Sime Darby to report biggest ever loss

The Malaysian Insider

KUALA LUMPUR, Aug 5 — One-time Malaysian icon, the 100-year-old Sime Darby Berhad, appears to be in a downward spiral as it faces huge losses again after the last one 13 years ago, with top officials being taken off from several units.

The Malaysian Insider understands that the government conglomerate will next month announce that potential full-year net loss could top RM2 billion — and go as high as RM2.5 billion. Most of the losses are down to ill-advised investments in the energy and utilities sector in Qatar as well as tardy business practices in the development of the Bakun dam in Sarawak.

The last time Sime Darby saw red on its balance sheets came after the 1997 Asian Financial Crisis, when a plunge in the stock market and a sharp depreciation of the ringgit led its financial arm, Sime Bank, to post a RM1.6 billion loss — the largest in Malaysian banking history — for the six months to December 1997. The conglomerate went on to post a six-month loss of RM676.2 million and closed the 1998 financial year with a net loss of RM540.9 million.

It is also learnt that property division managing director Datuk Tunku Badlishah Tunku Annuar has been removed from some units within his division while other top officials are being put on notice after Sime Darby instructed former chief executive Datuk Seri Ahmad Zubir Murshid to take a leave of absence last May 13 in relation to the losses.

But hefty losses and disciplined officials aside, the group could also face crippling billion-ringgit law suits as it moves to abruptly end some of its joint ventures across the globe.

It is understood that since being appointed as the acting chief executive, Datuk Bakke Salleh has been looking at joint ventures involving Sime Darby, arguing that some of these were not as advantageous to the group as others and mooting that they be revisited or ended.

The only hitch is this: All the ventures are legally-binding, were agreed to and vetted by Sime’s legal department, and given the green light by the previous management and the board of directors. A couple of the ventures even pre-dated Zubir’s tenure as the chief executive.

Any move to end these ventures is likely to set off an expensive legal battle for Sime Darby. The conglomerate could also have an embarrassing face-off with Zubir. He has been forced to go on leave but has not quit as the chief executive.

Along the corridors of Wisma Sime Darby, there is growing belief that he will engage a lawyer to protect his interest and avoid being made the scapegoat for all the problems at the conglomerate. A slugfest in court will prove bloody for both Zubir and the board of directors, led by Tun Musa Hiitam, but it could also have serious repercussions for the Barisan Nasional (BN) government.

It is widely known that government-linked companies sometimes enter into deals at the behest and urging of government leaders and political masters.

One of the chief concerns of investors on hearing the news that Bakke has been selected to steady the listing ship at Sime Darby was his relative inexperience in running a public listed entity.

He has helmed Tabung Haji and Felda, where profit making were not the primary objective. In both these organisations, corporate social responsibility (CSR) is a key objective, and since occupying the hot seat at Sime Darby and meeting senior officials, the view in the conglomerate is that corporate social responsibility will enjoy equal billing with profit making, news which may not cheer investors.

Officials who have met him describe Bakke as driven but impulsive.

Sime Darby closed at RM7.70 per share yesterday, falling one sen from the opening price. It has lost nearly some RM6 billion in market capitalisation since news of its troubles became public last May 13.

  1. #1 by loveandgratitude on Thursday, 5 August 2010 - 10:54 am

    Musa Hitam MUST go! No two way about it.

  2. #2 by HJ Angus on Thursday, 5 August 2010 - 11:17 am

    The decision to merge the 3 major plantation companies of Golden Hope, Sime Darby and Guthrie was a major strategic mistake by PNB.
    Instead of having 3 reasonably functioning companies, the planners thought that “bigger is better” and now we are stuck with one huge company with a poor outlook.
    Previously with 3 groups to compare results, it was much easier to gauge management competence.
    I daresay if not for plantations, SD would be in really serious trouble.
    The major expansion into engineering where it does not have expertise is as foolhardy as the foray into banking.
    When will BoDs learn NOT to expand foolhardily into areas outside their core business?

  3. #3 by LG on Thursday, 5 August 2010 - 11:36 am

    Sime Darby’s huge losses is no big surprise due to poor mismanagement by UMNO’s cronies & rampant corruptions. Predict: Federal government/UMNO will bail Sime Darby out by awarding this GLC a number close tenders mega projects with “huge profits” and kickbacks to them. A win-win solution.

    Never mind about the Rakyat’s money as the federal government/UMNO can do whatever they wish or like. Most important is $$$ in UMNO’s and their cronies pockets. Thus, Rakyat pay your income tax timely and also get ready for few rounds of subsidy cuts. We need to finance these multi billions ringgits mega-projects to these so-called UMNO GLCs.

  4. #4 by monsterball on Thursday, 5 August 2010 - 11:47 am

    Ling is Najib’s scapegoat.
    Sime’s financial loss….is a chance to apply another bail out by UMNO B?
    Who benefited from the bad deals?
    We have seen right in front of us…Port Klang Free Zone lands hugely overpriced to benefit someone…cronies of UMNO B?
    In Qatar…”ill advised looses”
    In Malaysia..Bakan Dam was Mahathir’s favorite project with Ting. What are the details?
    We can safely say…such looses takes years….and could be Mahathir’s time as PM too?
    He does not know so many things.
    Lets hope he can enlighten Malaysians.
    Razaleigh can turncoat and be pally with Mahathir.
    Do not be surprise Musa Hitam takes instructions from Mahathir too.
    Sacking means nothing.
    It means “ill advised” ….so sacking done ….and all the billions loss by shareholders….actions taken…lets move on?
    Mergers were made to rojak the companies.
    Nothing must be simplified or straight forward to UMNO B.
    I am sure more news will pop out…to show corruptions is the main reason…not so call …”ill advised ” bad investments.

  5. #5 by Bigjoe on Thursday, 5 August 2010 - 12:00 pm

    From what has been written, it appears there was blame to go all around but honestly the problem began with the board. If they really want to fix the company permanently, it should begin with board.

  6. #6 by transtar 3838 on Thursday, 5 August 2010 - 12:15 pm

    Go after its major shareholder

  7. #7 by k1980 on Thursday, 5 August 2010 - 12:54 pm

    Black Moses: “Why worry? It is not me punya money”

  8. #8 by frankyapp on Thursday, 5 August 2010 - 1:00 pm

    Well lets put it this way,sime Darby’s loss is Umnoputras’s gain. The real losers are the PNB’s share holders.Maybe not, The fact is the genuine losers are the tax payers.Who cares,as far as Umnoputras and cronies are concern,as ketuanan melayu they have the privilege to rob the poor and give it to the rich.

  9. #9 by sheriff singh on Thursday, 5 August 2010 - 1:54 pm

    Wait for it. Dr. M is gonna come out and wallop his former Deputy again. Just wait.

    This is not the Sime Darby of old.

    Its Sime Darby Baru formerly known as Synergy Drive. What “Synergy” you might ask. Well we are good at coming up with fanciful names like “Indah Water”.

    Questions must be asked if the Board of Directors are qualified and experienced to be the supervisors of the company’s operations. Or are they there just for show?

    Have they been asking the right questions or are they just rubber-stamping whatever the executives tell them?

    What do they know about dam construction? Or anything at all about the oil industry in Qatar?

    The shareholders should vote to withhold their directors’ fees and maybe sack them if they don’t resign of their own free will.

    What do they all know about ‘accountability, transparency, integrity and responsibility’?

    If they have any decency and honour left, they would all know what to do. Do it quickly.

  10. #10 by sheriff singh on Thursday, 5 August 2010 - 1:59 pm

    Such big losses. Perhaps they can contra off with the ‘very profitable’ Felda.

    Looks like another round of ‘subsidy re-alignment’ will be on the cards.

  11. #11 by boh-liao on Thursday, 5 August 2010 - 2:59 pm

    Don’t worry, small sum only what
    Dis is Uniquely Malaysia way of doing business what
    Merger after merger, after merger higher losses, normal what
    Otherwise how 2 convince Malays dat under NEP, belum achieve 30% what

  12. #12 by waterfrontcoolie on Thursday, 5 August 2010 - 6:42 pm

    UMNO forgot that having planted the current mind-set over the last 30 years, they CANNOT changed it again overnight. By merging the 3 plantations into one, those who had “lost” out by not being appointed ” executive’ to the new setup would never accept the situation. The “new’ CEO would be deemed as being enthroned on the post. As this had been the way things have been expected and have been the main criterion in all GLCs. Mind you, the conclusion could be wrong; but the preception was a foregone decsion. In such an environment, decisions wouldnot go down the line with the aim of getting the job done with any sincerity.
    Sooner or later, such attitude will pervail over many privatized projects. The transport industry is awaiting for some interesting slow down at one of the local terminals during the coming fasting month. The sense of being paid for a commercial rate while doing a job not much different from that of a Gomen job has not impacted them; after all this is MY RIGHT to demand!!!!!!!!!!!!!!!!!!

  13. #13 by HJ Angus on Thursday, 5 August 2010 - 8:41 pm

    why not Synergy Drive? – seeing how the drama unfolded it is quite apt.
    Before it was not easy to get the 3 companies to make “special contibutions”.
    After the streamlining definitely much simpler to “engineer” deals more favourable to others.
    After all SD as a GLC is not supposed to beat the other private companies that are better managed.

  14. #14 by cseng on Friday, 6 August 2010 - 12:21 am

    This is one big GLC (government linked cronies). GLC is the dirtiest platform where politic and business intertwined to satisfy the greed of filthy corrupt. How could a company to lost 2-2.5b in 12 months, that is 170-200millions a month, you need to have a plan and objective to lost that amount of money.

    1 fat malaysia still afford to GLC those companies “once a goose that lay golden eggs”, go and dissect these goose, grabs as much as possible at soonest possible. ‘They’ knew killing these goose are detrimental to future generations, but that never been the argument. What always been argued and focused are who benefitted, so long the right group of people it does not matter at all cost. This is what NEP is all about, once Malaysia!.

  15. #15 by ablastine on Friday, 6 August 2010 - 1:12 am

    Another golden goose slaughtered. Many more to go? Take your pick at the Bursa which has become the ATM machine for the filthy rich. The modus operandi is always the same-list a company, get funds from suckers who spend good money to buy its share. Embezzle all the money from the coffers, declare bankrupt and life starts again. If it is a bank, things are even simpler. Register a company, get a multi-million bumiputra loan with no collaterals, slowly suck out all the money from the loan by chalking up losses every year. When money finished, declare the private limited company bankrupt and start another again to get some more money from Stock Market suckers.

  16. #16 by HJ Angus on Friday, 6 August 2010 - 6:15 am

    The creation of SD should be a good case study for MBA students.
    As an ex-employee of Golden Hope in the 80s, I know that at the HQ level and even in some plantations, there were quite a few non-Malay staff at management level and there was quite a good system of checks and balances with open tenders and separation of duties and powers.
    We also had a few long-time expats and these were the ones who provided technical expertise.
    I do not know the extent of corruption in the system but at CNY, I would get about 4 or 5 hampers from contractors. There was also an old guy who came around with envelopes of money – it was RM500 at the time and when I checked out with colleagues, they said it was his tradition of giving such “ang pows”.
    It would be interesting to check out the racial composition of SD after the merger and also 2 years after the event. Needless to say the composition of contractors too would have changed dramatically.
    I predict there would have been a major shift in the composition of Sime Darby before and 2 years after the merger; with most of GHope and Guthrie staff moving to other plantation companies in Malaysia and overseas for there was a wealth of talent.

  17. #17 by PoliticoKat on Friday, 6 August 2010 - 7:52 am

    What anyone say, but “Satu lagi rekod baru untuk Malaysia.”

    But no worries, “kerajaan akan bayar dengan duit rakyat.”

    I wonder how SD lost so much money, which division was the biggest money hole

  18. #18 by undertaker888 on Friday, 6 August 2010 - 8:22 am

    any golden goose you give to umnonites, they will turn the goose to lay excrement in no time.

  19. #19 by k1980 on Friday, 6 August 2010 - 9:39 am

    Research by the Human Resources Ministry regarding salaries of workers shows that almost 34% of the approx 1.3 million workers are getting a monthly income of less than RM700….

    Looks like the country was better off under the Brits. What high income is the PM talking about?

  20. #20 by ablastine on Friday, 6 August 2010 - 10:14 am

    I went to the Sime Darby website and could not find out who are the big wigs there calling all the shots. I do not think I will be very wrong if I guess that as usual those fellas in charge must be UMNO cronies. We all know what UMNO cronies are really capable of doing. Even a golden goose like Sime Darby given to them after a few years will be die. Every single GIC bleeds because of this. Looks like there are lots to do when PR takes over and for the sack of the future it better be soon before they suck out more life from the country.

  21. #21 by yhsiew on Friday, 6 August 2010 - 10:48 am

    Sime Darby high-ranking officers are receiving kickbacks for the award of contracts (The Malaysian Insider). It is not at all surprising that the conglomerate is making losses.

  22. #22 by passerby on Friday, 6 August 2010 - 10:58 am

    Hello, MACC. Here we are talking of RM2,000 billion loss and you are charging someone with RM99,000 for the corruption. Are you trying to imply that the Sime Darby case is now solved ????

  23. #23 by monsterball on Friday, 6 August 2010 - 11:26 am

    hahahahahaha…….When there is trouble brewing out to reveal big fishes…MACC sure act fast to catch the small fishes.
    I guess big fish like Mahathir do not sign documents…and so Liong Sek on Port Klang.
    Now Sime Darby….MACC really work show Malaysians how good they are.
    Always same style..always same results…catch catch all the small fishes…and make ordinary less educated Malaysians satisfied….and indirectly…few thousand who gambled on shares…suffer in silence.
    Now sit back and recall Port Klang…and trace all investments made by Sime Darby….now loss in billions…who was the PM at that time.
    Mahathir la….and who owns Sime Darby?
    Why is Chairman Musa Hitam so quiet?…migrated already?

  24. #24 by Peter on Friday, 6 August 2010 - 12:25 pm

    To be successful, all GLCs must be run by people with integrity, capability and honesty irrespective of what race they belong. But in Bolehland, control by those greedy , racialistic and corrupted Umnoputras, only half pass six, unethical, kampong mentality type of cronies and “abang adik” are fit to run. They dont care a damn even $$$$$$$billlions have been wasted or pocketed. After all, it is rakyat money. Who cares, when the country is bankrupt and at the end of the day they put the blame on the non malays.

  25. #25 by Peter on Friday, 6 August 2010 - 12:28 pm

    To be successful, all GLCs must be run by people with integrity, capability and honesty irrespective of what race they belong. But in Bolehland, control by those greedy , racialistic and corrupted Umnoputras, only half pass six, unethical, kampong mentality type of cronies and “abang adik” are fit to run. They dont care a damn even $$$$$$$billlions have been wasted or pocketed. After all, it is rakyat money. And who cares, at the end of the day when the country is bankrupt they can put the blame on the non malays grabbing all the $$$$$$$$$.

  26. #26 by Bunch of Suckers on Friday, 6 August 2010 - 12:57 pm

    Another month; another announcement of Loss or bankrupt of our Bolehland state owned corporation…..

    Get rid off these suckers of BN/UMNO!!! The sooner, the better so that our Bolehland is not being faked by these bunch of suckers…

  27. #27 by HJ Angus on Friday, 6 August 2010 - 4:16 pm

    this type of graft cannot be committed by just one person and the problem is that the public does not know if the person arrested is at the top, the middle or the bottom of the food chain.
    If MACC is capable, they should use those arrested to flush out the entire food chain; especially those at the very top.
    So instead of arresting just a manager, they should leverage on whoever has been arrested to get the bigger fishes.
    Surely SD does not keep contract documents lying about for anyone to browse?

  28. #28 by dagen on Saturday, 7 August 2010 - 11:12 am

    How come mel_a_yu and cintanegara got no comment here?

    Let me represent them then. Mel_a_yu and cintanegara said:

    “Its ok. Better to let glc (any glc) to fail then to let non-umnoputras esp chinese, gain.”

    So there. Remember to direct all your anger and replies towards them.

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