Thursday, September 22, 2011

How To Expect Proper Governance With All These Conflict Of Interests?

Of course MSWG had questioned the Sime/E&O deal.

  • Minority Shareholders Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon had also questioned the deal and asked if there would be an MGO although the share purchase was below the 33 per cent threshold to trigger a mandatory buy.
    “Where does this leave the minority shareholders? Is it fair to them?
    “We believe that in the circumstances, the Securities Commission should investigate whether the other conditions for an MGO have been fulfilled,” Bushon wrote in The Star newspaper yesterday.
But here lies the problem.

Fair to which minority shareholder?

Because the problem is the conflict of interest between SC Chairman and and E&O chairman. They are related. Husband and wife.

And E&O chairman stake would still be considered a minority shareholder.

So if MSWG and SC calls it unfair to the minorities and forces Sime to do an MGO, what's the implication?

What if someone asked for whom did MSWG and SC fought the case for?

See the complication caused by this conflict of interest?

In my opinion, this conflict of interest must be stopped.

The local stock market cannot have A Securities Chairman whose husband is so actively involved in the stock markets.

Yesterday, blogger M.A.Wind blogs on SC & BM: (perceived) Conflict of Interest? 

Let me highlight this following issue from that posting.
  • Conflicts of Interests

    An integral part of ethics and integrity is the avoidance of conflict of interest. In this regard, all SC staff and their immediate family members have the obligation to avoid putting themselves in situations of conflict where their personal interest is conflicted with the interest of the SC. A process on declaration of interest has been put in place within the SC to ensure that SC employees adhere to this requirement.
(Mind you that was taken from SC own website! )

!!!! Exactly!

Despite what was written, the Malaysian stock market have this messed up conflict of interest between SC Chairman and her husband!

Where's the integrity in the stock exchange if this was to continue on?

Consider one older incident.

Now, I have seen many privatisations deals in the market the past several years. Most of the time, the minorities shareholders attempt to stop the privatisations failed. There was this case where a privatisation attempt actually failed. Jan 2010: Be fair to minority shareholders

For me, despite what was written, it wasn't a clear case against the privatisation offer. And as mentioned, in the article, the offer carried a decent premium.
  • On Jan 11, when the proposal was first mooted, that would have given entitled shareholders a chance to exit their investment at a premium of about 23% and 33% over the five-day and three-month volume-weighted average market price. Of course, the shares have since rallied in response to the news, and today, sit just short of the offer price
But thanks to MSWG, the minorities won. I was surprised.

And guess who is one of the minority shareholder in MBF Holdings? Datuk Azizan Abd Rahman!


How would you want to interpret this?

And from a conflict of interest perspective, won't one question why MSWG fought so hard to stop the privatisation? And why didn't MSWG fought harder in many more clear cut cases where the minorities shareholders were clearly shortchanged?
And yes, sadly, that MBF Holdings case would have been one stellar victory for the minorities but the problem is that one of the minority is such a prominent figure, and one who is related to the Securities Commission.


Isn't it all so disappointing?


bonny b said...

Dear Moo,
Conflict of conflicts. We must first ask about who is paying for MSWG to exist. This so-called NGO needs about RM1 mil per yr at least to function. Secondly, how did they select their personnel? I dont remember seeing any advertisement when they were recruiting their CEO etc. So, what goes around, comes around. Maybe its more pleasant to keep a pet instead eh?

Moolah said...

Bonny: What's your suggestion to solve all this mess?

M.A. Wind said...


They get their money from the Capital Market Development Fund, I think managed by the SC.


I had two cases, both they didn't pick up, I think they should always follow up on any genuine complaint, zero exception. I am pretty sure they were pressured, they should come clean on that, tell the people what happened.

ronnie said...

Why can't we have the top 1000 shareholders of all PLCs displayed on the SC website? This is technically very basic as the shareholder list is available to the PLC in any case.

Mun Wai said...


What's your view on the relationship betweem MSWG, its founding organisations/members and their "prominent" background.

Moolah said...

Mun Wai: I strongly feel that MSWG must be truly independent. And that goes for Bursa Malaysia itself and the SC.

They officers should not have any conflict of interest and neither should MSWG be funded by organisations which have strong links/relationship in the market.

In the case of SC Chairman, it's simply appalling.

How could the spouse of the Chairman hold excutive positions and even own shares in other listed companies?

bonny b said...

Dear Moo,
Its now most obvious that this country needs absolute transparency in all its public affairs, from the way business is conducted, to employment of key executives of public entities. All too often in the past, people were employed by who they know; so not necessary the best qualified technically nor morally.If this country wants to develop further, there is no other way.
MA Wind; On the question of MSWG,if it is funded by SC, we shall also ask questions then about who controls the SC? What goes around, comes around.

Mun Wai said...

I am sceptical towards its founding organisations/members, the gang of 4.

I somehow see the non-independence right from its inception/birth. On one hand, the 4 and MSWG seem to be having some common goals (
fighting for the Minorities)

But On the other hand, the 4 could have been exerting undue influence to other prominent shareholders, to the advantage of interested parties.

No possibility of hidden agenda? No meh?

brotherlone said...

what about AME Sdn Bhd?

bought over from Perisai at a pittance few years ago, and now sold to Kencana at more few mutiples higher than cost of investment.

AME Sdn Bhd is 90% owned by her husband too.

The disposal of AME to Kencana, left him with a direct stake of 6% in Kencana, and it was sold off market... again no one take notice

Moolah said...

Well this has got to be stopped, yes?