Tuesday, September 13, 2011

And All The E&O Chairman Said Was 'He Was Not Aware .... '

On Business Times:

  • Zarinah steps aside in Sime-E&O review
    Published: 2011/09/13

    The reviews are being led by the two most senior commission members, Datuk Francis Tan and Datuk Gumuri Hussain

    Kuala Lumpur: The Securities Commission (SC) chairman, Tan Sri Zarinah Anwar, will not be involved in the regulator's review of a corporate deal to avoid a conflict of interest.

    The SC is examining if Sime Darby Bhd should make a general offer (GO) for the rest of Eastern & Oriental Bhd (E&O) after buying 30 per cent of the developer. It is also looking at all stock transactions by all parties.

    "In accordance with the SC's internal governance processes, the reviews are being led by the two most senior commission members, Datuk Francis Tan and Datuk Gumuri Hussain and the SC chairman had, from the onset, recused herself," an SC spokesperson said.

    On August 28 2011, Sime agreed to buy the stake from Datuk Terry Tham, Tan Sri Wan Azmi Wan Hamzah and Singapore's GK Goh Holdings.

    Zarinah's husband, Datuk Azizan Abd Rahman, the chairman of E&O, had bought E&O shares prior to the announcement.
    The SC was responding to questions from Business Times on whether Zarinah had issued an internal memo to her staff about the deal.

    The SC did not deny that such a memo was sent out.

    A copy of the internal memo obtained by Business Times also stated that Zarinah had briefed Prime Minister Datuk Seri Najib Razak on the matter.

    "You would have read in the papers and the blogs the criticism and allegations in respect of the purchase of E&O shares by Sime Darby. While this is a commercial decision made by Sime Darby, it does raise the issue of whether the transaction has takeover code implications and an MGO (mandatory general offer) should be carried out.

    "The second issue of course relates to my husband's purchase of shares in E&O. He has been the chairman and shareholder of E&O since 2002 and has purchased shares in the company since then.

    "The latest acquisition is just part of his normal acquisition, with all purchases made in the open and duly reported to Bursa. Naturally he had no knowledge of the Sime Darby purchase at the time as this is a sale by the major shareholders and the board was not told of the negotiations until later.

    "In any case, I have instructed that both the issue of the MGO and the acquisition of shares be thoroughly looked into. Given that I am conflicted, in accordance with our governance procedures, I have recused myself and have asked our two most senior commissioners, Datuk Francis and Datuk Gumuri, to lead the review of this case working together with Dr Nik and Datuk Ranjit," the memo said.

    "I have also briefed the Prime Minister who had expressed his understanding," she added.

    Datuk Francis Tan Leh Kiah is also the managing director (MD) of Azman Davidson & Co, advocates & solicitors, while Datuk Gumuri Hussain is SME Bank chairman.

    Datuk Dr Nik Ramlah Mahmood is the SC's MD and executive director for enforcement while Datuk Ranjit Ajit Singh is the MD and executive director in charge of market supervision.

    The Edge weekly, in its latest issue, quoted Sime Darby's president and group chief executive officer Datuk Mohd Bakke Salleh as saying that the deal was within the law.

    Sime Darby also wanted a 30 per cent stake mainly because it did not want to make a GO without the benefit of a due diligence.

    Datuk Azizan, meanwhile, said that he was not aware of the transaction between the three vendors and Sime Darby at the time.

( For reference: posted last friday: Featured posting: Sime Darby's E&O bid poses policy dilemma )

The most tacky issue in my opinion is that  Zarinah's husband, Datuk Azizan Abd Rahman, the chairman of E&O, had bought E&O shares prior to the announcement

The Chairman of E&O purchased shares just prior to the announcement?

And all he said he was not aware!!!!!!!!!?

That's it?

Are you satisfied?


I am not.

How could the husband of the SC Chairman holds position in any listed company?

How could this even happen?

How could the investing public trust that there's no conflict of interest at all?

How could the investing public believes in good corporate governance when the SC itself cannot keep its house in good order?

Something just got to give!


Simon said...

It does not making any sense that the SC need to report to the PM on this issue.

One person is to ensure the nation security in good operation while another person is to ensure all SC is regulated without possibility loop hole.

While I speculate this entire picture is to get a cash cow to generate some funding for the next GE.

So end of the day, eventually will be forgotten.

M.A. Wind said...

"Naturally he had no knowledge of the Sime Darby purchase at the time as this is a sale by the major shareholders and the board was not told of the negotiations until later."

Surely she can't have written that?

That is already a very clear judgement call.

This is not looking good.

Moolah said...

From the edge: http://www.theedgemalaysia.com/in-the-financial-daily/192851-scs-sime-eao-dilemma.html

The last passage: “The SC’s Statement of Principles and Standards requires the SC to observe the highest ethical and governance standards in the discharge of our functions. The SC has always upheld this and will continue to do so,” the SC spokesman said in the emailed statement.

How to observe the highesy ethical and corporate governance standard when the Chairman of SC's husband is an active participant in the stock market????

Doesn't the conflict of interest sticks out sorely?

Mun Wai said...

I really hope this corporate saga can set precedence for future incidents that can force the invoke of an MGO.

Noo good doing selective procecution. People with significant background dun dare to touch, mid size corporate dig until 2008 fig and make a fuss over it.

Moolah said...

I actually don'tlike the idea of the MGO be enforced.


The E&O Chairman would benefit.

Which is just as wrong as the decision Sime made to purchase the shares of E&O at such a premium.

Mun Wai said...

After that, procecute him for insider trading. Q is dare to touch him?

In a nutshell, whoever is guilty, let them be punished in accordance to the quantum of gains accrued of losses avoided.

Remove whoever is not fit to carry out his/her duty as head of surveillance body/regulator. Charge them under the law enacted to govern them.

Now does anybody treat the law seriously? Comeon, they're put up just for show only.

Catch thief must first catch the leader, then only the corporate heads take things seriously.

Sigh! The same old questions:
1) Enforcement
2) Sequence of who are to be procecuted first. Must go for the big sharks first.

Yes? No?

Big sharks are shaking legs collecting profits while the other far less serious "alleged offences" are being cornered till no end. Isn't there a hierarchy for attention according to its significance.

Moolah said...

Well said!

Moolah said...

And the slap in the face for the minority shareholders was .... the relection of Tham at the AGM.

What a total farce!