The relevant documents on the website of the SFO (Serious Fraud Office from the UK) can be found in the following documents, the AirAsia case is referred to as "Count 12 - Malaysia Civil":
Deferred Prosecution Agreement – Statement of Facts – SFO v Rolls Royce PLC, paragraph 314 and further;
SFO -v- Rolls Royce judgment, paragraph 107 and further;
SFO -v- Rolls Royce Appendix A, paragraph 147 and further.
SFO -v- Rolls Royce Appendix B, detailing the financial sanction to be paid, in the AirAsia case being GBP 17 Million (RM 94 Million).
Showing posts with label corruption. Show all posts
Showing posts with label corruption. Show all posts
Sunday, 22 January 2017
AirAsia mentioned in Rolls-Royce bribery case
Article from Malaysiakini (partially behind paywall), some snippets:
UK's Serious Fraud Office (SFO) has named AirAsia Group as one of several foreign parties involved in bribery cases with jet engine manufacturer Rolls-Royce PLC.
AirAsia Group, in an immediate response, told Malaysiakini that it had complied with procedures in its dealing with Rolls-Royce.
This was despite Rolls-Royce employees believing that the credits would lead the AirAsia Group executive to perform his function "improperly".
"This financial advantage was given at the request of the AirAsia group executive, in return for showing favour towards Rolls-Royce in the purchase of products and services provided by Rolls-Royce and its subsidiaries, including Total Care Agreement services to be supplied to AirAsia X, a subsidiary of AirAsia Group," it said.
It also alleged that there was an attempt to conceal the fact that the credits, given to AirAsia X in 2013, would be used for the private jet, which was unrelated to the AirAsia Group.
On Oct 17, 2012, a Rolls-Royce employee reported to the Rolls-Royce senior employee that the AirAsia Group executive was seeking to "make the corporate jet deal 'invisible' with its 'value covered within additional A330 Total Care Agreement charges" for AirAsia X".
On March 15, 2013, a Rolls-Royce employee reported to his senior that the AirAsia X senior employee, who had been negotiating for the Air Asia Group executive's private jet, wanted a "cash settlement that is off the record and not visible to the AirAsia X group".
The Rolls-Royce employee raised concern that it was "unethical and likely illegal" and would rather not handle the case.
The Rolls-Royce employee complained that the AirAsia X senior employee had avoided discussing the private jet in front of other AirAsia X or Rolls-Royce employees and refused to communicate via email about the matter unless it was verbally or on Blackberry Messenger, a secured chat application.
In an interview during the SFO's investigation, the Rolls-Royce employee said the AirAsia X senior employee went as far as suggesting that the Corporate Care entry fee for the private jet be secretly spread across other AirAsia X payments to Rolls-Royce.
"Rolls-Royce employees believe the relevance of the jet to the issuing of those credits was most likely to be concealed from AirAsia X executives by the AirAsia X senior employee.
The above sounds very worrisome and requires an official, much more detailed answer from AirAsia than given.
I have written before about the huge amount of RPTs between the different companies in the AirAsia group and also the privately owned companies. This gives rise to numerous conflict of interest situations.
If the holding company was listed, with all subsidiaries (like AirAsia, AirAsia X and the subsidiary owning the private airplane) 100% owned, then many problems (like the above mentioning in the Rolls-Royce bribery case) would not have existed in the first place.
UK's Serious Fraud Office (SFO) has named AirAsia Group as one of several foreign parties involved in bribery cases with jet engine manufacturer Rolls-Royce PLC.
AirAsia Group, in an immediate response, told Malaysiakini that it had complied with procedures in its dealing with Rolls-Royce.
This was despite Rolls-Royce employees believing that the credits would lead the AirAsia Group executive to perform his function "improperly".
"This financial advantage was given at the request of the AirAsia group executive, in return for showing favour towards Rolls-Royce in the purchase of products and services provided by Rolls-Royce and its subsidiaries, including Total Care Agreement services to be supplied to AirAsia X, a subsidiary of AirAsia Group," it said.
It also alleged that there was an attempt to conceal the fact that the credits, given to AirAsia X in 2013, would be used for the private jet, which was unrelated to the AirAsia Group.
On Oct 17, 2012, a Rolls-Royce employee reported to the Rolls-Royce senior employee that the AirAsia Group executive was seeking to "make the corporate jet deal 'invisible' with its 'value covered within additional A330 Total Care Agreement charges" for AirAsia X".
On March 15, 2013, a Rolls-Royce employee reported to his senior that the AirAsia X senior employee, who had been negotiating for the Air Asia Group executive's private jet, wanted a "cash settlement that is off the record and not visible to the AirAsia X group".
The Rolls-Royce employee raised concern that it was "unethical and likely illegal" and would rather not handle the case.
The Rolls-Royce employee complained that the AirAsia X senior employee had avoided discussing the private jet in front of other AirAsia X or Rolls-Royce employees and refused to communicate via email about the matter unless it was verbally or on Blackberry Messenger, a secured chat application.
In an interview during the SFO's investigation, the Rolls-Royce employee said the AirAsia X senior employee went as far as suggesting that the Corporate Care entry fee for the private jet be secretly spread across other AirAsia X payments to Rolls-Royce.
"Rolls-Royce employees believe the relevance of the jet to the issuing of those credits was most likely to be concealed from AirAsia X executives by the AirAsia X senior employee.
The above sounds very worrisome and requires an official, much more detailed answer from AirAsia than given.
I have written before about the huge amount of RPTs between the different companies in the AirAsia group and also the privately owned companies. This gives rise to numerous conflict of interest situations.
If the holding company was listed, with all subsidiaries (like AirAsia, AirAsia X and the subsidiary owning the private airplane) 100% owned, then many problems (like the above mentioning in the Rolls-Royce bribery case) would not have existed in the first place.
Wednesday, 4 May 2016
More credible responses needed from S'pore firms accused of bribery abroad
Timely article from Mak Yuen Teen in the Business Times (Singapore). Some snippets:
..... allegations have been made in media reports about the possible involvement of some Singapore companies in bribery scandals overseas. The responses from these companies typically include an immediate denial of the allegations, and an assertion that the company has zero tolerance for corruption and a code of conduct prohibiting bribery and corruption.
.... every company will undoubtedly say it has a zero tolerance for corruption. I have never seen a company say it has some tolerance for corruption.
.... most companies have a code of conduct that prohibits bribery and corruption, and certainly none will have one that condones it. This does not guarantee that employees or third parties may not have violated the code.
In a recent case, overseas media reports said a leaked confidential memo from an overseas company accused of being a middleman in a massive bribery scandal commented that the Singapore company that was allegedly involved was an "ideal client" because it had lax anti-corruption controls, relative to other multinational clients.
[this is most likely a reference to Keppel, as described here]
Singapore companies that do business overseas need to take a good hard look at their compliance programmes, strategies, incentive systems and business practices and adopt a more measured approach when responding to bribery allegations. Rather than issuing a knee-jerk outright denial, chanting "zero tolerance for corruption" and "code of conduct" whenever such allegations surface, they should take allegations seriously and commit to reviewing their compliance programmes and undertaking their own investigations. Outright denial of bribery without any specific action may give the impression that the company has a head-in-the-sand attitude towards actual bribery risks out in the field. If the allegations subsequently turn out to be true, the company's initial response would be seen to be shallow and, over time, the company will lose its credibility.
..... allegations have been made in media reports about the possible involvement of some Singapore companies in bribery scandals overseas. The responses from these companies typically include an immediate denial of the allegations, and an assertion that the company has zero tolerance for corruption and a code of conduct prohibiting bribery and corruption.
.... every company will undoubtedly say it has a zero tolerance for corruption. I have never seen a company say it has some tolerance for corruption.
.... most companies have a code of conduct that prohibits bribery and corruption, and certainly none will have one that condones it. This does not guarantee that employees or third parties may not have violated the code.
In a recent case, overseas media reports said a leaked confidential memo from an overseas company accused of being a middleman in a massive bribery scandal commented that the Singapore company that was allegedly involved was an "ideal client" because it had lax anti-corruption controls, relative to other multinational clients.
[this is most likely a reference to Keppel, as described here]
Singapore companies that do business overseas need to take a good hard look at their compliance programmes, strategies, incentive systems and business practices and adopt a more measured approach when responding to bribery allegations. Rather than issuing a knee-jerk outright denial, chanting "zero tolerance for corruption" and "code of conduct" whenever such allegations surface, they should take allegations seriously and commit to reviewing their compliance programmes and undertaking their own investigations. Outright denial of bribery without any specific action may give the impression that the company has a head-in-the-sand attitude towards actual bribery risks out in the field. If the allegations subsequently turn out to be true, the company's initial response would be seen to be shallow and, over time, the company will lose its credibility.
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 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:
“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.
"..... we practise code of conduct and good business ethics".
Not everybody might agree with that:
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.
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.
Sunday, 31 August 2014
Aircel-Maxis case: are the Malaysian authorities refusing to cooperate?
The CBI has chargesheeted former telecom minister Dayanidhi Maran for abusing his position to "constrict the business environment" forcing mobile operator Aircel to sell stake to Malaysian company Maxis in lieu for two sets of 'gratification' totaling rs 742 crore.
The chargesheet also figures the Maxis' owner T Ananda Krishnan besides Maran's brother and chairman of Sun Network Kalanithi Maran among others.
According to the chargesheet, the CBI is also looking into "the aspect of irregularity in grant of FIPB approval" in the stake sale. CBI said it was investigating the FIPB approval to Global Communication Services Holdings Ltd and the role of Indian partner, Sindya Securities and Investments Ltd, in holding 26% equity of Aircel.
Maran had approached the Supreme Court on Thursday saying CBI should be restrained from filing the chargesheet as the information from Malaysia was awaited and the investigation was incomplete. But CBI officials told ET that though Malaysia has refused to offer any information about the deal, the information received by the agency from UK and Mauritius was enough to file a chargesheet.
The above from an article in The Economic Times. Other articles about this matter can be found here, here and here, they contain the following sentences:
....the chargesheet would be based on evidence collected within the country as the Malaysian authorities were refusing to cooperate.
The CBI said it had completed the investigations without receiving a reply from Malaysia as responses from the UK and Mauritius helped them establish the charges.
The agency had told the apex court that overseas probe was being delayed due to the influence of the firm's owner in Malaysia who is "powerful politically".
The agency had also sought information from the Malaysian authorities through Letters Rogatory (LRs) but it did not get satisfactory response, after which the judicial requests were sent again. The reply to second LR is pending.
The Malaysian authorities should come forward and provide details regarding the above allegations of not cooperating. This case is already 8 years old and should be expedited, especially with two listed companies (Maxis and Astro) and several Malaysian persons being involved.
Tuesday, 10 June 2014
Conflict of interest when regulators sit on company boards
Good article from The Malaysian Insider, see below.
Regulators should not sit on the boards of companies, be they listed or not, be they GLC or not.
Best is if this would be extended after retirement or quitting their job.
From the Hong Kong Civil Service Bureau:
"To maintain the integrity and standing of the Civil Service, it is important that civil servants on final leave and former civil servants should continue to act with good sense and propriety when pursuing post-service outside work as their actions will be seen by the public as a reflection of the culture and character of the Civil Service. They should avoid work which might be construed as being in conflict with their previous duties in the Government, or might bring the Civil Service into disrepute or cause public controversy."
If Malaysia is serious about combatting corruption (I am not convinced because the absence of any "big fish" being caught is painfully clear, I hope I will be proven wrong) then conflict of interest has to be avoided, whenever and wherever possible. It could take an example of Hong Kong, once one of the most corrupt cities in the world, that has significantly cleaned up its act.
"Question: Should regulators be on the board of government-linked companies (GLC)?
Datuk Seri Idris Jala (pic), the minister in charge of transformation unit Pemandu, does not think so and said so at an event yesterday.
The government's GLC Green Book recommends that regulators do not sit on board of GLCs. The reasons are simple: to avoid a conflict of interest and to make sure that there is fairness in decision-making and allocation of resources.
Actually, common sense should dictate that the people tasked with the job of making sure taxpayers funds are used prudently and government policies benefit the public should do so without being influenced by pecuniary or other considerations.
And yet, right across boards of GLCs, officials from various ministries are sitting pretty, and collecting hefty allowances on top of their monthly salaries, raising questions whether they can be seriously expected to function as regulators.
This is evident at Malaysia Airports Holdings Berhad (MAHB) where a couple of senior Transport Ministry officials are board members. They are paid between RM48,000 and just under RM170,000 in directors fees and other emoluments. This is in addition to the salaries they earn as senior Transport Ministry officials.
The problem with this arrangement is what are these individuals from Transport Ministry wearing: that of a regulator or that of a ministry official?
Put it more simply: did these individuals warn the government of the numerous problems at klia2 ranging from cost overruns to shoddy work? Did they raise red flags during MAHB board meetings on klia2 or even warn Prime Minister Najib Razak that more delays were expected, preventing him from making a premature announcement on the budget terminal's opening?
And when they deal with private airlines or deal with the combative Tan Sri Tony Fernandes and his AirAsia Group, are they acting as regulators or a GLC that pays them?
In short, who do they owe their allegiance to? Regulators have to be fair and must always look at the big picture."
Regulators should not sit on the boards of companies, be they listed or not, be they GLC or not.
Best is if this would be extended after retirement or quitting their job.
From the Hong Kong Civil Service Bureau:
"To maintain the integrity and standing of the Civil Service, it is important that civil servants on final leave and former civil servants should continue to act with good sense and propriety when pursuing post-service outside work as their actions will be seen by the public as a reflection of the culture and character of the Civil Service. They should avoid work which might be construed as being in conflict with their previous duties in the Government, or might bring the Civil Service into disrepute or cause public controversy."
If Malaysia is serious about combatting corruption (I am not convinced because the absence of any "big fish" being caught is painfully clear, I hope I will be proven wrong) then conflict of interest has to be avoided, whenever and wherever possible. It could take an example of Hong Kong, once one of the most corrupt cities in the world, that has significantly cleaned up its act.
"Question: Should regulators be on the board of government-linked companies (GLC)?
Datuk Seri Idris Jala (pic), the minister in charge of transformation unit Pemandu, does not think so and said so at an event yesterday.
The government's GLC Green Book recommends that regulators do not sit on board of GLCs. The reasons are simple: to avoid a conflict of interest and to make sure that there is fairness in decision-making and allocation of resources.
Actually, common sense should dictate that the people tasked with the job of making sure taxpayers funds are used prudently and government policies benefit the public should do so without being influenced by pecuniary or other considerations.
And yet, right across boards of GLCs, officials from various ministries are sitting pretty, and collecting hefty allowances on top of their monthly salaries, raising questions whether they can be seriously expected to function as regulators.
This is evident at Malaysia Airports Holdings Berhad (MAHB) where a couple of senior Transport Ministry officials are board members. They are paid between RM48,000 and just under RM170,000 in directors fees and other emoluments. This is in addition to the salaries they earn as senior Transport Ministry officials.
The problem with this arrangement is what are these individuals from Transport Ministry wearing: that of a regulator or that of a ministry official?
Put it more simply: did these individuals warn the government of the numerous problems at klia2 ranging from cost overruns to shoddy work? Did they raise red flags during MAHB board meetings on klia2 or even warn Prime Minister Najib Razak that more delays were expected, preventing him from making a premature announcement on the budget terminal's opening?
And when they deal with private airlines or deal with the combative Tan Sri Tony Fernandes and his AirAsia Group, are they acting as regulators or a GLC that pays them?
In short, who do they owe their allegiance to? Regulators have to be fair and must always look at the big picture."
Wednesday, 2 April 2014
Stolen info SBM Offshore about alleged $ 250 million fraud (2)
I wrote before about this case: an angry former employee who allegedly blackmailed SBM Offshore and published a list of potential problem cases in the on-going bribery investigations.
Today, finally, SBM published their findings:
Other Countries
At the outset of the investigation, the Company froze all payments to agents and conducted a review and due diligence on sales agents in all other countries. As a result of that review the Company decided to discontinue certain agents. Also, the Company decided to no longer use agents in countries where it has a presence. The investigation team also specifically looked at other countries covered by the agreements with the agent used in Equatorial Guinea and Angola but in its evidence-based approach did not perform a further detailed investigation into these countries.
In the list of the angry ex-employee three Malaysian companies were mentioned: MISC, Barnado and Delcom. SBM Offshore apparently has not found anything wrong with these business relations. SBM Offshore has now a presence in Malaysia (Kuala Lumpur), and will thus not use agents anymore.
Today, finally, SBM published their findings:
- The Company paid approximately US$200 million in commissions to agents during that period of which the majority relate to three countries: US$18.8 million to Equatorial Guinea, US$22.7 million to Angola and US$139.1 million to Brazil;
- In respect of Angola and Equatorial Guinea there is some evidence that payments may have been made directly or indirectly to government officials;
- In respect of Brazil there were certain red flags but the investigation did not find any credible evidence that the Company or the Company’s agent made improper payments to government officials (including state company employees). Rather, the agent provided substantial and legitimate services in a market which is by far the largest for the Company;
Other Countries
At the outset of the investigation, the Company froze all payments to agents and conducted a review and due diligence on sales agents in all other countries. As a result of that review the Company decided to discontinue certain agents. Also, the Company decided to no longer use agents in countries where it has a presence. The investigation team also specifically looked at other countries covered by the agreements with the agent used in Equatorial Guinea and Angola but in its evidence-based approach did not perform a further detailed investigation into these countries.
In the list of the angry ex-employee three Malaysian companies were mentioned: MISC, Barnado and Delcom. SBM Offshore apparently has not found anything wrong with these business relations. SBM Offshore has now a presence in Malaysia (Kuala Lumpur), and will thus not use agents anymore.
Monday, 10 February 2014
Stolen info SBM Offshore about alleged $ 250 million fraud
The share price of SBM Offshore, a Dutch company involved in the service industry for oil & gas, was hit hard last Friday on fresh allegations about corruption. The possible size makes it one of the largest recent cases of bribery.
The Dutch magazine Quote had published new information regarding this matter on its website.
The reader can use Google translate on the text, I have tried to translate a few paragraphs:
Stolen info SBM Offshore about $ 250 million fraud and involvement top executives
On the internet circulates a very detailed document that gives information about large scale alleged bribes by Schiedam (Netherlands) based Billion Euro company SBM Offshore, a supplier to the oil and gas industry. SBM confirms to Quote that this information comes from within the company. "It was stolen by a former employee who wanted to blackmail us."
A former employee of SBM has a large amount of information about possible fraud cases by employees of SBM Offshore on the Internet, which contains bribery of officials in Angola, Equatorial Guinea (both located in West Africa), Brazil, Malaysia, Iraq, Kazakhstan and Italy. Also, excerpts from transcripts of recordings published showing that (members of) the Board of Directors and (members of) the Board of Trustees for many years are aware of the malpractices. The top of the company would deliberately try to conceal these cases. In total, between 2005 and 2011, $ 250 million is spent on bribes.
The spokesman of SBM lets Quote know that this information actually comes from the internal investigation that runs inside the company. "This information has been obtained illegally by an angry former employee who tried to extort SBM. We are engaged in legal action against this person. This information is placed out of context. As the investigations of the American and Dutch judiciary are still running, with which we are fully cooperating, we can not further give any information."
The text can be found in the following Wikipedia article, an old revision dated October 18, 2013.
The link to Malaysia can be found in the following paragraph:
"4.1 MALAYSIA - Payments to Barnado Limited and Delcom Limited totalling approximately US$10,000,000, paid on (ie. by way of bribes) to “MISC” for the Kikeh FPSO (leased to US oil company Murphy)."
If these allegations by the formed employee are indeed true or not, I guess we have to wait until the investigations by the relevant authorities are finished.
More information about this project can be found here:
FLOATING PRODUCTION STORAGE AND OFFLOADING (FPSO)
"The Kikeh field is located 120km northwest of the island of Labuan, offshore Sabah, East Malaysia in water depths of around 1,300m. Murphy Sabah Oil Company operates Kikeh on behalf of partner Petronas Carigali.
The FPSO Kikeh will be located in 1,350m of water. It will be owned by MDFT Labaun and operated by MDPX Sdn Bhd, two joint ventures between SBM and Misc Berhad. The converted tanker was built in 1974 It has an overall length of 337m a breadth of 54.6m and a deadweight of 273,000t. It has a storage capacity of two million barrels."
The Dutch magazine Quote had published new information regarding this matter on its website.
The reader can use Google translate on the text, I have tried to translate a few paragraphs:
Stolen info SBM Offshore about $ 250 million fraud and involvement top executives
On the internet circulates a very detailed document that gives information about large scale alleged bribes by Schiedam (Netherlands) based Billion Euro company SBM Offshore, a supplier to the oil and gas industry. SBM confirms to Quote that this information comes from within the company. "It was stolen by a former employee who wanted to blackmail us."
A former employee of SBM has a large amount of information about possible fraud cases by employees of SBM Offshore on the Internet, which contains bribery of officials in Angola, Equatorial Guinea (both located in West Africa), Brazil, Malaysia, Iraq, Kazakhstan and Italy. Also, excerpts from transcripts of recordings published showing that (members of) the Board of Directors and (members of) the Board of Trustees for many years are aware of the malpractices. The top of the company would deliberately try to conceal these cases. In total, between 2005 and 2011, $ 250 million is spent on bribes.
The spokesman of SBM lets Quote know that this information actually comes from the internal investigation that runs inside the company. "This information has been obtained illegally by an angry former employee who tried to extort SBM. We are engaged in legal action against this person. This information is placed out of context. As the investigations of the American and Dutch judiciary are still running, with which we are fully cooperating, we can not further give any information."
The text can be found in the following Wikipedia article, an old revision dated October 18, 2013.
The link to Malaysia can be found in the following paragraph:
"4.1 MALAYSIA - Payments to Barnado Limited and Delcom Limited totalling approximately US$10,000,000, paid on (ie. by way of bribes) to “MISC” for the Kikeh FPSO (leased to US oil company Murphy)."
If these allegations by the formed employee are indeed true or not, I guess we have to wait until the investigations by the relevant authorities are finished.
More information about this project can be found here:
FLOATING PRODUCTION STORAGE AND OFFLOADING (FPSO)
"The Kikeh field is located 120km northwest of the island of Labuan, offshore Sabah, East Malaysia in water depths of around 1,300m. Murphy Sabah Oil Company operates Kikeh on behalf of partner Petronas Carigali.
The FPSO Kikeh will be located in 1,350m of water. It will be owned by MDFT Labaun and operated by MDPX Sdn Bhd, two joint ventures between SBM and Misc Berhad. The converted tanker was built in 1974 It has an overall length of 337m a breadth of 54.6m and a deadweight of 273,000t. It has a storage capacity of two million barrels."
Wednesday, 10 July 2013
Bina Puri admitted its intention to secure contracts by paying bribes (3)
I wrote about Bina Puri's possible intentions to pay bribes here and here.
Finally the story has been reported by the Malaysian press, in this case by KiniBiz, the article can be found here (full story for subscribers).
Two excerpts:
"......Bina Puri Group executive director Matthew Tee has denied that Bina Puri entered into the agreement with ANC with the intention to bribe."
"When asked why there was no denial to the allegations in court, Tee responded that it was the judge’s findings and that Bina Puri is at peace with their intention to take ANC on for technical advisory and not to bribe."
I tend to disagree with the above. I invite the reader to take note of the very detailed judgment, especially paragraphs 105 until 111, all points brought forward by the defendant (Bina Puri).
Just one of many examples given by the judge:
In an otherwise unrelated posting from KiniBiz: "PEMANDU to push for more radical reforms to fight corruption", an excerpt:
Director of Anti-Corruption NKRA of Pemandu, Ravindran Devagunam said Pemandu acknowledged the results of the 2013 Global Corruption Barometer (GCB) released by Transparency International and take this on as a further impetus to push for more reform.
“The survey clearly shows that what we have done is not enough. We need to intensify efforts and continue to push for improvements across the social, political and business arenas,” he said in a statement here today.
The GCB survey was conducted in more than 100 countries and found that more than half surveyed globally believed corruption had worsened over the past two years.
What is very much missing is enforcement against the "big fish". The agencies have to show credible results against the well-connected, only then will the perception improve. At least, that is my opinion.
Finally the story has been reported by the Malaysian press, in this case by KiniBiz, the article can be found here (full story for subscribers).
Two excerpts:
"......Bina Puri Group executive director Matthew Tee has denied that Bina Puri entered into the agreement with ANC with the intention to bribe."
"When asked why there was no denial to the allegations in court, Tee responded that it was the judge’s findings and that Bina Puri is at peace with their intention to take ANC on for technical advisory and not to bribe."
I tend to disagree with the above. I invite the reader to take note of the very detailed judgment, especially paragraphs 105 until 111, all points brought forward by the defendant (Bina Puri).
Just one of many examples given by the judge:
In an otherwise unrelated posting from KiniBiz: "PEMANDU to push for more radical reforms to fight corruption", an excerpt:
Director of Anti-Corruption NKRA of Pemandu, Ravindran Devagunam said Pemandu acknowledged the results of the 2013 Global Corruption Barometer (GCB) released by Transparency International and take this on as a further impetus to push for more reform.
“The survey clearly shows that what we have done is not enough. We need to intensify efforts and continue to push for improvements across the social, political and business arenas,” he said in a statement here today.
The GCB survey was conducted in more than 100 countries and found that more than half surveyed globally believed corruption had worsened over the past two years.
What is very much missing is enforcement against the "big fish". The agencies have to show credible results against the well-connected, only then will the perception improve. At least, that is my opinion.
Thursday, 30 May 2013
Malaysia in the same category as Nigeria?
An article appeared in the NY Times: Online Currency Exchange Accused of Laundering $6 Billion.
The operators of a global currency exchange ran a $6 billion money-laundering operation online, a central hub for criminals trafficking in everything from stolen identities to child pornography, federal prosecutors in New York said on Tuesday.
The currency exchange, Liberty Reserve, operated beyond the traditional confines of United States and international banking regulations in what prosecutors called a shadowy netherworld of cyberfinance. It traded in virtual currency and provided the kind of anonymous and easily accessible banking infrastructure increasingly sought by criminal networks, law enforcement officials said.
In it the following observation:
The exchangers, the indictment said, “tended to be unlicensed money-transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam.”
It is really a shame that Malaysia is named in the same sentence as a country like Nigeria with its rather infamous repuation.
The first hit that I get when I google "Liberty Reserve Malaysia" is this website.
In the top it says:
"Urgent News: Due to the closure of LibertyReserve.com, we now can no longer provide exchange service for Liberty Reserve."
In the bottom however it seems to contradict itself:
"Disclaimer: LibertyReserveMalaysia.com is in no way affiliated nor endorsed by LibertyReserve.com."
I can't seem to find Liberty Reserve on Bank Negara's website of fraude alerts.
But this blog entry seems to indicate that they were included on the list of illegal investment companies.
Malaysia really should step up hugely its efforts in enforcement.
Three articles from the "Baker Institute Blog", dealing with the issue of corruption:
What’s the problem, Malaysia?
Malaysia: At election time, corruption remains a central issue
Malaysia: Looking forward
The operators of a global currency exchange ran a $6 billion money-laundering operation online, a central hub for criminals trafficking in everything from stolen identities to child pornography, federal prosecutors in New York said on Tuesday.
The currency exchange, Liberty Reserve, operated beyond the traditional confines of United States and international banking regulations in what prosecutors called a shadowy netherworld of cyberfinance. It traded in virtual currency and provided the kind of anonymous and easily accessible banking infrastructure increasingly sought by criminal networks, law enforcement officials said.
In it the following observation:
The exchangers, the indictment said, “tended to be unlicensed money-transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam.”
It is really a shame that Malaysia is named in the same sentence as a country like Nigeria with its rather infamous repuation.
The first hit that I get when I google "Liberty Reserve Malaysia" is this website.
In the top it says:
"Urgent News: Due to the closure of LibertyReserve.com, we now can no longer provide exchange service for Liberty Reserve."
In the bottom however it seems to contradict itself:
"Disclaimer: LibertyReserveMalaysia.com is in no way affiliated nor endorsed by LibertyReserve.com."
I can't seem to find Liberty Reserve on Bank Negara's website of fraude alerts.
But this blog entry seems to indicate that they were included on the list of illegal investment companies.
Malaysia really should step up hugely its efforts in enforcement.
Three articles from the "Baker Institute Blog", dealing with the issue of corruption:
What’s the problem, Malaysia?
Malaysia: At election time, corruption remains a central issue
Malaysia: Looking forward
Monday, 12 November 2012
Malaysia has the highest Power Distance Index in the world
At the blog of Marina Mahathir Rantings byMM I stumbled on this posting, which was completely censored by The Star: Power and the media...cut again...
Some time last year a friend gave me a very interesting book, Cultures and Organisations: Intercultural Cooperation and Its Importance for Survival by Geert Hofstede, Gert Jan Hofstede and Michael Minkov. Professor Geert Hofstede is a Dutch sociologist who studies the ways in which companies can incorporate intercultural factors in the countries they work in so that they may function better.
One of the five intercultural dimensions that Hofstede developed in this research is the Power Distance Index that looks at how much a culture does or does not value hierarchical relationships and respect for authority. The PDI measures the distribution of power and wealth between people in a nation, business and culture, and seeks to demonstrate the extent to which subordinates or ordinary citizens submit to authority. The index figure is lower in countries or organisations in which authority figures work closely with people, and higher in countries or organisations with a more authoritarian hierarchy.
Examples of countries with high PDIs are the Arab countries, Russia, India and China while those with low scores include Japan, Australia and Canada.
How does a high PDI culture manifest itself? In these countries or organisations, we would normally observe that those in authority openly demonstrate their rank and their subordinates are not given important work and expect clear guidance from above. If anything should go wrong however, those subordinates are expected to take the blame. The relationship between the boss and his subordinates are rarely close or personal.
When it comes to politics, high PDI countries are ‘prone to totalitarianism’ and class divisions within society ‘are accepted’.
On the other hand, in low PDI countries, superiors treat subordinates with respect and do not pull rank. Hence you find the phenomenon in some countries where bosses and subordinates call each other by their first names. In these countries, subordinates are also entrusted with important assignments. If something goes wrong, the blame is either shared or accepted by the boss as it is his responsibility to manage. This is why we often find company bosses in Japan or Korea resigning or even committing suicide if there is some scandal in the company. Managers also often socialize with their subordinates.
In terms of politics, low PDI countries tend to be liberal democracies and their societies tend to lean towards egalitarianism. Hence you find Dutch royalty for instance cycling around town just like everyone else.
The PDI’s measurement of inequality is defined from below, that is, it is about how the lower ranks of a society or organization accepts and expects the unequal distribution of power. This suggests that both the followers and the leaders accept a society’s level of inequality.
As an example, Germany has a 35 on the PDI scale. This means that compared to Arab countries, which rank around 80, and Austria which has a rank of 11, Germany is somewhere in the middle. German society does not have a large gap between the rich and poor but has a strong belief in equality for every citizen. This means that every German has an opportunity to rise in society.
On the other hand, the US has a PDI of 40. Although still in the middle of the scale, there is a more unequal distribution of wealth compared to German society, a gap that seems to be widening as the years go by. This explains the recent explosion of the Occupy Movement, because the distribution of wealth between the top 1% and other 99% seems to have become extremely unequal.
When you look at the PDI measurements of many countries, a pattern seems to emerge. Those at the top end seem to be less developed than others. They also seem to be undemocratic or at the very least very imperfect democracies. They are the type of countries where you are likely to see leaders who are kept both physically and psychologically distant from the masses. Apart from orchestrated events, you are unlikely to see political leaders in anything except limousines and VIP rooms.
So after reading all of this, and sensing something familiar, where do you think Malaysia stands in the PDI rankings? Do we have our leaders ‘openly demonstrating their rank’? Despite constant exhortations to ‘go down to the grassroots’, our leaders rarely are addressed in anything but the most respectful titles and terms. Some of their subordinates may take on important jobs but they will shoulder 100% of the blame should anything go wrong, even when it’s not really their fault. Our people do tend to wait for instructions from above and feel somewhat lost if we don’t get clear ones. Our mindset remains largely feudal.
Thus it should come as no surprise that Malaysia, with an index of 104, tops the PDI rankings.
And indeed, that is (according to this link) very much so since Malaysia is the only country in the dark red zone of 100-120 points.
Another article about this index can be found here.
An article implying a link between corruption and a high PDI ranking can be found here:
The association between corruption and power distance is not imaginary. Ratings of power distance index and corruption index of countries show a high correlation (Corruption Conundrum, Penguin, 2010). Typically, the countries that have high power distance are also more corrupt and vice versa. So we do need to fight against the power distance index.
The other face of power distance index is our blatant, in your face, 'VIP' culture. As a people, we do not seem to be sufficiently embarrassed that in a so-called democracy, we regularly accept and expect two distinct treatments meted out to two sets of people - the 'VIPs' and the lesser mortals.
Implications for good Corporate Governance (CG) are also clear, the word "equity" refers to "freedom from bias or favoritism", and each share has the same rights: "one share one vote". We need whistleblowers and not the "shoot the messenger" mentality.
The extremely high value of the PDI in Malaysia might therefore (partially) explain the lack of CG and shareholder activism in Malaysia.
Some time last year a friend gave me a very interesting book, Cultures and Organisations: Intercultural Cooperation and Its Importance for Survival by Geert Hofstede, Gert Jan Hofstede and Michael Minkov. Professor Geert Hofstede is a Dutch sociologist who studies the ways in which companies can incorporate intercultural factors in the countries they work in so that they may function better.
One of the five intercultural dimensions that Hofstede developed in this research is the Power Distance Index that looks at how much a culture does or does not value hierarchical relationships and respect for authority. The PDI measures the distribution of power and wealth between people in a nation, business and culture, and seeks to demonstrate the extent to which subordinates or ordinary citizens submit to authority. The index figure is lower in countries or organisations in which authority figures work closely with people, and higher in countries or organisations with a more authoritarian hierarchy.
Examples of countries with high PDIs are the Arab countries, Russia, India and China while those with low scores include Japan, Australia and Canada.
How does a high PDI culture manifest itself? In these countries or organisations, we would normally observe that those in authority openly demonstrate their rank and their subordinates are not given important work and expect clear guidance from above. If anything should go wrong however, those subordinates are expected to take the blame. The relationship between the boss and his subordinates are rarely close or personal.
When it comes to politics, high PDI countries are ‘prone to totalitarianism’ and class divisions within society ‘are accepted’.
On the other hand, in low PDI countries, superiors treat subordinates with respect and do not pull rank. Hence you find the phenomenon in some countries where bosses and subordinates call each other by their first names. In these countries, subordinates are also entrusted with important assignments. If something goes wrong, the blame is either shared or accepted by the boss as it is his responsibility to manage. This is why we often find company bosses in Japan or Korea resigning or even committing suicide if there is some scandal in the company. Managers also often socialize with their subordinates.
In terms of politics, low PDI countries tend to be liberal democracies and their societies tend to lean towards egalitarianism. Hence you find Dutch royalty for instance cycling around town just like everyone else.
The PDI’s measurement of inequality is defined from below, that is, it is about how the lower ranks of a society or organization accepts and expects the unequal distribution of power. This suggests that both the followers and the leaders accept a society’s level of inequality.
As an example, Germany has a 35 on the PDI scale. This means that compared to Arab countries, which rank around 80, and Austria which has a rank of 11, Germany is somewhere in the middle. German society does not have a large gap between the rich and poor but has a strong belief in equality for every citizen. This means that every German has an opportunity to rise in society.
On the other hand, the US has a PDI of 40. Although still in the middle of the scale, there is a more unequal distribution of wealth compared to German society, a gap that seems to be widening as the years go by. This explains the recent explosion of the Occupy Movement, because the distribution of wealth between the top 1% and other 99% seems to have become extremely unequal.
When you look at the PDI measurements of many countries, a pattern seems to emerge. Those at the top end seem to be less developed than others. They also seem to be undemocratic or at the very least very imperfect democracies. They are the type of countries where you are likely to see leaders who are kept both physically and psychologically distant from the masses. Apart from orchestrated events, you are unlikely to see political leaders in anything except limousines and VIP rooms.
So after reading all of this, and sensing something familiar, where do you think Malaysia stands in the PDI rankings? Do we have our leaders ‘openly demonstrating their rank’? Despite constant exhortations to ‘go down to the grassroots’, our leaders rarely are addressed in anything but the most respectful titles and terms. Some of their subordinates may take on important jobs but they will shoulder 100% of the blame should anything go wrong, even when it’s not really their fault. Our people do tend to wait for instructions from above and feel somewhat lost if we don’t get clear ones. Our mindset remains largely feudal.
Thus it should come as no surprise that Malaysia, with an index of 104, tops the PDI rankings.
And indeed, that is (according to this link) very much so since Malaysia is the only country in the dark red zone of 100-120 points.
Another article about this index can be found here.
An article implying a link between corruption and a high PDI ranking can be found here:
The association between corruption and power distance is not imaginary. Ratings of power distance index and corruption index of countries show a high correlation (Corruption Conundrum, Penguin, 2010). Typically, the countries that have high power distance are also more corrupt and vice versa. So we do need to fight against the power distance index.
The other face of power distance index is our blatant, in your face, 'VIP' culture. As a people, we do not seem to be sufficiently embarrassed that in a so-called democracy, we regularly accept and expect two distinct treatments meted out to two sets of people - the 'VIPs' and the lesser mortals.
Implications for good Corporate Governance (CG) are also clear, the word "equity" refers to "freedom from bias or favoritism", and each share has the same rights: "one share one vote". We need whistleblowers and not the "shoot the messenger" mentality.
The extremely high value of the PDI in Malaysia might therefore (partially) explain the lack of CG and shareholder activism in Malaysia.
Sunday, 1 April 2012
The need for a Big Bang impact
Below is an extract from "Fighting corruption: The need for a Big Bang impact" by Anna Taing under the "Random Thoughts" category, April 2, 2012. I can't agree more with the article, and I would like to extend it to Corporate Governance. Despite all the raving articles, the new regulations etc. of the authorities (Securities Commission and Bursa Malaysia), they still haven't managed to get a single conviction (jail sentence, fine or even as little as a reprimand) against a "big shot": either a Blue Chip company, a Government Linked Company or an established tycoon. And that is what is very much needed, to give credibility to the enforcement, to show they really mean business.
"Last Friday, the financial markets of Hong Kong were rocked by news of the arrest of two of Asia's richest tycoons by the Independent Commission against Corruption (ICAC), its anti-graft agency. According to news reports, Thomas and Raymond Kwok, joint chairman and managing directors of Sun Hung Kai Properties, were arrested as part of an alleged corruption and bribery probe.
Such high-level investigations and arrests are not something that we see in Malaysia. And we say that this is exactly the kind of "big bang" impact that Malaysia needs in its fight to eradicate corruption.
Despite the proclamation of success by the government, there is widespread perception that nothing has changed and that corruption is still very persuasive in this country, particularly between the government and the business community.
It didn't help when Malaysia fell four places from 56 to 60 in Transparency International's Corruption Perception Index for 2011.
To be fair, the government has made some headway in fighting corruption with the enactment of the Whistleblower's Act and the publication of offender's faces in the Name and Shame database available on the NKRA website.
Primarily because the measures put in place are seen as "baby steps", there is still a perception that many big offenders have escaped the net, mainly because some are said to be high-powered and well-linked politically. According to the 2010 report of the Malaysian Anti-Corruption Commission, 381 people were charged for corruption during the year, of whom 193 were members of the public, 131 were civil servants, 56 private sector employees and amazingly, only one politician.
So, unless there is a clear demonstration that all offenders, big and small, rich and poor, politician or tycoon, are brought to book, the country will never really be able to declare a complete victory in the battle against corruption.
Yes, fighting corruption takes time, but it also can take too long. This is more so when Malaysia wants to become a high-income nation by 2020, and corruption has been singled out as one of the key impediments to the country's economic growth.
In Hong Kong, in the 1970's, corruption was so rampant it was almost a way of live and a norm of government departments. The ICAC was setup in 1974, which resulted in the arrest of a horde of government officials, including high ranking ones. Today, Hong Kong is one of the least corrupt cities in the world.
Thus, it is only by showing the culprits that no one can escape the net that the battle against corruption can be really successful. Going after the small offenders and convicting them is not enough. Catching the big fish will send a stronger and more effective message that Malaysia has no room for corruption. Let's learn from Hong Kong."
"Last Friday, the financial markets of Hong Kong were rocked by news of the arrest of two of Asia's richest tycoons by the Independent Commission against Corruption (ICAC), its anti-graft agency. According to news reports, Thomas and Raymond Kwok, joint chairman and managing directors of Sun Hung Kai Properties, were arrested as part of an alleged corruption and bribery probe.
Such high-level investigations and arrests are not something that we see in Malaysia. And we say that this is exactly the kind of "big bang" impact that Malaysia needs in its fight to eradicate corruption.
Despite the proclamation of success by the government, there is widespread perception that nothing has changed and that corruption is still very persuasive in this country, particularly between the government and the business community.
It didn't help when Malaysia fell four places from 56 to 60 in Transparency International's Corruption Perception Index for 2011.
To be fair, the government has made some headway in fighting corruption with the enactment of the Whistleblower's Act and the publication of offender's faces in the Name and Shame database available on the NKRA website.
Primarily because the measures put in place are seen as "baby steps", there is still a perception that many big offenders have escaped the net, mainly because some are said to be high-powered and well-linked politically. According to the 2010 report of the Malaysian Anti-Corruption Commission, 381 people were charged for corruption during the year, of whom 193 were members of the public, 131 were civil servants, 56 private sector employees and amazingly, only one politician.
So, unless there is a clear demonstration that all offenders, big and small, rich and poor, politician or tycoon, are brought to book, the country will never really be able to declare a complete victory in the battle against corruption.
Yes, fighting corruption takes time, but it also can take too long. This is more so when Malaysia wants to become a high-income nation by 2020, and corruption has been singled out as one of the key impediments to the country's economic growth.
In Hong Kong, in the 1970's, corruption was so rampant it was almost a way of live and a norm of government departments. The ICAC was setup in 1974, which resulted in the arrest of a horde of government officials, including high ranking ones. Today, Hong Kong is one of the least corrupt cities in the world.
Thus, it is only by showing the culprits that no one can escape the net that the battle against corruption can be really successful. Going after the small offenders and convicting them is not enough. Catching the big fish will send a stronger and more effective message that Malaysia has no room for corruption. Let's learn from Hong Kong."
Tuesday, 14 February 2012
How corruption takes a toll on the bourse
According to Dr. Jerram: "Low corruption leads to high income per capita and high equity market valuations". The last is logical since low corruptions also tends to lead to high corporate governance, which improves valuations.
Malaysia had once the highest income per capita of all the countries in the below graph (in Asia only Japan had a higher income per capita). A huge effort is needed in fighting corruption and improving corporate governance, not only in words but in deeds.
Link between graft, per capita income and valuations: study
IF typically the stock market and the economy each seem to have a life of their own, consider how rife graft is in the country.
There's a close link between corruption perceptions, income per capita and equity market valuations, particularly for developing economies, according to findings by Richard Jerram, chief economist at Bank of Singapore.
Drawing on Transparency International's annual corruption perceptions index, Dr Jerram points to two countries in particular - Indonesia and India - that illustrate the 'potential benefits to economies, as well as equity and bond markets, from improving governance, and the hazards from heading in the wrong direction'.
Declining perceptions of corruption in Indonesia over the last 10 years - as reflected in an improving corruption perceptions index score during the period - have been accompanied by a rise in the country's investment-to-GDP ratio.
Views about corruption in India, on the other hand, have worsened in recent years and this has led to a decline in the investment-to-GDP ratio. 'This has been a major factor behind infrastructure bottlenecks that have led to persistently high inflation and a slowing trend growth rate,' says Dr Jerram in a report titled Honesty, Growth and Markets published yesterday.
The trends are also seen in the financial markets, he notes. The Indian equity market has weakened over the past four years, and remains 15 per cent below early 2008 levels. Indonesia's stock market, in contrast, is 40 per cent higher and its bond market has fared well, 'illustrating that the quality of growth is important and not just the absolute speed'.
The report also cites research findings about corporate governance being worse under corrupt governments, with firms from more corrupt countries trading at lower market multiples.
After all, corruption can be seen as a form of tax on economic activity, as it raises, in effect, the cost of doing business and reduces returns to investors, says Dr Jerram.
But, for the equity market, it is 'the change in the corruption perceptions index that seems to matter rather than the absolute level', he notes, comparing the findings for Indonesia with the trends for Malaysia, Thailand and the Philippines.
Only the Philippines perhaps shows promise - its 2011 corruption index was its best since 2004. 'Thailand is still trying to repair the damage from increased corruption perceptions from the previous Thaksin administration, while Malaysia is struggling to convince investors about its latest economic reform plan.'
Asked about the corruption perceptions trend findings for Singapore, Dr Jerram said the link is 'not particularly relevant for developed economies as other factors are more important for investment'.
But there is generally a close relationship between the corruption perceptions index and per capita GDP in Asia. 'Identifying countries that are successfully reforming and improving business conditions also points towards rising incomes and stronger capital markets,' he says.
The Business Times (Singapore), February 14, 2012
Malaysia had once the highest income per capita of all the countries in the below graph (in Asia only Japan had a higher income per capita). A huge effort is needed in fighting corruption and improving corporate governance, not only in words but in deeds.
Link between graft, per capita income and valuations: study
IF typically the stock market and the economy each seem to have a life of their own, consider how rife graft is in the country.
There's a close link between corruption perceptions, income per capita and equity market valuations, particularly for developing economies, according to findings by Richard Jerram, chief economist at Bank of Singapore.
Drawing on Transparency International's annual corruption perceptions index, Dr Jerram points to two countries in particular - Indonesia and India - that illustrate the 'potential benefits to economies, as well as equity and bond markets, from improving governance, and the hazards from heading in the wrong direction'.
Declining perceptions of corruption in Indonesia over the last 10 years - as reflected in an improving corruption perceptions index score during the period - have been accompanied by a rise in the country's investment-to-GDP ratio.
Views about corruption in India, on the other hand, have worsened in recent years and this has led to a decline in the investment-to-GDP ratio. 'This has been a major factor behind infrastructure bottlenecks that have led to persistently high inflation and a slowing trend growth rate,' says Dr Jerram in a report titled Honesty, Growth and Markets published yesterday.
The trends are also seen in the financial markets, he notes. The Indian equity market has weakened over the past four years, and remains 15 per cent below early 2008 levels. Indonesia's stock market, in contrast, is 40 per cent higher and its bond market has fared well, 'illustrating that the quality of growth is important and not just the absolute speed'.
The report also cites research findings about corporate governance being worse under corrupt governments, with firms from more corrupt countries trading at lower market multiples.
After all, corruption can be seen as a form of tax on economic activity, as it raises, in effect, the cost of doing business and reduces returns to investors, says Dr Jerram.
But, for the equity market, it is 'the change in the corruption perceptions index that seems to matter rather than the absolute level', he notes, comparing the findings for Indonesia with the trends for Malaysia, Thailand and the Philippines.
Only the Philippines perhaps shows promise - its 2011 corruption index was its best since 2004. 'Thailand is still trying to repair the damage from increased corruption perceptions from the previous Thaksin administration, while Malaysia is struggling to convince investors about its latest economic reform plan.'
Asked about the corruption perceptions trend findings for Singapore, Dr Jerram said the link is 'not particularly relevant for developed economies as other factors are more important for investment'.
But there is generally a close relationship between the corruption perceptions index and per capita GDP in Asia. 'Identifying countries that are successfully reforming and improving business conditions also points towards rising incomes and stronger capital markets,' he says.
The Business Times (Singapore), February 14, 2012
Saturday, 17 December 2011
newspaper articles December 17, 2011
A few interesting articles today:
An issue which has caught the attention of Padini's fund managers, analysts, shareholders, and bankers is its buildup of inventory. Chan reasons that they bought a lot on purpose to secure the supplies.
“We are not stuck with the stocks. Most are finished basic items, not the trendy stuff, so they will be saleable. In view of China's current situation, where the factories are shutting down and lowering their capacity, you will find it harder to buy the quantities you want.”
The next two quarters will be interesting to see if they can indeed reduce the inventory significantly.
It is obvious from the above that the economic impacts of grand corruption, systemic corruption, and syndicated corruption can be significant because of their scale. One would expect them to have a larger economic impact, e.g. inflationary pressures, when compared to petty corruption, individual corruption or non-syndicated corruption.
I always felt that inflation has been understated in Malaysia, hard to believe it is only a few percent per year while so many items have doubled in price over the last say ten years.
The pride of Padini
http://biz.thestar.com.my/news/story.asp?file=/2011/12/17/business/10113907&sec=businessAn issue which has caught the attention of Padini's fund managers, analysts, shareholders, and bankers is its buildup of inventory. Chan reasons that they bought a lot on purpose to secure the supplies.
“We are not stuck with the stocks. Most are finished basic items, not the trendy stuff, so they will be saleable. In view of China's current situation, where the factories are shutting down and lowering their capacity, you will find it harder to buy the quantities you want.”
The next two quarters will be interesting to see if they can indeed reduce the inventory significantly.
Corruption and inflation – how they affect the economy
http://biz.thestar.com.my/news/story.asp?file=/2011/12/17/business/10108355&sec=businessIt is obvious from the above that the economic impacts of grand corruption, systemic corruption, and syndicated corruption can be significant because of their scale. One would expect them to have a larger economic impact, e.g. inflationary pressures, when compared to petty corruption, individual corruption or non-syndicated corruption.
I always felt that inflation has been understated in Malaysia, hard to believe it is only a few percent per year while so many items have doubled in price over the last say ten years.
Bursa IPO pipeline to remain healthy
http://www.btimes.com.my/Current_News/BTIMES/articles/20111216233106/Article/index_html
Friday, 2 December 2011
Is Malaysian corruption up or down?
Pemandu claims that Malaysia's corruption score actually slightly improved, but due to inclusion of the BPI (Bribe Payer Index) it worsened.
BPI's website can be found here:
http://bpi.transparency.org/results/
Malaysia scored a decent joined 15th place out of 28 quite normal, larger countries, that doesn't seem to be a bad score to me, so I don't see how that could have dragged things down. But I don't know how all has been calculated, so I can't verify Pemandu's claim, they might be right, may be TI can explain this.
Datuk Seri Idris Jala: “Now, more than ever, the focus has to shift to dealing with grand corruption.”
And with that everybody will agree.
http://www.themalaysianinsider.com/malaysia/article/pemandu-blames-new-measurement-method-for-poorer-graft-score/
Malaysia’s corruption score would have improved to 4.5 if Transparency International (TI) had not included a new measure which dragged down overall performance, the government’s efficiency unit said today.
“TI’s Bribe Payer Index (BPI) was conducted only in 28 countries. This is the 1st time this has been introduced into the CPI,” the Performance Management and Delivery Unit (Pemandu) said on its @gtp_roadmap Twitter account for its Government Transformation Programme (GTP) section that covers anti-graft programmes.
“BPI is a new survey conducted to measure the propensity of Msians paying bribe to parties outside of Msia. If BPI was not taken into account, Msia’s score would jump to 4.5 and the country ranking would remain at 56.”
Malaysia’s Corruption Perception Index (CPI) score has worsened for the third consecutive year to 4.3 from 4.4 in 2010, according to a report released by TI’s Malaysian chapter today.
Malaysia’s country ranking also fell to 60 out of 183 countries — between Saudi Arabia and Cuba — from 56 out of 178 last year.
It remained the third-least corrupt nation in Asean after Singapore (9.2) and Brunei (5.2), with Thailand (3.4) and Indonesia (3.0) following in fourth and fifth places respectively.
Pemandu also said Malaysia had increased scores in key surveys like the PERC Asian Intelligence Survey, WEF Executive Opinion Survey and Bertelsmann Transformation Index, which are aggregated into the CPI score.
It promised Putrajaya would work harder to stamp out large-scale corruption after having achieved “encouraging” results in TI’s Corruption Barometer (CB), which measures public perception of graft.
“On a day to day basis, while people continue to deal w petty corruption, many of these issues are being tackled,” it quoted chief executive Datuk Seri Idris Jala as saying.
“Now, more than ever, the focus has to shift to dealing with grand corruption.”
According to the CB, 49 per cent of Malaysians thought the government’s efforts to fight corruption were effective or very effective, up a touch from 48 per cent last year.
However, the number of respondents who felt Putrajaya’s long-running battle against graft was ineffective or very ineffective rose five points to 25 per cent.
Members of the public saw the police and political parties as the most corrupt institutions, with the police named as the most likely recipient of bribes in the past 12 months.
TI’s CPI is an aggregate measure of the degree to which corruption is perceived to exist in the public sector which draws on 17 surveys and country assessments from 13 different independent institutions.
Two-thirds of the 183 countries surveyed this year achieved a score of less than 5.0.
New Zealand (9.5), Denmark (9.4), Finland (9.4), Sweden (9.3) and Singapore (9.2) were ranked the least corrupt nations in the world, while Somalia (1.0), North Korea (1.0), Myanmar (1.5) and Afghanistan (1.5) were the most corrupt.
BPI's website can be found here:
http://bpi.transparency.org/results/
Malaysia scored a decent joined 15th place out of 28 quite normal, larger countries, that doesn't seem to be a bad score to me, so I don't see how that could have dragged things down. But I don't know how all has been calculated, so I can't verify Pemandu's claim, they might be right, may be TI can explain this.
Datuk Seri Idris Jala: “Now, more than ever, the focus has to shift to dealing with grand corruption.”
And with that everybody will agree.
http://www.themalaysianinsider.com/malaysia/article/pemandu-blames-new-measurement-method-for-poorer-graft-score/
Pemandu blames new measurement method for poorer graft score
December 01, 2011
Malaysia’s corruption score would have improved to 4.5 if Transparency International (TI) had not included a new measure which dragged down overall performance, the government’s efficiency unit said today.
“TI’s Bribe Payer Index (BPI) was conducted only in 28 countries. This is the 1st time this has been introduced into the CPI,” the Performance Management and Delivery Unit (Pemandu) said on its @gtp_roadmap Twitter account for its Government Transformation Programme (GTP) section that covers anti-graft programmes.
“BPI is a new survey conducted to measure the propensity of Msians paying bribe to parties outside of Msia. If BPI was not taken into account, Msia’s score would jump to 4.5 and the country ranking would remain at 56.”
Malaysia’s Corruption Perception Index (CPI) score has worsened for the third consecutive year to 4.3 from 4.4 in 2010, according to a report released by TI’s Malaysian chapter today.
Malaysia’s country ranking also fell to 60 out of 183 countries — between Saudi Arabia and Cuba — from 56 out of 178 last year.
It remained the third-least corrupt nation in Asean after Singapore (9.2) and Brunei (5.2), with Thailand (3.4) and Indonesia (3.0) following in fourth and fifth places respectively.
Pemandu also said Malaysia had increased scores in key surveys like the PERC Asian Intelligence Survey, WEF Executive Opinion Survey and Bertelsmann Transformation Index, which are aggregated into the CPI score.
It promised Putrajaya would work harder to stamp out large-scale corruption after having achieved “encouraging” results in TI’s Corruption Barometer (CB), which measures public perception of graft.
“On a day to day basis, while people continue to deal w petty corruption, many of these issues are being tackled,” it quoted chief executive Datuk Seri Idris Jala as saying.
“Now, more than ever, the focus has to shift to dealing with grand corruption.”
According to the CB, 49 per cent of Malaysians thought the government’s efforts to fight corruption were effective or very effective, up a touch from 48 per cent last year.
However, the number of respondents who felt Putrajaya’s long-running battle against graft was ineffective or very ineffective rose five points to 25 per cent.
Members of the public saw the police and political parties as the most corrupt institutions, with the police named as the most likely recipient of bribes in the past 12 months.
TI’s CPI is an aggregate measure of the degree to which corruption is perceived to exist in the public sector which draws on 17 surveys and country assessments from 13 different independent institutions.
Two-thirds of the 183 countries surveyed this year achieved a score of less than 5.0.
New Zealand (9.5), Denmark (9.4), Finland (9.4), Sweden (9.3) and Singapore (9.2) were ranked the least corrupt nations in the world, while Somalia (1.0), North Korea (1.0), Myanmar (1.5) and Afghanistan (1.5) were the most corrupt.
Thursday, 1 December 2011
Malaysia slips in 2011 Corruption Perceptions Index
Bad news, corruption perception levels in Malaysia worsened instead of getting better. Corruption is highly correlated with bad Corporate Governance: countries that have low levels of (perceived) corruption also tend to have a high level of Corporate Governance and vice versa.
Interesting comments are:
- The CPI results show that the leaders and public institutions were not doing enough to combat corruption, especially “grand corruption”, it said
- These results indicate that day-to-day bribery at the lower levels or “petty corruption” is being addressed.
But sorely missing are cases against large companies, high-profile corporate leaders and financial service providers (investment bankers, auditors, valuers etc.). And their behaviour hasn't always been lily-white either.
http://www.theedgemalaysia.com/political-news/197114-malaysia-slips-in-transparency-intl-corruption-perceptions-index.html
Written by theedgemalaysia.com, 1 December 2011.
Malaysia slipped four places to 60th spot out of 183 countries in Transparency International’s (TI) Corruption Perceptions Index (CPI) 2011 from 56th last year.
The report, which was issued in conjunction with the worldwide launch of the Transparency International CPI on Thursday, said for the third consecutive year, Malaysia had shown a decline in its CPI score.
“Its 2011 score of 4.3 is slightly lower than the 4.4 recorded in 2010, and is significantly lower than the government’s benchmark of 4.9,” said TI-Malaysia.
Although the CPI decline for the last two years is marginal (0.1 for 2010 and 2011), the lack of improvement in Malaysia’s CPI ranking is a cause for concern, said TI-Malaysia.
While the government has launched a number of initiatives to address corruption including recently the Corporate Integrity Pledge for the business sector, the CPI results show that the leaders and public institutions were not doing enough to combat corruption, especially “grand corruption”, it said
“Elements of state capture which facilitate ‘grand corruption’ are still prevalent. These include the continuing and snowballing practice of awarding mega projects and contracts without open tenders or competitive bidding, limited access to information which contributes to a culture of secrecy and lack of transparency, allegations of inflated pricing in military purchases and the continued close nexus between business and politics in Malaysia,” it said.
TI-Malaysia said Malaysia’s 2011 Corruption Barometer results were about the same as last year’s.
It said that 40% of the public perceived that corruption levels have stayed the same over the past three years, and “will remain the same for the next three years”.
TI-Malaysia said the police and political parties have been identified as the most corrupt institutions, with the police as the most frequent recipient of bribes in the past 12 months.
On a positive note, it said the percentage of respondents who had paid bribes has encouragingly plummeted from 9% in 2010 to 1.2% this year.
In addition, almost 50% of the respondents continue to believe that the Malaysian government is effective in fighting corruption.
TI-Malaysia said this exceeded the government’s benchmark of 38%. These results indicate that day-to-day bribery at the lower levels or “petty corruption” is being addressed.
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