Where is Ze Moola

Showing posts with label Malpractices. Show all posts

Tuesday, July 28, 2009

Maxbiz: The Dog Ate My Assets!

Do you remember them school days. You forgot your homework and as kids, we would come out with some of the daftest and silliest excuses in our attempt to cover up.

I was less than impressed when I highlighted Maxbiz and its missing 40 million assets in the posting, Honey Did You See My Missing 40 Million Assets?

On the Edge Financial Daily, Maxbiz fails to trace missing assets and by jolly, they did lose a car (as suggested in the earlier blog post!)!

Sorry but it's not even funny.

It's simply ludicrous.

What on earth is happening in this company?

KUALA LUMPUR: Maxbiz Corp Bhd said today its missing assets of RM40.3 million could have generated sufficient returns to cover a RM1.8 million loan given to its subsidiary Mayford Garments Sdn Bhd (MGSB) by RHB Bank Bhd.

It said a winding-up order was made against MGSB on Feb 28, 2007 by RHB Bank as the company had defaulted on the RM1.8 million loan. Maxbiz said attempts were being made to resolve the matter with RHB Bank.

The missing assets comprised plant and machinery, a motor vehicle, office equipment, furniture and fittings, with a net book value of RM40.29 million as at Dec 31, 2006. The asset cost was RM64.44 million as at that date.

Maxbiz said directors who were appointed on June 26, 2007 and Nov 26, 2007 had failed to communicate with the former directors of MGSB over the missing assets. It has lodged police reports over the matter.

Maxbiz said it had written off its entire investment of RM47.11 million in MGSB last year.

How could plant and machinery go missing?

And these missing assets comprising of plant and machinery, motor vehicle, office equipment, furniture and fittings carried a net book value of rm40.29 million??????????????

??????

( Off topic: See this is why I personally would not invest using book value yardsticks. There is always a chance of the company inflating their book value. )

And needless to say, when I visited Bursa website for more info on Maxbiz, I get such announcements.

This announcement in May 2009 was worth noting: MAXBIZ CORPORATION BERHAD ("MAXBIZ" or "the Company") - Deviation of Results

Pursuant to Paragraph 9.19 (34) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of MAXBIZ wishes to announce that the Company's loss after taxation for the financial year ended 31 December 2008 has deviated by 1135% from the unaudited loss after taxation of RM6.227 million as announced on 2 March 2009. The audited loss after taxation stated in the audited accounts now stands at RM76.926 million.

WISHES to announce? Duh! Rather poor choice of word, no? I mean, is the company so happy that there is such a massive deviation in earnings????

Omigosh... from 6.227 million losses corrected to rm76.926 million!!!!!!!!!!!!!!

!!!

Wednesday, July 22, 2009

Honey Did You See My Missing 40 Million Assets?

On the Edge Financial News.

Maxbiz lodges report over RM40m missing assets
Written by Financial Daily
Wednesday, 22 July 2009 11:35

KUALA LUMPUR: Maxbiz Corporation Bhd has lodged a police report over missing assets valued at over RM40 million.

In a statement yesterday, Maxbiz said the missing assets belonged to its wholly owned subsidiary Mayford Garments Sdn Bhd, which had been served with a winding-up order by the High Court here.

It said the Batu Pahat commercial crime division had started investigations on Monday to recover the assets.

This article appeared in The Edge Financial Daily, July 22, 2009. ( link source: here )

WOW!

How can assets worth 40 million be missing??? ( macam mana ni? siapa telan? )

40 million woh!

I mean.. ok... perhaps one can 'LOSE' a car or maybe two.... but... but... butt... we are talking about missing 40 million worth of assests!

Yes this is truly mind boggling!!

Yes we can!

Friday, April 17, 2009

Mems Tech Directors Charged!!

Mems had been featured many times on this blog. In fact, the first posting ever made on this blog was based on this stock, way back in Oct 2005!! :D

If you would indulge with me, let's take a trip back in time.

I had questioned the extremely bullish earnings expectations for the stock from folks like S&P, OSK, and CIMB. Hard to fault them entirely as the company itself was making extremely optimistic statements in press conferences. (see Mems: Part IV ).

And I highlighted very fact that the cash flow balances were so questionable! ( see Mems: Part VI )

Then on 21 November 2007, OSK Research did a rarity by making a warning on MEMS. Yes, it did and I was impressed with what OSK did. (See OSK comments on Mems )

Six days later, all hell broke loose! Update on Mems Accounting Issue

In light of the above, and after due deliberation, the Board has resolved not to recognize revenue of RM19.72 million. As a result of this, the unaudited consolidated revenue for the financial year ended 31 July 2007 will be revised to RM53.7 million. This will consequently result in the unaudited profit after tax for the financial year ended 31 July 2007 to be reduced from RM21.47 million as announced on 27 September 2007, to RM13.45 million.

The amount was not HUGE at all but the implication was so crucial.

Without the disputed 8.02 million (Mems on that day said its earnings was reduced from 21.47 to 13.45 million), this would mean it changed the whole complexion for the stock.

The stock would HAD NEVER been branded as a GROWTH stock and with it, the higher earnings expectations (see initial posting on Mems on S&P high earnings expectations on Mems in the posting: Mems.. ) and the higher earnings multiple.

In layman terms, the stock should never had traded as high as it did!

And so I wrote on More on Mems Restating of Its Earnings and made another update posting, Regarding Mems Again...

And the point I made was..

So if the market valuation now is about fair for a company making only 13 million, then Mems is worth only some 163 million. However, due to the overstated earnings, MEMS was valued as much as some 531 million!!!

All thanks to overstating of the earnings by a mere 8.02 million!

And a couple of months later, on 12 Feb 2008, I wrote Unnamed Sources Strikes On Mems!. The stock surged by an incredible 42% thanks to unnamed sources mentioned on the Edge article ( see The said article on Mems ).

A business weekly reported last weekend, citing unnamed sources, that new information had surfaced that may soon get the company out of the problems it is in

But no OFFICIAL news was released by Mems itself! And on 25 Feb 2008, the stock fell back to 13 sen! See What now for Mems Technology?

And the most glaring issue during this period was AKN Equity disposing tons of Mems shares during this period! ( See Unnamed Sources Strikes On Mems! )

Here's the announcement posted on Bursa: Changes in Sub. S-hldr's Int. (29B) - AKN EQUITY VENTURES SDN. BHD. See the massive disposals made by AKN Equity from 11 Feb 2008 to 13 Feb 2008!!

And on 29th Feb 2008: Mems Technology Will Be Suspended!!!!!!!!

Suspended until further notice!!!!

By April MEMS Tech: Still Unable to Produce Quarterly Earnings!. I even made a review on Mems again. See Mems Technology Again!

A month later, Mems finally announced its quarterly earnings. See A Look At Mems Technology Again

And it was incredible that on 31 May 2008, Mems Asks For Support!!

Executive director Tan Yeow Teck said its board of directors has explained all the circumstances of the accounting issues to the shareholders present at the meeting.

"On hindsight, we believe this whole thing may not have happened if we've talked to the auditors up front," Tan said, referring to its external auditor KPMG, which raised concerns about certain transactions relating to the firm's revenue, property, plant and equipment last year.

A couple of months later, I wrote A Brief Look at Mems Latest Quarterly Earnings

It was astonishing! All the warnings signs were lit. Trade receivables were insanely high when compared to its sales revenue. Cash depleted to a mere 3.191 million and loans increased by 7.441 million to 50.796 million!

And finally today we read that Mems Tech directors charged!!

Mems Tech directors charged
Written by Sharon Tan
Thursday, 16 April 2009 12:23

KUALA LUMPUR: Mems Technology Bhd (Mems Tech) directors Ooi Boon Leong and Tan Yeow Teck separately pleaded not guilty in the Sessions Court here today to a charge of furnishing misleading statements to Bursa Malaysia Securities Bhd.

The duo were charged by the Securities Commission (SC) under Section 122 of the Securities Industry Act 1983 for knowingly authorising the furnishing of a misleading statement concerning Mems Tech’s revenue of RM73 million for the 12-month period ended July 31, 2007 to Bursa Securities.

Judge Rosbiahanin Arifin fixed the joint trial for Oct 5 to 9, 2009. If found guilty, Tan and Ooi can be fined a maximum of RM3 million each or jailed up to 10 years or both.

The court set a bond of RM200,000 for each defendant with two sureties. Tan and Ooi were also required to surrender their passports but could make an application to the court for their passports if they were required to travel for business.

Ooi, 48, a director of the Mesdaq Market company, was appointed to the board on Nov 30, 2000. As of Feb 13, 2000, he held a direct stake of 4.82% comprising 31.61 million shares in Mems Tech. Ooi is also a director and group chief executive officer of AKN Technology Bhd.

According to the company’s annual report, Tan, 48, was appointed to the board on June 28, 2006. He is the executive director and also the chief financial officer of the company.

Mems Tech’s substantial shareholders include AKN Equity Ventures Sdn Bhd with a 10.42% stake comprising 68.35 million shares and Lembaga Tabung Haji with a 9.95% stake or 65.25 million shares.

Mems Tech, which is involved in microelectromechanical systems products, had failed to finalise the audited financial statements for financial year ended July 31, 2007 and quarterly report for the period ended Oct 31, 2007. The audited income statement for the year was later announced on April 24, 2008 containing a disclaimer by the company’s former statutory auditors, KPMG.

On Dec 24 last year, Mems Tech announced that the suspension of trading of its securities and the commencement of the delisting procedures against it was deferred pending the decision on its application by Bursa Securities. It is asking for a waiver to submit a regularisation plan. The stock yesterday fell 0.5 sen to 8.5 sen with 1.67 million shares traded.

Earlier in March, the SC charged Tan Chin Han, the former chief executive officer and executive director of Welli Multi Corporation Bhd, for knowingly authorising the provision of a misleading statement to Bursa regarding Welli Multi’s revenue.

Thursday, April 02, 2009

Southern Acids seeks more info on forex losses, contracts

Totally unreal to read such corporate developments!

On the Edge.

Update Southern Acids seeks more info on forex losses, contracts
Written by Financial Daily
Thursday, 02 April 2009 00:41

KUALA LUMPUR: Southern Acids (M) Bhd has been unable to issue its quarterly report for the period ended Jan 31, 2009 due to “insufficient information and explanation to the board in respect of the foreign exchange losses and contracts”.

The company told Bursa Malaysia on April 1 its board expected the report to be issued on April 14 to allow an “independent review of the company’s exposure on the foreign exchange contracts”.

Apart from a healthcare division, the group is mainly involved in plantations and manufacturing of oleochemicals.

In the notes accompanying its results for its second quarter ended Oct 31, 2008 (2QFY09), Southern Acids said the group had entered into forward forex contracts to limit the exposure to potential changes in foreign currency exchange rates with respect to its foreign currency denominated estimated receipts.

It said total off balance sheet forward forex sales contracts outstanding as at Dec 17, in ringgit equivalent, was RM3.43 million, and maturing from December 2008 to February 2009.

“There is minimal credit risk because these contracts were entered into with a reputable bank. All gains and losses arising from forward foreign exchange contracts are dealt with through the income statements upon maturity,” it had said.

Southern Acids had earlier announced that such off balance sheet forward forex sales contracts outstanding as at Sept 26, 2008 in ringgit equivalent was RM669,098, maturing between October and November 2008.

In a separate development, the provisional liquidator of Banting Hock Hin Estate Company Sdn Bhd had last Friday requisitioned to convene an EGM for the proposed removal of Southern Acids non-executive chairman Yap Soon Nam and independent director Mohd Hashim Harun.

It proposed the appointment of Lee Peng Ling, Wong Yien Kim and Jonathan Law Ngee Song to the board.

Appointed to the board on Aug 10, 2005, Yap was previously also called upon by the Cabinet and Treasury to advise on the takeover and restructuring of highway concessionaire Metramac Sdn Bhd.

Southern Acids is majority owned by the Low family, led by executive director Low Mong Chai @ Low Ah Kow, who held an indirect stake of 56.07% of the company as at Sept 15, 2008.

Mong Chai is the brother of the late Datuk Mong Hua @ Low Mong Hua, the group’s co-founder and former executive chairman and managing director who died on April 13, 2008.

The group reported a net loss of RM5.17 million for 2QFY09 versus a net profit of RM12.08 million a year earlier.

For the six months to Oct 31, 2008, its net profit was halved to RM10.72 million from RM21.06 million a year earlier, while revenue rose 16% to RM272.43 million from RM235.54 million. No dividend was declared for the current financial year ending April 30, 2009.

The company released only the consoldiated income statement, but not its balance sheet and cash flow statements.

As at Oct 31, 2008, it had investments in quoted securities totalling RM20.45 million at cost, RM15.33 million at carrying value and RM16.71 million at market value. It had short-term and long-term borrowings of US$1.86 million (RM6.62 million) and US$406,000 (RM1.45 million), respectively. Southern Acids has a paid-up capital of 136.93 million shares of RM1 each.

Saturday, January 10, 2009

Detecting Companies' Malpractices

Excellent article posted on Star Business: How to detect companies' malpractices

Saturday January 10, 2009

How to detect companies' malpractices

Investors have lost thousands and millions due to companies’ malpractices but there are ways to detect the warning signals

Following the revelation of the shocking Bernard L. Madoff’s US$50bil Ponzi scheme, there has been much uproar over the US regulator’s incompetence in failing to uncover a swindle of such mammoth proportions.

Madoff’s Ponzi scheme is possibly the largest financial fraud in US history. Questions have been raised as to how this could escape the eye of the Securities and Exchange Commission.

Thousands of enraged investors have accused Maddoff of stealing their life savings.

Here in Malaysia, while not of that magnitude or of the same nature, investors have found their investments dwindle due to significant accounting-related mishaps.

Transmile Group Bhd, a once-upon-a-time darling, rattled investors by its accounting fraud. Then, there was optical disc producer Megan Media Holdings Bhd which incurred huge debts and losses over “massive collusive fraud”. When discovered in August 2007, Megan Media was grappling with losses and debts to the tune of over RM1bil.

The dramatic exposure of Transmile came to light in mid-2007, when auditors discovered fake receivables sitting on Transmile’s books. From a market cap of RM3.89bil at its high of RM14.40 on Jan 3, 2007, the company has now been reduced to a dismal market cap of RM155.32mil.

Since then, Transmile shareholders have collectively lost billions. Not surprisingly too, Transmile has been announcing losses in its quarterly earnings since.

There were, however, some shrewd fund managers who managed to escape unscathed from the Transmile episode. Trusting his gut, a fund manager from a local firm sold his Transmile shares at the peak, just before the issue erupted. He tells how he was already feeling uneasy with management’s consistent evasiveness during analyst briefings.

“Management was avoiding some of the questions we asked. They could not give me a straight answers,” says the fund manager.

What are the signs?

Investors who have been victims of fraud are probably angry and want retribution. Before that happens, maybe watching out for red flags would be more helpful.

When choosing to invest in a stock, MIDF Amanah Asset Management Bhd chief executive officer Scott Lim says a key criteria is honesty in management.

He is wary of companies, which during company visits, tell fund managers one thing but announce a different thing altogether. He believes the company should be totally transparent and try their best to explain their actions to all shareholders.

“Whether the fund manager is a majority or small shareholder, they should have total access to information. If the company is beating around the bush, and not being direct in their answers, I think it is time to sell their shares,” he says.

A fund manager who had the bad experience of being deceived by a second board Malaysian-listed company, says investors should be careful when management promises unrealistic returns.

Looking at the character of captain of the company is also important. “If they are the sort who veils everything, very tight lipped, won’t give much information to analysts or shareholders, and are combative in nature, it’s time to be careful,” he says.

He says another red flag is when companies are unable to articulate a clear strategy or are vague on how it gets its returns.

Kumpulan Sentiasa Cemerlang head of stock research and partner, Choong Khuat Hock, admits that it is not easy to spot a fraudulent company, but there are a few signs one can watch out for. “I would still look at the balance sheet. If the company has a very high debt level, or has a business model that relies on a lot of capital expenditure to grow, then I would be wary,” he says.

He adds that companies that are trying to boost their earnings to maintain their past track record, could also fall prey to fraud as there could be attempts to manipulate their books. “This was probably what happened to India’s Satyam group. They needed to increase earnings to meet analyst expectations,” he says.

Recently, Satyam Computer Services Ltd chairman Ramalinga Raju resigned after saying he falsified accounts and assets. Raju unsuccessfully tried to sell two companies to Satyam last month in a final attempt to plug 50.4 billion rupees of “fictitious assets” on the company’s balance sheet.

Choong also advises investors to invest in companies which possess a consistently good corporate governance track record.

“Avoid companies that have dabbled with related party transactions or have been involved in buying over family-related companies. The company may do it again. Sometimes a leopard doesn’t change its spots,” he says.

The local fund manager tells shareholders not to be complacent even when the captain behind the company appears to have a lot of integrity. “You have faith in the person. You see good profits and hence, may abandon common sense. But when the company guarantees a certain level of performance, be suspicious. Be very doubtful if his track record looks too good to be true, because it probably is,” he says.

He adds that if the investment manager’s record seems remarkably steady over a long period of time, it ought to provoke scepticism. After all, markets fluctuate between good and bad times. If returns continue to be good despite market fluctuations, it doesn’t make sense.

Like a Ponzi scheme, a pyramid scheme depends on keeping its volatility low, so that victims don’t start thinking of cashing in en masse. The moment that happens, the game is over, and shareholders get burnt.

Nonetheless, there are many times too that shareholders fall for financial scams simply because of their own gullibility.

This can be explained by the “irrational exuberance factor”. This is the tendency of humans to model their actions, especially when faced with affairs they don’t entirely comprehend, on the behavior of other humans.

So, if a stock is deemed solid and full of potential by most fund managers, then the investment must be good and most people flock to buy the stock. Still, and as many bitter episodes have shown, it is no guarantee of capital preservation.

Friday, January 09, 2009

Comparing Megan Media And Satyam

Posted yesterday: More From Satyam Scandal

The following passage...

Raju also said Satyam's balance sheet as of Sept. 30 had a non-existent cash balance of 50.4 billion rupees; nonexistent accrued interest of 3.76 billion rupees; an understated liability of 12.3 billion rupees; and an overstated debtor position of 4.9 billion rupees compared with 26.51 billion rupees reflected in its books.

"This has resulted in artificial cash and bank balances going up by 5.88 billion rupees in the second quarter alone," said the executive.

Hmmm...

1. had a non-existent cash balance of 50.4 billion rupees;

2. nonexistent accrued interest of 3.76 billion rupees;

3. an understated liability of 12.3 billion rupees;

4. and an overstated debtor position of 4.9 billion rupees compared with 26.51 billion rupees reflected in its books.

I decided to dig my old notes on Megan Media. Yeah, our Malaysian version of Enron. See The Naked Truth in Megan

Let me repeat what was posted in that posting.

Ok, Megan posted that Megan Media posts RM1.14b net loss in 4Q.

I have decided to have some fun in spotting the differences between yesterday's Quarterly rpt on consolidated results versus their previous quarterly earnings reported on March 2007.

I will state the current one first followed by the previous quarter.

1. Sales revenue. 21.417 million versus 306.150 million.

2. Property & plant. 101.939 million versus 588.601 million.

3. Investment in associate. Zero versus 67.502 million.

4. Inventories. 26.355 million versus 125.090 million.

5. Trade receivables. 13.601 million versus 430.354 million.

6. Other receivables,deposits and prepayments. 12.891 million versus 260.787 million.

7. Total assets. 163.441 million versus 1.511 billion!

8. Accumulated losses of 1.041 billion versus retained earnings of 262.545 million.

9. Total Equity-(Deficit) of 796.963 million versus total equity of 506.963 million.

10. Net Asset per share of -3.92 versus Net Asset per share of 2.50.

Well Megan cooked up their sales revenue, the property plant value, investment value in its associate, inventories and receivables!

So who was the better cooker? :P

And lastly, I would like to state that it's best one not be narrow minded and assume that all Indian companies and all Malaysian companies are crooked as Satyam and Megan Media. Or just because there was a Maddoff, I do not think it's right to assume that all American funds are crooked.

For me, I truly believe that one cannot make such prejudiced and narrow minded statement such as that above. Yes, crooks will exist. Not only in India. Not only in America. Not only in Malaysia. Crooks simply exist. However, let us not discriminate the majority of honest and hard working people that exist too.

And as for investing, isn't the golden rule in investing is that one should want to invest only in the wonderful business that is managed/owned by people that can be trusted at a low price?

Take Megan Media for example. Was it ever an investment grade stock? My answer is simply NO.

Friday, August 01, 2008

A Deeper Look At Axis Inc

So it now appears that Axis Inc has crashed and burned. ( See Regarding The Plunge Of Axis!! and The Plunge Of Axis)

This morning I would like to take a simple and quick look at Axis and examine if there was any justifications to invest in Axis Inc or not.

Axis Inc was listed on April 2004 via taking over the listing of the failed Ganad.

The first fiscal year for Axis was announced on May 2005. Quarterly rpt on consolidated results for the financial period ended 31/3/2005.

Axis announced a net earnings of 14.394 million for the fiscal year. Margins were low at 5.18% and company was carrying net debts of over 77.845 million. And Axis is in the garments industry.

For the next fiscal year 2006, Axis earnings were rather shockingly poor. Quarterly rpt on consolidated results for the financial period ended 31/3/2006

Net earnings dropped to 8.154 million despite a sharp increase in sales revenue. Net margins slumped to a mere 2.33%. Net debts soared to 172 million! Any justifications?

The next fiscal year 2007, Axis had a bumper year! Quarterly rpt on consolidated results for the financial period ended 31/3/2007

Sales soared to 492 million from 350 million the previous fiscal year and net earnings soared to 25.167 million. Margins too improved to 5.11%. And an investor who just focus on earnings growth and earnings per share would be seduced, yes?

However, the fundamental weakness of the company was rather crystal clear.

I have compiled a table from all the links above and this is what I would have been looking at.

Shocking is the word. Despite all the incredible revenue and earnings growth, the fundamental deterioration was crystal clear! Total loans soared and the company is now in a net debt position of 224 million! Loans were just 85 million back in 2005. And look at the receivables. Receivables soared from 82 million to 200.9 million!

Others D&R stands for other deposits, receivables and prepayments - this figure would be interesting the next fiscal year!

So where there any justifications to invest in Axis Inc?

And this was Axis latest earnings report made on May 2008. Quarterly rpt on consolidated results for the financial period ended 31/3/2008

Take a look at the compiled figures in the new table below.

Earnings slumped to 16.105 million. Margins dropped.

Total debts is now at 325.701 million, which means the company is now in a net debt of 308.47 million! (Consider this, with a net earnings of around 16 million, it would take this company 20 years just to repay its total loans of 325 million!)

Others D&R, which stands for other deposits, receivables and prepayments soared to 151.559 million! Receivables improved slightly to 197.393 million!

(Sorry for the insinuation - I could be wrong here - but in my simple opinion - which may be flawed - this is simply looking so much like Megan Media!. The low margins, the increase in debts and receivables!)

How?

Was there any justifications to invest in Axis Inc?

Or don't you think Axis Inc simply looked like an accident waiting to happen?

Friday, April 11, 2008

More SC action!

Published on Business Times: SC probe widens

FRESH from filing its landmark legal suit, the Securities Commission (SC) is probing share trades of more companies for possible price manipulation activities, it was learnt yesterday.

Business Times was told that the regulator is monitoring the situation before deciding if there are enough grounds to justify a full-fledged investigation.

In an e-mail reply to questions sent, the SC said it proactively monitors trading activities on Bursa Malaysia to ensure a fair and orderly market, and that "firm action will be taken where there is evidence of wrongdoing".

Apart from firms linked to Global Trader Europe Ltd, a UK fund, it is believed that the regulator has widened its scope to include Liqua Health Corp Bhd and Welli Multi Corp Bhd.

The Global Trader probe is on possible insider trading. In late February, several counters had brutal limit-down crashes, timed with the UK fund's selling of pledged shares, with margin shortfall.

The latest probe, meanwhile, is on possible manipulation in the trading of Liqua Health and Welli Multi shares. Sources said a senior dealer was interviewed last week on trading related to shares of Liqua Health.

Both companies, with possible accounting irregularities rap hanging over their heads, closed at their lowest level on March 19.

However, some 10 trading days later, shares of Welli Multi and Liqua Health surged by some 400 per cent and 200 per cent respectively.

Liqua Health, which was also linked to the Global Trader probe, announced on Wednesday the appointment of chartered accountants Baker Tilly Monteiro Heong to do a forensic audit on transactions worth RM15 million.

Welli Multi has had a roller-coaster 12 months, with a slew of expired memoranda of understanding on changes in ownership and expansions into China and Indonesia under its belt.

On April 1, it signed a conditional subscription agreement with GEM Global Yield Fund Ltd and GEM Investment Advisors Inc, for the two US-based funds to buy under five per cent of the company for about 50 sen a share.

On further prodding from the stock exchange, Welli Multi said it doesn't know who is behind the fund or its intentions.

Now I do understand that perhaps SC could have done much more than dishing out civil suits. Postings and the comments made on Dali's blog is certainly worth reading SC files landmark civil suit and Cat Out Of The Bag

Could SC done much better? Probably.

Are you happy to see what's happening?

Don't you think that SC by taking these actions indicates that perhaps finally we might see some changes in the local market for good? At least there is hope for a better future, yes? Or is this simply wishful thinking?

Or are you afraid that these actions would ultimately hurt the already fragile market sentiments? Some would argue by saying 'Aiyoh, Malaysian markets needs these buggers around mah and without them, how to cari makan?'

How?

Tuesday, December 11, 2007

Suit Filed Against 2 Megan Officials

Read this news article on Business Times: SC files charges against 2 Megan Media officials

THE Securities Commission (SC) has filed criminal charges against two former officials of diskmaker Megan Media Holdings Bhd for allegedly making false statements to Bursa Malaysia in relation to the company's revenue figures.

Revenues in question totalled a staggering RM1.81 billion for various periods.

Kenneth Kok Hen Sen @ Kok Liew Sen, the former financial controller of Megan Media, and Datuk Dr Mohd Adam Che Harun, the former executive chairman and director, were named in an indictment at the Sessions Court yesterday.

Kok was also the special assistant to Mohd Adam during the material time of the offence.

In addition to the criminal charges, the SC has obtained a warrant of arrest against the former executive director of Megan Media, George Yeo Wee Siong.

The SC is seeking the assistance of Interpol to trace and arrest Yeo, who is wanted on similar charges.

Kok is charged with four counts of violating section 122B(a)(bb) read together with section 122C(c) of the Securities Industry Act 1983 (SIA).

The SC charged Kok with abetting Megan Media in furnishing to Bursa Malaysia false revenue figures of RM1,034,797,000 in the group's books for the year ended April 30 2006, RM230,365,000 for the period ended July 31 2006, RM238,134,000 for the period ended October 31 2006 and RM306,150,000 for the period ended January 31 2007.

The SC's complaint against Mohd Adam alleges that he furnished a false statement relating to the revenue figure of RM306,150,000 for the company's financial period ended January 31 2007 under section 122B(a)(bb) read together with section 122(1) SIA.

Upon conviction, the accused are liable under section 122B SIA to a fine not exceeding RM3 million, or imprisonment of not more than 10 years, or both.

Which reminded me of this blog posting posted on Aug 7th 2007, in which I blogged on Megan's Other Bossie

KUALA LUMPUR: Megan Media Holdings Bhd executive chairman Datuk Mohd Adam Che Harun disposed of a total of 6.26 million warrants of the company between April 25 and May 4, a filing to Bursa Malaysia on Aug 3 showed.
According to Bursa filings, Mohd Adam sold the block of warrants on the open market via five transactions, which saw his warrants holdings in Megan Media being reduced to 63,700 units or 0.09%.

The point mentioned in that blog posting was..

Point is the transactions was DONE between April 25 and May 4 and these transactions was only recorded and announced on Aug 3rd 2007?
Why did it take so long to file?

How?

Tuesday, June 26, 2007

Cooking And More Cooking!!

Two articles posted on The Edge Weekly on TransMile and Megan.

25 Jun 2007: Corporate: How Transmile's books were cooked By Doreen Leong and M Shanmugam

Quote: In a nutshell, it was a well-designed scheme running for years involving some customers and suppliers and the company's top management.

25 Jun 2007: Corporate: Transmile, Megan spill over to banks By Lim Ai Leen

Quotes:

"If everyone writes off their loans completely, the banks will still stand but there will be a substantial impact on earnings. It's a problem," says a bank executive last week
"It's like a house of cards. All you need is for one bank to pull the credit line and the whole company will collapse," he says.
Megan Media seems to worry the lenders more. As at January, its borrowings total RM888 million, of which RM320 million is in the form of Islamic bonds that have defaulted. Megan's principal bankers are Citibank, CIMB, DBS, HSBC, Malayan Banking and RHB. "
Each bank's exposure to Megan ranges from as low as RM10 million to RM250 million. So the size of the hit will vary," says the bank executive.
"For now, it's generally agreed among the creditors that there's no point pulling back credit lines or calling for the company to be liquidated. But some are wary of Citibank because its head office may decide to pull the plug," notes the bank executive.

Thursday, June 07, 2007

Megan, do you think that it's so scandalous?

Putting aside the issue of whether one should have never invested in Megan, do you reckon that it's so scandalous?

Look at the announcement made.

MTSB appears to have created fictitious trading creditors and debtors to overstate purchases and sales

MTSB appears to have financed the payment of fictitious trading creditors through bank debt and recycled the cash through other entities to appear that repayments were being made by fictitious trading debtors

The IA's site visits to the supposed trading locations of the trading debtors and creditors shows that they are fictitious

Ultimately, all trading creditors were paid (payments were actually made to other parties than that shown in the accounts), allowing cash to be paid out of MTSB and the trading debtors remain outstanding and are unlikely to be collectible at all

MTSB's payment of a deposit of RM211 million for 13 production lines also appears to be fictitious

The report also set out a Net Realizable Value which indicates that MTSB has potential shortfall in assets of RM456 million. Further, value of MTSB's fixed assets of RM585 million requires further investigation and the realizable value is unknown.

Fictitious this, fictitious that. WOW. Everything IS FICTITIOUS!!!!!!!!

So what is real?

Tell us what is real?????

What I know is real is that Mr. Yeo Wee Siong has sold the majority of his shares! ( see here and see this blog posting: http://whereiszemoola.blogspot.com/2007/05/look-who-is-selling-their-shares-in.html )

The company's substantial shareholder and founder George Yeo Wee Siong sold down his stake to 1.97% in February from 11.2% in August last year before Megan Media's financial problem surfaced.

How?

Isn't this so bloody scandalous?

Seriously, if you think that fraud has been committed, why don't you sign your name here?

regards

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