The Prime Minister Datuk Seri Najib Tun Razak should present a preliminary White Paper to the June 7 Parliament on the RM1-2 billion Sime Darby cost overruns which have already led to the fall of its group chief executive Datuk Seri Ahmad Zubir and growing calls led by former Prime Minister Tun Dr. Mahathir Mohamad for the whole Board of Directors including Chairman Tun Musa Hitam to resign.
This is because the Malaysian people and taxpayers are the final shareholders of Sime Darby, hitherto the biggest and most successful government-linked company (GLC).
I welcome the announcement by Musa yesterday that the ongoing internal probe by Sime Darby Bhd to find out how it made staggering losses has now been expanded to cover all its six business divisions.
The probe was previously confined to the conglomerate’s energy and utilities division and is now expanded to its five other business units, viz: plantations, property, healthcare, automotive and industrial divisions.
Mahathir is right to ask why only the CEO is made responsible, when he (Mahathir) was told of the cost overruns and delays from the four energy and utilities projects, including the Bakun dam project, three year ago.
There is also the question of the actual cost overruns from the four energy and utilities projects – with reports giving a total loss of RM1.8 billion.
It is not good enough for Musa to evade the issue and say that he will “stick to the figure” of RM964 million as given in the May 13th Sime Darby statement, if all the facts showing that the total cost overruns from the energy and utilities units have ballooned to RM1.8 billion.
Musa owes the Malaysian public the latest updates on the Sime Darby losses or he is falling short of the high standards of accountability and good governance which he had always set for himself and the country.
I will ask for a meeting with Musa on the colossal losses suffered by Sime Darby under his chairmanship.
#1 by rahmanwang on Friday, 21 May 2010 - 8:48 am
Holy smoke.I smell of some kind of bailout by the government soon.What else is new?
#2 by yhsiew on Friday, 21 May 2010 - 9:09 am
The Bakun project is destined to be a white elephant because the 600 mile cable from Bakun to west Malaysia has to pass 70% of the way near few islands owned by Indonesia and only 30% of the way is Malaysia owned. So Indonesia has not given permission and is also not keen on to buy Bakun electricity as it cannot afford. There is not a single company in the world who can make a 600 mile long cable. The electricity loss would be tremendous. (80 %?) and the earth quakes would break the cable. Sabotage and damage due to ships anchors and other passing ships have to be factored in.
Since the Australian Co. and Chinese Co. don’t want to use the electricity produced by Bakun, the project will remain a white elephant in the foreseeable future.
#3 by k1980 on Friday, 21 May 2010 - 9:23 am
Jib: “Why worry? Not my money!”
#4 by chengho on Friday, 21 May 2010 - 9:33 am
dont jump the gun , wait for the investigation report , who is their external auditor ? not another Enron..
#5 by newchief on Friday, 21 May 2010 - 9:35 am
Jib, i think you r quite wrong. though you stated that its not your money, i presume you don’t pay tax. however, whatever money you pay out is already considered your money to pay tax but borne by the other party instead (eg. buy food,clothing,schol costs,fuel, etc)
as such, all tax money collected are pumped into the government. as such , such un-qualified personels who made government projects to lose substantial losses due to corruptions , etc knew that all the while, the government will not take drastic actions to jail these fellas but instead, PROVIDE MORE OF OUR MONEY ( yours too,jib) to bail-out such companies.
thereon, i hope jib has a clearer picture of the situation and start worrying now in case you are eligible for tax.
#6 by Bigjoe on Friday, 21 May 2010 - 9:43 am
There was two main argument for the mergers that led to Sime Darby today 1) Cost and efficiency and 2) Size to enable Sime Darby to expand overseas and take on larger scale projects. The first argument was always dubious because there is a limit to efficiency of palm oil plantation. For the second argument, Sime Darby to some extend was already international and really size was not a major constraint unless it was to enter new type of business which was a bad idea (going international and doing business you are unfamiliar with at the same time is a bad idea, difficult to execute and should not pass even the worst board). So by default it was not surprising to me that the major moves of Sime Darby all these time was to go for local projects and the biggest projects. This was not discussed as a major issue as political correctness prevented it from so. – IT WAS A CRAPPY IDEA.
Firstly, mega projects have a very mix (that is being kind, its basically bad) history in Malaysia and secondly when you look around, there is not a lot of easy to do big projects anymore given much of what could be privatised has already been privatized i.e., the low hanging fruits are gone. The chances of doing something bad is so big with this idea and honestly speaking Sime Darby losing RM2b is not only expected but got off easy. Those familiar with what Sime Darby did in banking knows it could have been a lot worst.
The idea of using large GLCs on big projects is a bad idea. Its attractive to politicians for obvious reason but its a bad idea.
Take the HSBB project – on paper it appears that other country have successfully subsidized the rollout of broadband – Korea, Singapore, etc. and so it can be done. But they did it in a rational way. Our GLC are full of managers that knows how to take the easy way out better than the politicians know how to control them. Between sly managers and poor government, the sly manager is going to come out winning and the losers will always be the people. We are never going to achieve the broadband targets because its just a very hard thing to do and the TM is not pushed to go above and beyond i.e., there was not competition for the project. TM should have subsidized based on sign ups and also more for rural areas not for just doing a project.
Similarly, Bakun was never going to work out because the managers downsides were limited. They were well-paid, if things go wrong, there was always excuses and the government paid for it. The only answer to something like Bakun as with HSBB is simply competition.
There will be more of these coming. You can bet on it and remember both Bakun and HSBB was given the go-ahead under Najib administration…Its highly representative of the mediocre ability of Najib.
#7 by Bunch of Suckers on Friday, 21 May 2010 - 9:57 am
Yes, Changehole! Sime Darby can never be as big and prestigious as Enron! Enron is a multi-billion corporation! You can never compare Apple to Orange as what our Bolehland BN/UMNO enlightened us!!! Certainly, the corruptions and bankruptcies are going to be much worse than Enron…. If their auditors are private like PriceWater House, bunch of sh*ts will be dug out and revealed without covering up!
#8 by k1980 on Friday, 21 May 2010 - 10:11 am
The face of BN’s fixed deposit
http://www.freemalaysiatoday.com/fmt-english/news/general/5796-still-mired-in-poverty-52-years-later
#9 by Godfather on Friday, 21 May 2010 - 10:38 am
This is what happens when a bunch of id!ots sitting in Putrajaya discuss how to create riches beyond their wildest dreams. Yeah, let’s build Sime Travel, Sime Autos, Sime Contracting, Sime Energy, Sime Oil & Gas, Sime Property, Sime Financial Services. Nobody to run these businesses ? No worry, we have many tokoh bumiputras to made as head of divisions.
So now all that they have is Sime Coffins.
#10 by undertaker888 on Friday, 21 May 2010 - 10:39 am
asking thieves and plunderers to run companies is like committing suicide. if the umno goons with hp6 education can be ministers, those CEOs in GLC is even worse.
ya, they want everything, but dont know how to run them. just to look nice on a big chair with big office and a big chaeffeurred car. Just look at tenaga and telekom. If they dont monopolize the market, they would fall with a big THUD!! a long time ago. The only thing they know about profit is to increase price. Forget efficiency and lean.
blo0dy [email protected] them out. Dont fall for the i help you, you help me cr@p!! We will help them pack their bags.
#11 by Godfather on Friday, 21 May 2010 - 10:41 am
The article by Dr Chan Chin Cheung was so revealing about the mentality of the Sime “bosses”.
Rugi tak apa, style mesti mau.
#12 by HJ Angus on Friday, 21 May 2010 - 10:49 am
I have 2 points to make on Bakun and the SD merger:
The basic reasons for the 2 projects were never fully disclosed –
Bakun was just the excuse to harvest thousands of prime timber in Sarawak and SD was a corporate/restructuring scheme to make the investment banker rich.
Of course nice project papers were produced but that was mere window-dressing!
#13 by boh-liao on Friday, 21 May 2010 - 10:49 am
Aiyah, MMK, no need 2 get upset what, only RM1-2 billion
MMK had caused many RM billion losses b4
Lagi Bakun dam project is MMK’s baby what
Get Petronas 2 kaw dim lah, cheap cheap only
Perkasa n Utusan M’sia shld b happy n silent over dis matter as SD top guys r Malays what
#14 by k1980 on Friday, 21 May 2010 - 10:50 am
Just like asking Kassim Baba to guard the treasure cave
#15 by undertaker888 on Friday, 21 May 2010 - 10:55 am
sime darby has rotten to ‘slime cr@ppy’
malaysia airlines to ‘malasial airlines’
proton to ‘koh-tong’ (antique)
all run by who? by Mr. ‘I want everything and do nothing’ goons. the only organisation they are good to be in are gertak and perkosa, with mamak as their COO.
#16 by House Victim on Friday, 21 May 2010 - 11:12 am
So, Sime-Darby is a GLC!!
Is that the reason why Sime-Darby got the Land Title of Subang Ria Park in Subang Jaya?
A piece of public reserved land for water Retention Pond (about 58.3ha) for Subang Jaya in 1970’s (Mahathir period)!!
Part of the land was used for SJMC and the Wangsa Baiduri Residential Project. The latter sparked an Hotel with the abuse of the Club House and part of the land for project!! MPSJ continued to abuse the Wangsha Baiduri Project until now, allowing over building and the non-provide of recreation area in the project!!
The water retention pond was to be a Town Park for Subang Jaya!! But under a Private Land Title own by Sime Darby!! The Joke of Malaysian Administration never stopped!!
And, all these years MPPJ/MPSJ had collected Assessment from Subang Jaya without having the Town Park!!
And, “Red Herrings” in Subang Jaya were pushing the buy-back of the land for a Town Park in 2007!!
A hybrid of “God & Ghost” since the Administration of Mahathir??
#17 by machiavelli on Friday, 21 May 2010 - 11:14 am
Sometimes mergers are good because they lead to efficiency and economies of scale; but in Sime Darby’s case, it’s a matter of ego; that we can tell the world that we have got the biggest plantation company in the world.
But what price ego when the company does not perform.
And this is not the only financial blunder in the history of Sime Darby; recall the Sime Bank/Sime Securities fiasco?
This leads us to the question, are we putting the right people to lead our GLCs?
This is a malaise that is afflicting our fair country, among its many other maladies.
What Malaysians of all races want is a Government that is free from corruption, practices good governance and is transparent. Free from the nepotism and cronyism.
The Government of the day is not here to promote a super elite and a cadre of super wealthy individuals.
The Governmentof the day should go back to the basics of development, economic progress, education, basic amenities, infrastructure, health, eradication of poverty irrespective of race.
Long has this Government practised the politics of race and hold all Malaysians in their thrall.
It is time to break the shackles!
#18 by House Victim on Friday, 21 May 2010 - 11:21 am
“Musa owes the Malaysian public the latest updates on the Sime Darby losses or he is falling short of the high standards of accountability and good governance which he had always set for himself and the country.”
If same happened to the Government for the past 50 years, why Musa has to bother??
Any City Council or State Administration been answering on why they are performing so bad:?
All officers just simply keep silent and SAFE!!
“SILENCE IS GOLD” the Malaysian Administration Culture!!
#19 by Jeffrey on Friday, 21 May 2010 - 11:28 am
Zubir was blamed simply because someone has to take the blame. We’re taking of Sime, flagship with controlling stake owned by PNB. ASM holders want to know who’s responsible for diminishing their dividend yield!
Responsible in terms of accountability goes with position. One can be responsible and accountable and take the blame in this sense as distinct from personally and morally culpable where one should be investigated!
Taking “responsibility” in first sense: how far Mahathir wants to point finger?
The cost overruns in Sime’s Energy and Utilities Division predated Zubir’s appointment in 2007 and were known as early as 2004. (Zubir fault, if any, lies in his continuing his predecessors’ practices or protecting them?)
So following Mahathir’s lead Zubir’s predecessors also responsible? Then what about present board? The Sime Board includes Tun Musa Hitam and Andrew Sheng (former chairman of the Hong Kong Securities and Futures Commission) both of whom hold claims to ethical corporate standards – how come you guys including your independent directors never rivet your eyes on the Cost ball to only now know about cost overruns starting in 2004 after 6 years?
But again how far else Mahathir wants to point the blame? How come Sime so gungho to take on Bakun project – and that submarine cabling project across South China Sea? (Sime’s core business/forte has all along been plantation & housing generating secure). This must be Mahathir’s Malaysia Boleh spirit. It must have felt confident with Sino-Hydro Corporation of China (who built the dams for 3 Gorges) being part of consortium. But can this change culture or work ethos?
Before Sime, Bank Bumi, Perwaja, Proton etc all left a trail of losses requiring Govt’s bail out. Bakun is hot potatoe. In wake of Asian Financial Crisis Govt already paid RM1.6 billion to bail out Bakun of which RM700 million to RM1.1 billion was paid by government as ‘compensation’ to Ting Pek Khing’s Ekran in 1997 (source Wikipedia).
As far back as 2002 (under Mahathir’s administration) letter of intent to award Bakun to Sime was already afoot. That’s why he is monitoring it and said cost overruns and delays were told to him three years ago.
A lot of Sime’s problems have to do with work culture and ethos (not confined to Sime alone but also other conglomerates and GLCs).
We don’t exactly practise culture of frugality, cost consciousness, realism and pragmatism in business affairs. More so after 30 years of affirmative NEP policies fostering the rentier and subsidy mindset.
We abjure Meritocracy: other extraneous factors are more pertinent for appointment to decision making levels. Also important is spend 70% of time to play politics, “bodek the boss”. Frugality and cost consciousness is derided traditional china man businessman trait! Yet we aspire for big projects the bigger the better, never mind got expertise or not, whats more imprtant connection, you scratch my back I scratch yours, talent can buy – Malaysia Boleh – Semua boleh and Ok attitude as long as when the crunch comes some other people’s money, whether from Bursa or Govt, rakyat will bail out! RM1 billion is nothing what compared to PKFZ’s RM12 billion!
So who is further responsible? Remember when one points the index finger, 3 others are pointed back at him.
#20 by Bigjoe on Friday, 21 May 2010 - 12:14 pm
Actually a bigger question is the Sports Betting license given to Vincent Tan. Why was Vincent Tan given the license only to be sold to his listed vehicle Berjaya? Why not issue it to Berjaya in the first place? Because the stock market would have quickly made the calculation of its worth there there would be less way to pass money to UMNO warchest. Its clear the license was worth at least RM600mil. The issue is who is keeping the money? Ridiculous to believe that Vincent Tan would be allowed to keep that amount. It can only go to the govt, or Najib or UMNO. By right, the govt MUST get at least RM600mil for issuing the license. Did the govt get RM600mil for issuing the license?
Where is the money? Follow the money trail..
#21 by sheriff singh on Friday, 21 May 2010 - 12:27 pm
Everybody thinks “With Sime, nothing can go wrong”. How wrong they are.
The bigger you are, the bigger and harder the fall.
The very, very high, high-powered Sime Board does not guarantee that things won’t go wrong. In fact things are more likely to go wrong if they all feel they are protected with the government behind them.
Big names mean nothing if they do not have the relevant knowledge and experience to do the job and if they do not actually do their job but are merely ‘yes’ men and women.
If it can happen to Sime, it can also happen at any of the other GLCs. Does anybody else wishes to wash its dirty linen or reveal the skeletons in their GLCs? Hey, how about Khazanah?
Bakun is Mahathir’s pet project. He’s now asking for more heads to fall at Sime.
But really, its Mahathir v Musa Part 2. Just like Sodomy 2.
It just proves that if you live long enough, you can have a second bite at the cherry.
#22 by sheriff singh on Friday, 21 May 2010 - 1:00 pm
Just think:
What kind of figures have the Finance Directors and their teams been feeding their management especially the BOD all these years?
If their figures and reports are accurate and have been showing poor performance, then the Directors have not been doing their monitoring jobs properly and should be held accountable.
But if the finance people have been cooking up their figures and reports, then they must be held accountable.
Which is which? Maybe a bit of both?
First, it was the edible oils scandal just over a year ago, now this dam thing.
What next, Sime? Iskandar? Surprise us.
Downgrade soon?
#23 by limkamput on Friday, 21 May 2010 - 4:30 pm
It is not just Zubir and Sime Darby. You better look closely at all the GLCs, from Khazanah, TM, TNB, EPF, MAS, Plus, ports to airport. The pattern is the same, CEOs and Board of Directors are nincompoops selected from among nincompoops.
#24 by ENDANGERED HORNBILL on Friday, 21 May 2010 - 4:47 pm
YB LKS : “I will ask for a meeting with Musa on the colossal losses suffered by Sime Darby under his chairmanship.”
YB, whilst u r at this, can u also seek a meeting with Minister of Trade or the Dy, Mukhriz. Hv u noticed that since Mukhriz is now Dy Min. Trade, his maverick dad has stopped screaming about the AP – very sudden change. Has Tun’s principles changed b’cos it’s a different horse in MOT saddle now?
Now who r 2009/2010 benefiaciaries of APs. How much has it cost d Rakyat? How much has entered Govt Coffers: How much into ‘Crony Coffers’. Then, we know ratio of Govt income:Crony Income from APs. C.A.Transparency shud not be forgotten simply b’cos Malaysian Maverick decides to shut up now that son is in the saddle, ok?
#25 by Winston on Friday, 21 May 2010 - 5:01 pm
So, everybody’s decided?
Dump UMNO/BN at all by-elections and the next GE!
Give the PR a chance to show its mettle!
#26 by Jeffrey on Friday, 21 May 2010 - 5:15 pm
The Malaysian Insider report of May 21, 2010 (by Lee Wei Lian) quoted Barry Wain as saying that “a lot of problems in Malaysia stem” from the “Malaysian Maverick”’s rule eg : “corruption, lack of leadership, abuse of the NEP (New Economic Policy), problems that exist today.” “The reason why Malaysia was still lagging behind advanced Asian economies such as Singapore, Hong Kong, Korea and Japan even after all the rapid growth was that the fast economic growth masked problems such as cronyism and the merging of politics with business”, Wain added.
The problems faced by Sime are similar to those faced by many GLCs and conglomerates.
Isn’t Sime’s present situation caused by costs over-runs, deficient work ethos, lack of accountability and practical feasibility a result ultimately of the Malaysian Maverick’s legacy?
PM should cite Sime’s case as an argument against pressure and interest groups supported by the former Prime Minister why his NEM should proceed without being shackled by the Ketuanan/NEP to the extent that the only difference between the two is the alphabet M and P!
The affirmative policies are supposed to help Malaysian Malays in economic disadvantage. How could they help if they generate a mindset and work culture that causes problems like that faced by Sime and other GLCs and conglomerates not putting the best people with merits for the job?
Ultimately who would suffer when PNB pays less dividends on ASM due in part to RM1 billion cost overruns/loss by Sime?
Those who benefit from cost overruns are not necessarily the target group intended to be benefited by the affirmative policies.
Its ironical that Mahathir now asks why only the CEO is made responsible. Yes he should think further who else!
#27 by limkamput on Friday, 21 May 2010 - 5:31 pm
Yes, ask them to account for all the APs. The government now wants to review and cut subsidies. Before they do that, I suggest they look at all the APs and other crony programmes from tolls, IPPs to gambling licences and land deals first.
Now they want to license the teachers too. I know what they are up to – to issue licence in exchange of their votes in the coming GE. Soon you must have a licence before having a glass of beer. A Real farting government.
Sime Darby fiasco, you want to know why it is now being exposed. Mamak wants it that way, to get rid of Musa, the last of the trait of Badawi. They are just fighting among themselves, period. Anyway it is not just Sime Darby. Soon bigger holes will emerge in almost all the GLCs for they are all run by nincompoop CEOS and their equally nincompoop Board of Directors.
#28 by Jeffrey on Friday, 21 May 2010 - 5:50 pm
Its Ok to think big but have we the talent to commensurate the challenges of these big projects under our NEP culture? Whether national car project or Bakun or PKFZ its always plagued by huge cost overruns requiring bail out from (ultimately) public offers. Bakun Dam was conceived with an idea of submarine cable linking East and West Malaysia across South China Sea. Its a challenge to even Sime with 30 billion capitalisation. Reminds me of python having ambition to swallow a full grown elephant! Whilst we are having problems with Bakun, we are already thinking of going nuclear to build our nuclear plants. Is the govt opening up this issue for debate (pros & cons)? . Yes like Bakun so in case of nuclear plants we can buy talent for the short term. Importing expatriates with the right skill sets can do the job to a point but they too are a huge additional cost item added to the inherent high costs of building and commissioning a nuclear plant that make the project very expensive. Importing expatriates with the right skill can’t mitigate if mangerial and financial decisions are made by set of people sitting in their top positions not based on merits but patronage/connections and other extraneous reasons.
#29 by monsterball on Friday, 21 May 2010 - 6:32 pm
Sime Darby have been suspected for years moonlighting and robbing shareholders.
Why does it take such a long time for Musa Hitam to act?
#30 by limkamput on Friday, 21 May 2010 - 7:04 pm
Bakun was supposed to generate electricity in the late 1990s. If not for the Asian Financial crisis, that was what it was supposed to be. More than 10 years later, not one kilowatt of electricity was generated from Bunkun, but did the country suffer any severe shortage of power? Mamak must explain, why did he give the project to his buddy Ting pek king when the country has no need for such a project. From day one when Sime Darby was asked to take over this project, I know the company was in for trouble. All the GLCs bosses better listen good – if your faculty is like that resident odd ball only good for addition and subtraction, surely you would not be able to multiply and divide. I have been urging the government for years to do less, not more “for the people and the country”. Let less you do, the less damage and fiasco your create. So please do less, duduk diam diam, ambil gaji and elaun cukup lah. Tak perlu fikir panjang and lebar apa yang nak dibuat untuk rakyat and Negara.
#31 by ReformMalaysia on Friday, 21 May 2010 - 7:05 pm
UMNO cronies and associates were made board of directors/CEO of the GLC… After that make hugh losses, the tax payers’ money(or probably petroleum royalties from Sabah and Sarawak?) used to bail the GLC out…. The CEO and others just tender their resignation and ‘happily retire,….. case closed… other cronies and associate take over the management… and case forgotten?
#32 by monsterball on Friday, 21 May 2010 - 9:57 pm
You can visualize how lonely Lim Suck Ass is.
#33 by writecom on Saturday, 22 May 2010 - 3:53 am
My question is WHY RM 700 million of our taxpayer’s money is being used to top-up the Bakun project and the losses in the GLC which could reach RM 2 billion.
In the 1st place do we need such massive dam especially when Sabah & Sarawak doesn’t need such a massive supply. Basically the Federal & Sarawak government must be made accountable for the losses including our past PMs.
As citizens, we demand our rights to know our losses and need a Royal Commission of Inquest done to justified our losses. We don’t need MACC or the authorities to handle such losses, all the findings of MACC will be not made public.
#34 by drngsc on Saturday, 22 May 2010 - 8:13 am
Hi Kit,
Please also look into all the other divisions, including healthcare. Healthcare is smaller money, but corruption nonetheless. I know for certain that they bought two lost making healthcare centers at premium price, with shareholder’s funds.
This GLC is poorly run, surviving on government help for some personal gain. It is time this all come out to the open.