Bernas eyes relisting in 2020?

Article in The Edge Financial Daily dated March 30, 2017: "Bernas eyes relisting in 2020".

One snippet:

That appears to be in sharp contrast with an earlier announcement to Bursa:


"after due enquiry with our Directors and major shareholders, the Board of Directors of Padiberas Nasional Berhad (“Company”), wishes to inform that as at today, the Company is not aware of any written arrangement on the following:

(i) any corporate restructuring that includes an impending relisting plan"


The authorities should look into this case.

Next to this, there is the very serious issue if all minority shareholders have been treated equally.

Goh Ban Huat: connecting the dots

Excellent detective work by Errol Oh in The Star: "From Casio King to King of Coincidences".

This in regard to the acquisition by Goh Ban Huat of 20% in Time Galerie (M) Sdn Bhd for RM 14 Million, as announced here and here.

The detailed work showing possible relationships is much too cumbersome for ordinary retail investors.

Unfortunately, because there are systems out there that would make things much more easy, for instance "Handshakes" and "Webb-site". Pity that Bursa is not making similar systems for retail investors.

Related Party Transactions (RPTs) have a horrific reputation in Malaysia, as detailed in many cases in this blog (and much more cases in "Where is Ze Moola") where minority investors often received the short end of the stick.

But there is one category even worse, RPTs that are dressed up as non-RPTs. With many big players registering their holdings under nominee accounts, in a country where conflict of interest is normal, surely this is happening many times per year.

Unfortunately, enforcement on this aspect is really weak, we hardly hear about relevant cases against major shareholders who do business deals with related parties and fail to report this.

This is very relevant, since RPTs have to follow much more stringent rules and guidelines than non-RPTs. Larger RPTs even require an independent adviser and have to be approved in EGMs where the related parties have to abstain.

That all doesn't mean that Goh Ban Huat's acquisition is a RPT. But it does mean that the regulators actively should look into this deal (and in many similar deals).

It also doesn't mean that it is bad for its shareholders, Time Galerie looks like a very decent, profitable company.

There is one part in the reply to Bursa's query though that I don't like, the comparison to similar transactions. It shows that the PE of Time Galerie (11.8) compares reasonable with five other deals done with listed companies.

However, unlisted companies are sold for much lower PE's, a PE of 5 is often considered reasonable, and a PE of 2 is not unheard of. Shares in unlisted companies are very illiquid, and the standard of the audits is much lower than those of listed companies, hence those companies are trading at a large discount to their listed rivals.

In an unrelated matter, an interesting story about how Robert Tan gained control over Goh Ban Huat can be found here, paragraph 4.3. And for readers who like to know more about Syed Mokhtar (about whom I have written many times in this blog), paragraph 4.2 seems to be interesting.

Fraud at Kontena Nasional (2)

I wrote before about NCB Holdings and the fraud at Kontena Nasional.

Today the company announced:


"... the resignation of En. Syahrul Azmir bin Ahmad Zaki as the Chief Executive Officer of Kontena Nasional Berhad, a wholly owned subsidiary of NCB Holdings Bhd. The effective date of resignation is from 1st January 2015."


No reason was given, which is exceptional.

In an unrelated announcement it was reported that MISC sold its shares in NCB to a wholly-owned subsidiary of MMC Corporation.

With the majority shareholder of MMC (Tan Sri Syed Mokhtar) already having stakes in other Malaysian ports, there might be a potential for a monopoly.

Bernas: are all minority shareholders really treated fair and equal? (2)

I wrote before about the privatisation exercise of Bernas,

In a new twist to this story, The Malaysian Insider published the following article:

"Story behind Syed Mokhtar’s ‘RM2.25 billion tax-exempt’ Bernas deal revealed, says PKR MP"

In it is again allegedly confirmed that minority shareholders of Bernas are not treated the same:


"In the letter, Syed Mokhtar gave his personal undertaking that he would guarantee the national interests of rice in Malaysia. In the relisting of Bernas, 10% shares of Bernas IPO will be allotted to Putrajaya for the National Farmers Association (Nafas) and the National Fisherman Association (Nekmat). Syed Mokhtar also pledged annual contributions to the welfare programmes of Nafas and Nekmat for five years or until the relisting exercise of Bernas was completed."


And that is simply not allowed, according to the rules.

Will the authorities (Securities Commission and/or Bursa Malaysia) investigate the above and take any action, if appropriate? I guess we have to wait and see, even if action is taken it can often take a very long while.

The shares of Bernas have been removed from the Official List of Bursa Securities with effect from 9.00 a.m., Friday, 18 April 2014.

Bernas: are all minority shareholders really treated fair and equal?

Bernas (Padiberas National Berhad) has been in the news lately. The first attempt by companies linked to Syed Mokhtar AlBukhari to takeover and thus delist the company failed, but a second attempt succeeded (at least regarding the latter part). Rather surprisingly, since the offer was exactly the same.

Regarding the offer price, it seems to be rather low for such a cash cow, an opinion that MSWG agrees with, according to this article in The Ant Daily:


According to the Minority Shareholder Watchdog Group (MSWG), a prudent estimate of Bernas’ intrinsic value is RM3.2 bil or RM6.13 per share. At a conservative 8.5-11.5% discount with at least a 2% perpetual growth rate, the indicative value of Bernas is estimated at between RM4.18 and RM6.13.


Then why did some of the minority shareholders change their mind and accept the low offer? Is it possible that some received a better offer than others?

Comments made by Agriculture and Agro-Based Industries Minister Ismail Sabri Yaakob clearly seem to indicate that. In an article "Bernas delisting ‘good’ for farmers, fishermen" at KiniBiz website, the Minister allegedly said (emphasis mine):


.... Bernas has agreed to his request to pay Nafas and Nekmat RM2 million each annually even though they are no longer shareholders and are not entitled to a dividend.

“(This is so) that Nafas and Nekmat will still have consistent financial (support) … So it’s a good deal for them. They are well taken care of,” he said.

Ismail Sabri said he had received a “personal undertaking” from Syed Mokhtar that Nafas and Nekmat will be offered 5% each of the shares, should the company be re-listed in the future.


Similar articles can be found here and here reinforcing that the Minister really said this.

That is all very nice for Nafas and Nekmat, I have zero problems with them being treated generously and receiving more than the low one-off payment of RM 3.70 per share.

But there are many other minority shareholders of Bernas, and according to the rules, they should be treated the same, they should receive the same offer. Thus they also deserve a yearly payment and an offer a percentage of shares when Bernas is relisted again.

The Capital Markets and Services Act, paragraph 217, clearly states this:

Lee Won Chen of Shearn Delamore & Co writes it in a very clear manner:

So why have the other minority shareholder not received a similar offer?

Nafas and Nekmat have in the mean time accepted the offer, according to the same article:


The National Farmers Organisation (Nafas) and National Fishermen’s Association (Nekmat) had respectively held 3.7 and 3.2 percent of Bernas shares previously.

However, Bernas, now owned by companies related to tycoon Syed Mokhtar AlBukhari, has since bought the shares.

Because of this the public shareholding has fallen below 10% and the shares of Bernas have been suspended since March 21, 2014.


This of course will put even more pressure on the remaining shareholders, holding shares in an unlisted company is not a very attractive proposition for many.

In an interesting twist, Bursa Malaysia asked the company to clarify an article in The Edge Malaysia dated February 10, 2014, and Bernas answered:


In response to your query, after due enquiry with our Directors and major shareholders, the Board of Directors of Padiberas Nasional Berhad (“Company”), wishes to inform that as at today, the Company is not aware of any written arrangement on the following:

(i) any corporate restructuring that includes an impending relisting plan; and
(ii) where the National Farmers Association (“Nafas”) and the National Fishermen’s Association (“Nekmat”) will eventually hold a 5% stake each in the newly listed entity.


The statements of the Minister on one side and Bernas on the other side seem to contradict each other. The behaviour of Nafas and Nekmat (accepting the same offer offer that they refused earlier) seems to put more weight on the statement of the Minister.

Bursa Malaysia and the Securities Commission should urgently investigate this matter and show that they really practice what they preach:

"to promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the overall development of an innovative and competitive capital market."


On a side note, regular readers of this blog will know that I don't like these "listing-delisting-relisting games" at all, they are "played" mostly by the tycoons, at the expense of the minority investors, who hardly stand a chance. I have yet to read a good and proper reason why a company needs to be delisted and relisted, arguments given are often vague along the lines of "the need to restructure the company". The authorities really should do something about this abuse of the rules and the continued disadvantaging of minority investors.

Bina Puri admitted its intention to secure contracts by paying bribes (2)

It seems that the Malaysian mainstream news providers have not yet picked up on the story, but in Singapore they did.

From the Singapore Law Watch website, source Straits Times, written by K.C. Vijayan (bold emphasis is mine):

Firm fails to collect $4.6m from client

A Singapore firm's court bid to collect a $4.6 million commission from a client failed after the judge found the deal had been tainted by intentions of graft.

The High Court found that Singapore-based ANC Holdings and Kuala Lumpur-based Bina Puri Holdings had intended to pay bribes to third parties in Saudi Arabia in order to secure two construction contracts worth $93 million.

The intention to bribe, which appeared to have been factored into the commission amount to be paid to ANC, effectively nullified the contract for ANC to help Bina secure the Saudi projects in return for the commission.

The judge made it clear the court was duty-bound to take into account evidence of illegal action and declined to uphold the contract on such grounds.

Judicial Commissioner Vinodh Coomaraswamy, in his judgment grounds released yesterday, said there was no finding that bribes were actually paid to secure the projects. "I cannot and do not make any findings as to whether bribery actually took place. I am in no position to do so," he said.

However, "it is a serious thing to admit an intention to secure contracts by paying bribes. It is especially serious - legally and reputationally - for a public listed company to do so", he added.

Bina Puri Holdings is listed on the Kuala Lumpur bourse and deals in construction and property development, among other things. ANC had contracted to help its subsidiary in Saudi Arabia secure the housing projects, which Bina Puri Saudi won in January 2011. But the Saudi housing authorities cancelled the contracts three months later, after Bina Puri Saudi failed to pay performance guarantee deposits worth 5 per cent of the projects' value.

ANC then sued Bina for its 5 per cent commission on the grounds that it had effectively secured the job for the Malaysian company. ANC's lawyer P. Ashokan argued it had alerted Bina to the pro-jects in Saudi Arabia and advised Bina's Saudi subsidiary on how to price its bids, making ANC the effective cause through which Bina got the contracts.

But Bina's lawyer Chia Foon Yeow countered that the firm had known of the projects independently and the successful pricing had been worked out with a Saudi contractor without ANC's help.

Judicial Commissioner Vinodh agreed that the evidence did not favour ANC's claim of having provided material assistance. But it was the allegations of bribery that finally unpicked the case.

The claims were triggered at first by Mr Chia's examination of an ANC witness which Mr Ashokan objected to. But in his own questioning of Bina's witnesses, it emerged, among other things, that some of the commission was meant for use as bribe payments with Bina's knowledge.

ANC's witnesses claimed the payouts to persons in Saudi Arabia were for market intelligence on relevant issues such as pricing strategy.

The judge discounted the claims, noting that 60 per cent of the $4.6 million commission was to go to Saudi third parties. He noted the commission in the agreement was 2.5 times the 2 per cent sum reasonably expected for such tender projects. "And this serves to reinforce my belief that the common intention from the outset was for (ANC) to use bribery to ensure Bina Puri Saudi secured the projects."

The judge dismissed the case and ordered both parties to bear their own costs.


Bina Puri did make today an announcement to Bursa Malaysia. Not about the High Court findings in Singapore nor about the intention to bribe which it admitted, but about a huge (30%) private placement which will very much dilute its existing shareholders. And that while a previous private placement had just taken place.

Bina Puri's accounts over 2012 were not qualified, but there was an "Emphasis of Matter" regarding the amount of RM 17 million owing by an associate which has been long outstanding, which is a clear red flag.

Bina Puri is allegedly linked to Syed Mokhtar. However, the following quote is from his biography:

He also answered the issue of the shareholding structure of his companies that could not be traced to him, acknowledging “it is an old habit that has to change.”

Where is Ze Moola has written several articles about Bina Puri.

Protons marketshare slipped from 80% to 18%

Pretty astonishing statistics in an article from The Malaysian Insider:

"At its peak, four of every five cars sold in Malaysia was a Proton, but the carmaker is now in danger of slipping into third spot in sales behind Toyota and Perodua, the second national car company that has ruled the roost for over six years.

Industry sources told The Edge newspaper in an article published today that Proton saw its market share slip in December 2012 to just 17.7 per cent, with Toyota now a close third at 17.1 per cent share of passenger vehicle sales in the country.

“Perodua (Perusahaan Otomobil Kedua Sdn Bhd) is the runway market leader while Proton over the last few years has been a strong second. Now Toyota is closing in on Proton’s position,” an unnamed executive told the financial daily.

Proton is controlled by Tan Sri Syed Mokhtar Al-Bukhary’s DRB-Hicom.
Proton was established by Tun Dr Mahathir Mohamad in 1983 and became a poster child of the former prime minister’s industrialisation policies.

Dr Mahathir had made it patriotic to buy a Proton, but the company has seen its sales slump in the last decade due to increasing liberalisation of the Malaysian market."

I wrote before about my home country, The Netherlands. Dutch people seem to be more practical then Malaysians, at least when things don't work out: just move on, even if it means taking a loss.

The Netherlands has a company dealing with cars, trucks etc, DAF, but in 1975 it sold of its passenger car division to Volvo in 1975. Dutch people had the same love-hate relationship with its (only) homegrown car as Malaysian have with Protons. The DAF passenger car was as ugly as the Proton Saga.

Holland also had one steel company, Hoogovens, it first merged with British Steel and was later sold to Tata Steel from India. Malaysia is still stuck with its steel industry, Perwaja Steel is rumored to have lost about RM 10 Billion.

KLM, the royal Dutch airlines, merged in 2004 with the much larger Air France. Malaysia Airlines continues to be a big headache, with huge accumulated losses of around RM 8 Billion.

For the people in charge, there might be a lesson here.

Syed Mokhtar, please expose those who abuse the system

From the website of The Star: "The caring side of Syed Mokhtar":

"Fresh from the publication of his biography recently, tycoon Tan Sri Syed Mokhtar Albukhary has released a 195-page coffee table book on his global charity work, which many ordinary Malaysians are not familiar with.

Until the release of his biography Syed Mokhtar Albukhary: A Biography by Premilla Mohanlall, where he opened up on many issues for the first time to put the record straight, the reclusive billionaire had always shied away from the media.

He has rarely talked to journalists, except a privileged handful and even then, it is always on an off-the-record basis. This continuous distancing from the media has only put him under greater media scrutiny.

“I wonder why I get bad press when others who have abused the system for personal gains have not been subjected to such media scrutiny. Perhaps it is time to come out and defend myself,” he said in his book.

Envy, jealousy, fascination and simply selfish politics may have been reasons why SM, as he is known, has found it difficult to get the kind of coverage he wants, and deserves."

I have written about the first book (a biography) about Tan Sri Syed Mokhtar here.

This second book about his charity seems again a PR exercise, according to the Linkedin profile of the writer. A pity, because what Malaysia needs is thoroughly investigated books written by independent writers.

But the most interesting of the article in The Star is the above quote in bold. Syed Mokhtar is surely very well informed, why does he not simply name and shame those that have abused the system for personal gains? If laws are broken, it is even his obligation to do so. If no law is broken, he could still come with recommendations how to improve the system to end the abuse, he is in an ideal situation to do that.

Regarding the charity, there has been controversy in the past. Listed companies controlled by Syed Mokhtar have donated huge amounts of money to his charity. Was it not more appropriate to give this money in dividends to all shareholders and to let them decide for themselves what they want to do with their money? And if they want to give it to charity, let them choose the charity of their liking? MSWG has also tackled this issue. "Where is Ze Moola" wrote about it here.

Syed Mokhtar "old habit that has to change"

In The Star of today an article about the new book: "Syed Mokhtar Albukhary, A Biography"

One snippet:

He also answered the issue of the shareholding structure of his companies that could not be traced to him, acknowledging “it is an old habit that has to change.”

The question is, why hasn't he changed this "old habit"? It has been many times criticised and is so easy to cure. Just start reporting all the holding companies, problem solved, it can't take much more than a few hours to do so.

And why are the authorities not taking any action in this matter? They can easily put pressure on Tan Sri Syed Mokhtar Albukhary to start reporting the structure of his holdings. Knowing the shareholding structure of companies is essential for good corporate governance.


But the media is still biting on Syed Mokhtar and, in some ways, he is to be blamed as he has never made himself available to journalists, preferring to let his aides do the talking. In fact, bankers also complain that he never meets them!

Syed Mokhtar never meets his bankers? That is rather surprising, given the amount of money that they have lend his companies. MMC alone had per June 30 2012 loans exceeding RM 21 Billion.


Although the book is, no doubt, a public relations exercise

The publisher PVM Corporations is a pure Public Relations company. Everybody can hire one to write a nice, friendly story. But what Malaysia really needs is investigative reporters who dig deep and report the information in an unbiased way based on facts.

Several companies of Syed Mokhtar have had clear CG issues in the past, two previous blogs I wrote about MMC are here (which ironically contains a very sharp article about Syed Mokhtar by the same The Star "How to become very rich in Malaysia") and here.

Much more, well written blogs from Ze Moola can be found here.