EPF Forgot Sime Darby’s Lesson in UMBC
Richard Teo
The pension fund, EPF must surely think that money grows on trees when they decided to take-over RHB at a cost of $10 billion.
They have still not recovered from their early foray into Bank Islam and Bank Pertanian where they suffered massive losses.
Bank Islam alone in its audited profit of two years suffered losses of $2.3 billion.Either they are so naiive about business nvestment in the banking sector or they must be sadist looking for more punishment.
If there is any parallel investment failure in the banking sector we need not go too far for examples. Remember Sime Darby’s adventure with UMBC?Yes its brief foray caused them to lose more than $250 million in a short span of time.
Luckily in quick time UMBC was disposed off lock, stock and barrel and that was the first and last time Sime comtemplated venturing into the banking sector deemed ‘a profitable business which could bring long -term benefit’ by its CEO Mr. Azlan Zainol.
If it was profitable why did Sime’s investment in UMBC resulted in such a massive loss?
By his own admission Mr Azlan Zainol said they have no experience in Banking but they were going to engage professionals to run the bank.
Does this imply that UMBC was not run by experts in the banking field?
Surely not, because we would assume that Sime would have carefully selected a team of banking experts and yet they came up with a loss.
With the benefit of such banking failure one would have thought EPF would have been more cautious and prudent in their choice of Banking as an investment.
What really boggles the mind is that RHB is a debt-laden banking group and the bottom line is that if it was so profitable as claimed by its CEO then why is it heavily in debt?
One simple test why it is a poor investment is to ask yourself why RHB owners are selling? Try asking owners of Hong Leong Bank or Public Bank to sell and see their response.
The recent forage into risky investments which yielded considerable losses in many of its portfolios reflects bad management.
For too long the govt has regarded EPF as one of its GLC and like all GLC’s poor management by key personnel has resulted in huge losses. And like all GLCs they are run by political cronies and supporters rather then for their expertise and experience.
If the pension fund is to recoup some of its earlier losses especially in MBSB (Malaysia Building society) where its losses are more than a billion dollars then some sanity must prevail.
The money collected from employees are sacrosanct and not meant to be indulged in risky speculative ventures nor should it be used to bail out UMNO cronies in failed busineses.