Is Your Company Bankrupt ?

Hantu Laut

Let's us get back to the story of Felda's bankruptcy.

Is Felda already unofficially bankrupt or is in the process of becoming bankrupt (some people like to use the term 'technically insolvent') which is a misnomer.You are either insolvent or you are not.There is no in between.If you suffer a temporary cash flow problem that doesn't yet construe an act of bankruptcy until such time you can't pay your creditors and legal action is instituted against you by your creditors to recover the debts.

The question here is. Has Felda committed an act of bankruptcy which simply means it was unable to pay its creditors?

One can easily detect whether a company is liquid or not and the simplest way is to look at the current assets over current liabilities.This ratio is concerned with the assessment of an organisation's ability to meet its short-term obligations.Even this does not reflect true liquidity.The truest test is the acid test of the 'liquid asset ratio', which is current assets less stock/inventories over current liabilities.The minimum ratio should be 1:1 liquid assets over current liabilities.Anything less means the company is in trouble and will have problem paying its creditors and a probable cash flow problem that can effect its overall operation.

Can one detect a company heading for bankruptcy a year or two before it happens?

In 1968 Edward I Altman, assistant professor of finance at New York University came up with a formula that can predict a company heading for bankruptcy as far back as two years before it happens.The formula is a bit too complicated for me to explain here. It uses balance sheet values to measure the financial health of a company using different formula for different type of company.His formulas have achieved over 75 percent accuracy and gained wide acceptance by auditors and management accountants.

Felda is a GLC and as such its financial statements should be an open book.In fact, all public and private limited companies' accounts are opened for public scrutiny and it should be more so with GLCs.These are companies considered own by the people which make it imperative that those managing them show transparency and accountability.

Why is Felda silent and secretive about where the missing portion of the cash reserve gone to?

Felda should be more forthcoming and should publish its latest audited accounts to satisfy public's abhorrence.Simply saying our assets has grown by so much is not good enough.

Dato Mohd Maslan in a press conference didn't show an air of confidence or knowledgeable in finance when he simply put forth the increment in total assets as a satisfactory answer.Total assets meant nothing to liquidity.A company can have huge asset backing yet still go bust.Reason? It doesn't have enough liquid assets to pay short term debts.

The question? Is Felda having liquidity problem that forced them to use the cash hoard to finance their day-to-day operation or the money was spent on other investments.If there were investments what are they? These are simple questions that someone in the higher management should answer not people like Mohd Maslan who is an UMNO politician.

Below is financial highlights of Felda operations.
Performance 2004-2008 (year ended December 31)




Felda has yet to produce its audited accounts for 2009.

The last few years Felda has embarked on diversification of it business.In 2007 it bough out Robert Kuok's interest in Perlis Plantation Bhd (PPB) at a total cost of RM1.5 billion which bought them PPB group's entire sugar asset in the country.

Felda Global was created to diversify both locally and overseas.It formed a JV in Indonesia to open palm oil plantation, hotel and restaurant in Mecca, oleochemical in US and foodstuffs in UAE.

There was no announcement whether it uses internal funding or bank borrowings to fund the venture overseas.

If they have nothing to hide, it's about time someone in Felda wake up and give plausible answers to those relevant questions and send its detractors to hell.

Also read:

Unfazed by threat, ex-minister takes another swipe at Felda

(Unperturbed by the threat of an expensive law suit, issued by Felda yesterday, Tan raised another poser over the group’s alleged RM500million investment in Massachusetts-based Twin Rivers Technology.

“Felda is in the oil palm business. Why is it investing in an American business in the first place?

“And what benefits does Twin Rivers Technologies bring to Felda?” he asked.)

Profoundly stupid question.Probably, never heard of diversity,diversification and diversified resources.

Palm oil will not be the golden crop forever.A time will come when it will end up like the others, tin and rubber.

Felda was right in diversifying into other type of businesses.A one product company is vulnerable when market goes a yoyo.

It is not what other business the company undertakes should be the question.It is whether there were frauds and abuses of fiduciary duties that should be of concern.

Wonder, how they made this guy a deputy minister?

Not sure whether this makes any sense but read it anyway.

Is Felda A Bankrupt Company ?

Hantu Laut

The next time, before you accuse a corporation or an individual of being a bankrupt just make sure you read their balance sheets first.

The question here is how many of our politicians, journalists, bloggers, lawyers, judges and economists can interpret financial statements? Obviously, some just don't care to find out the truth before opening their big mouth.

These are the people who are often confronted with the intricacies of financial figures and its imputations that could be as simple as ABC for some and as puzzling as the jigsaw puzzle for others.

Politicians, are the worse offenders when it comes to not doing their homework.Than you have the other type, political leaders surrounded by advisers and sycophantic political vultures who dish out wretchedly wrong advices to advantage their own position without caring for the dire consequence.

Felda, in response to some of the malicious rumours that the company is bankrupt has decided to sue for defamation a number of people including Anwar Ibrahim, Zaid Ibrahim, PAS MP Abdul Wahid Endut, a former deputy minister and at least three reporters.The Malaysian Insider story here.

The source of the rumours is Felda's dwindling case reserve of RM4 billion which apparently had diminished over the past few years and blaming Najib's involvement in its ruinous financial management.

Did people like Anwar Ibrahim and top dog lawyer Zaid Ibrahim actually check Felda's financial statements before going public with their assertions.

Felda confirmed that it is true its cash reserve has declined but on the other hand its current and fixed assets had risen as much as RM6.2 from RM9.17 billion in 2004 to RM15.37 billion in 2009.Maybe, Felda should also be more forthcoming where the money has gone to. New investments or drawn down to meet its financial obligations?

What construes bankruptcy? It is an inability of an individual or organisation to pay its debts as and when it becomes due.In more simple term you have more liabilities than assets and you can't pay your creditors.You are not a bankrupt unless legally declared so by a court of law.

In Malaysia the Bankruptcy Law is still archaic.The last time the government wanted to revise it to be current with what is practised in other developed economies it was bullied and pressured by the banking community not to amend the Act.

Getting court protection for scheme of arrangement with creditors is almost unheard of in Malaysia.Once, you are bankrupt, you are almost bankrupt for life and applying for discharge is dicey if you have many creditors.

Personal bankruptcy is painful for those genuinely in trouble.The Najib's government should make attempts to change and update the Act to be in line with developed nations and to make the banking community more prudent in their lending and not become too dependent on getting the life and soul of the guarantor when loan goes bad.

In many Western countries discharge is automatic after a few years, provided you are on good behaviour, did not commit fraud or broke any of the conditions applicable to a bankrupt.

Has Felda failed to meet any of its financial obligations or asked for restructuring of any of its short and long term debts that might indicate acute liquidity problems? If it has not than it is not anywhere near insolvency and even if it has applied for restructuring it is still not deemed bankrupt unless declared so by the court.

Even if Felda were to have lost all the cash reserve in a bad investment, technically, it is still not bankrupt as long as it can meet its financial obligations in the day-to-day running of the company.

Anwar Ibrahim was a former Finance Minister and Zaid Ibrahim used to run the biggest law firm in this country.It's absurd that they don't know the procedures.It goes to show that they don't care what it takes, they are prepared to throw caution to the wind to implicate Najib to gain political mileage.

Though, I think they are not very good at it, lying has become a set pattern and the forte of Pakatan leaders.



If Felda can prove that they are not any where near bankruptcy, the two Ibrahims better be prepared to consider bankruptcy themselves.This can be not only the most costly legal suit in Malaysia's history, it can also bankrupt the defendants unless of course Anwar can take over Puterajaya and do what he accused the BN government of doing, interfere with the judiciary.

So, next time before you call a company bankrupt, please learn to read and interpret the "balance sheet". That's where the company's financial health is hidden.

Was Kevin Rudd Rat-Fucked ?

Hantu Laut

Just two weeks ago, while in Australia, I wrote about whether Kevin Rudd is in the rut.Would he loses his job?

Just two days ago Rudd fell victim, not to the electoral process, but rat fucked by his own deputy.As they say "hell hath no fury like a woman scorned" or in this case a deputy scorned.

His deputy, Julia Gilard engineered a midnight coup against him in a leadership tussle of the party.Rudd initially says he would defend his position but later changed his mind.The general consensus is that in view of his declining popularity, his government falling short of expectations and contentious issues with his government he would lose the contests as party members would rebel against him to save the party.

Her source of anger was Kevin Rudd's seemingly contemptuous act of sending out feelers to test her loyalty.Whether she if fair dinkum?

Rudd is well known for his short on the fuse, distrust of those near him and a ruddy human relation problems with colleagues and subordinates.

One of Rudd's big problems is his loggerhead with mining bosses on the super tax for the mining industry which has also exposed his other administrative weaknesses.His poor human relations with colleagues and subordinates has finally pulled the rug from under his feet.

Rudd was not a victim of diminishing popularity with the masses.He is a victim of the rich and powerful mining lobby.The mining companies $100 million advertising war chest has done serious damage to his reputation.

The companies took up television,internet and full-page newspaper ads attacking Rudd' government.One ads punctuates that the super tax “Weaken mining, you weaken the country. But that’s exactly what the government’s new super tax is doing,”

Julia Gilard says she is throwing open the government's doors to the mining industry.That could mean compromise or total withdrawal of the tax.

Was Kevin Rudd "rat-fucked" by his deputy?

What an ebb of tide, a man popular six months ago suddenly died of political back-stabbing.

Shooting Blanks

Hantu Laut

It takes all kinds to make the world go round and Malaysian politicians are one of them.More brawn than brain.

In school we are always being told by our teacher that empty vessel makes the most noise and little knowledge is more dangerous than none.

What have we got here? An empty vessel and a fool? The empty vessel has been shouting to be heard on something that in all likelihood will not be heard.The fool can't tell the difference between a spoon and a fork.

Kota Kinabalu: Umno Kalabakan's public demand for the Merotai State seat that is currently held by a fellow Barisan Nasional (BN) component is a total disrespect of the coalition's spirit of comradeship.

The Liberal Democratic Party (LDP) said it not only reflected the (State leadership's failure to discipline members)(this is a democracy mate, you can't stop people from speaking up), but also set a dangerous precedent that could backfire on the ruling coalition.

LDP Publicity Officer, Albert Kok, said LDP felt that the Umno division had placed not only the BN State but also the national leadership behind by making such a demand.

"I totally disagree that the Merotai seat was on loan to LDP from Umno (it is, face the truth) because under the BN spirit the seats are distributed equally to all the component parties irrespective of the seats' voter make-up," he said, Monday.

Kok who is also Private Secretary to the Deputy Minister in the Prime Minister's Department, Datuk V.K Liew, said that in many areas in the country, compromise has been reached to allow even one minority party to contest.

He recalled that the Prime Minister had also made it clear that "we must work as a team and help out one another even if that area has a Malay majority".

According to him, the Hulu Selangor by-election was one of the recent and best examples where despite being a Malay-dominated constituency the seat was given to MIC (MIC did not win the seat,UMNO did)because the national leadership respects the coalition spirit.

In the by-election, he said Umno and all the component parties had worked hard to ensure victory for the BN.

Kok said Umno Kalabakan Chief, Datuk Abdul Ghapur Salleh who had also stated that 191 branches in the division fully supported the demand for Merotai seat "to be returned" to Umno in the next General Election (do you expect anything better from him) would be setting a dangerous precedence.

"If this happens in future they can simply disregard other component parties and simply resolve to do something that is against the interests of BN as a whole.

"If they can do to Merotai, what is stopping them from doing the same in other areas? It also reflects badly on the State BN leadership for its failure to discipline their members (again, your communist mentality, this is the free world)," he said.

"It is totally contradicting the Prime Minister and BN concept of 1Malaysia ... this is not 1Umno," he said. (it is all UMNO mate, they consider you mosquito party)

Kok said LDP is the most senior BN party in Sabah but it had also been continuously victimised. "This is extremely unfair considering we have been loyal (there is no loyalty in politics)and dedicated to the struggle of BN since 1989.

"We were one of the few parties who were instrumental in assisting and sticking with Umno when it set foot in Sabah in the early 1990s.

We certainly do not deserve to be mistreated by certain Umno State leaders lately who are out there to discredit and victimise us to satisfy their greed and fulfil their hidden agenda."

Ghapur, who is also the Kalabakan MP, had said that the Merotai seat belongs to Umno and was only lent to LDP for the past two general elections.

He also accused Gerakan of trying to enlist Umno members and that Sabahans would not be stupid as to vote for a peninsula-based party that was even rejected by the people over there.

Two general elections ago, the Merotai State seat, which is one of the State constituencies in the Kalabakan Parliamentary constituency, was held by Datuk Dr Patawari Patawe who was then moved to Sebatik following re-delineation of the electoral boundary.

Tan Sri Liew Yun Fah who was with LDP at that time replaced him.

In the last election, Liew was dropped and replaced by a LDP Vice President Pang Yuk Ming who is currently the Assistant Infrastructure Development Minister and chairman of Sabah Air.

Liew has since joined Gerakan and was made a Vice President over the weekend