Unaoil and Amona Ranhill consortium Sdn Bhd can be found here.

The names of "Ranhill" and "Unaoil" are mentioned each dozens of time, with many big shots of Ranhill being named, having directly negotiated with the top of Unaoil.

Ranhill Holdings (the currently listed entity) wrote:

".... neither Ranhill Holdings Berhad nor any of its group of companies has entered into any transaction or arrangement with Unaoil."

The company should at the very least specify the exact relationship between Unaoil and the former Ranhill Bhd and its subsidiaries, and what the implications are for the current Ranhill Holdings Bhd.

The announcement by Ranhill Holdings (written in typical "Menglish", that is Malaysian English, bit surprising for an official announcement) also mentioned:

"..... we practise code of conduct and good business ethics".

Not everybody might agree with that:

Wednesday, 6 April 2016

Ranhill, Petronas and Keppel implicated in Unaoil's "bribery scandal"? (3)

Ranhill Holdings has reacted through an announcement on Bursa's website.

It has come to our attention that there had been a series of articles published by The Huffington Post and Fairfax Media recently with regards to the investigation centres on a Monaco company called Unaoil for the alleged unethical business practices. The articles mentioned that Unaoil’s multinational clients in Libya included a Malaysian company Ranhill.

With regards to the above, we wish to clarify and confirm that neither Ranhill Holdings Berhad nor any of its group of companies has entered into any transaction or arrangement with Unaoil. 

We wish to further clarify that at Ranhill, we have due process prescribed in the forms of policies and procedures in regards to engagement of third parties that include due diligence process and we practise code of conduct and good business ethics.

That seems like a rather clear answer.

However, it looks like there was definitely a "Ranhill" which was dealing with Unaoil, as described for instance in this link:

"Know your counterparty: how not to lose millions on your business deal"

Some snippets:

In early 2005, a company called Amona Africa placed a bid for a major construction contract with the Libyan government. The initial contract value was almost a billion US dollars, with opportunities for this to increase.

At the same time, the Malaysian based Ranhill group wanted to acquire Amona Africa. The Ranhill holding company entered into an agreement to buy a majority shareholding, conditional on the construction contract being awarded to Amona Africa.

To improve the chances of securing the construction contract for Amona Africa and control of Amona Africa for Ranhill, executives of Ranhill began discussions with a company called Unaoil. Unaoil had business contacts in Libya who could provide access to members of the Gadaffi regime. This would lead to opportunities to lobby at the very highest level for the award of the construction contract.

Ranhill did not yet own or control Amona Africa. Nor were any Ranhill directors on the Amona Africa board. Negotiations with Unaoil were conducted by the group CEO of Ranhill and two other senior executive directors. One of these, a Mr Lough, was represented to Unaoil by the CEO as 'Ranhill's 'Mr Libya'. At this stage, Unaoil did not need to analyse which Ranhill group company the negotiators were representing. They were simply trying to do a deal between senior executives of the Ranhill group on one hand and Unaoil on the other.

Is this "Ranhill group" in no way, shape or form related to the currently listed "Ranhill Holdings"?

Tuesday, 5 April 2016

Ranhill, Petronas and Keppel implicated in Unaoil's "bribery scandal"? (2)

Business Times (Singapore): "Keppel refutes allegations of link to Unaoil bribery scandal"

Some snippets:

KEPPEL Corp has dismissed allegations in foreign media reports that the group was involved in a global oil bribery scandal embroiling Monaco-based oil company Unaoil. A company spokesman said in a statement on Monday: "Keppel FELS strongly refutes allegations made in the media regarding its involvement in the payment of bribes relating to Unaoil. Keppel has a code of conduct which prohibits, among others, bribery and corruption."

In Malaysia the story seems to have been completely ignored by the mainstream media, which is a rather peculiar (but not completely unexpected) way to deal with bad news.

Therefore also no reactions from Petronas and Ranhill, which were mentioned in the allegations.

Saturday, 2 April 2016

Scan Associates reprimanded, directors fined

I have written before about Scan Associates, and the rather curious case of suing Bursa Malaysia.

As detailed by KiniBiz:

"Scan Associates also said it had no means to announce Bursa Malaysia’s directive on the GN3 reclassification as its company secretaries had left."

Tough luck, but I guess that if the company secretary leaves, you need to appoint a new one, quickly.

Not too long afterwards, Scan withdrew its case, RM 30K in money poorer and hours in effort spend.

However, this was not the end of the story, since Bursa decided to reprimand the company and its directors and fine the directors RM 350K.

The company announced its first half year results: its operations are tiny, it has a negative net asset value, and is involved in numerous legal disputes.

Friday, 1 April 2016

Ranhill, Petronas and Keppel implicated in Unaoil's "bribery scandal"?

"Asian companies such as Hyundai, Samsung, Sinopec and Petronas are household names. But they have dark secrets. In the latest in Fairfax Media and The Huffington Post’s global bribery expose, these firms and more are implicated for paying kickbacks, money laundering and corruption."

The start of part 3 "Unaoil: Dark secrets of Asian powers" of "World's Biggest Bribery Scandal"

The Asian powers mentioned are three companies of Korea (Samsung, Hyundai and ISU) and the following players:

Some snippets containing specifics:

Leaked emails reveal that Unaoil agreed to pay millions of dollars to a Malaysian middle man who claimed he could influence a top Petronas’ executive and other Malaysian officials in 2010. “I’ll make [an] arrangement for us to see Mr [Petronas executive] when I’m in Dubai,” middle man Affandi Yusuf wrote to Unaoil.

“As you are aware the situation is very sensitive at the moment. I’ll have to meet Mr [Petronas executive] personally to make him comfortable to meet up with your team.”

In a later email from Affandi, the middleman claims that, in return for the bribes, his corrupt Petronas contacts had “fed us” inside information from a tender committee. This ensured that Unaoil’s client Petrofac qualified for a large contract.

In Libya, Malaysian company Ranhill offered Unaoil $40 million to convince senior Libyan officials to award it a large housing construction contract. The leaked emails reveal Ranhill approached Unaoil after former Malaysian prime minister Mahathir Mohamad had failed to convince Colonel Gaddafi to help.

Unaoil succeeded where Mahathir had failed. Unaoil paid a high ranking Libyan official, Mustafa Zarti, to assist Ranhill. The leaked files also suggest Unaoil promised a $200,000 personal kickback to a Ranhill executive if he helped Unaoil extract large commissions from the Malaysian company.

Unaoil also paid up to $2 million (along with further payments for a rug and a collection of fine wines) into offshore accounts to two mysterious Algerian middle men, Tewfic Guerbato and Omar Habour. It appears these payments were made to increase Unaoil’s influence inside Petronas and other Asian firms.

A confidential 2007 Unaoil memo details its plans to help Keppel win offshore oil rig and barge contracts on the massive Kashagan oil field. Unaoil regarded Keppel as an ideal client because Keppel had lax anti-corruption controls compared with Unaoil’s other multinational clients. Unaoil also believed Keppel had its own connections to allegedly corrupt Kazakh government officials.

“In my opinion we have a lot at stake here, apart from the $30m [in fees from Keppel] – we could set-up a long term association with these guys [Keppel].... The problems of working with a US or European outfit do not apply here,” a Unaoil executive wrote in a 2007 memo.

The leaked emails provide specific details of just how helpful Unaoil was to Keppel. In 2006, when Keppel was competing with French multinational Technip to win a contract to build an offshore oil rig in Kazakhstan, Unaoil used a corrupt contact codenamed “small D” to leak inside information on bidding strategy.