Malaysia's Latest Proton Saga

Thursday, 16 February 2012

Questions of insider trading in national car shares remain unanswered a month after sale to a Mahathir crony

For nearly three decades, Malaysia’s national car project, Proton, has suffered through endless troubles, nearing its demise several times only to be propped up again and again by the government.

The government has regularly sought foreign buyers to come in and save the project, Perusahaan Otomobil Nasional Bhd. The carmaker has cost the country’s consumers billions in lost opportunity costs from the steep tariffs levied against other carmakers in addition to the losses the company made on its own, estimated at US$2-3 billion, plus the cost of building its factories. The preferential tariffs haven’t stopped consumers from turning to other makes anyway.

In January, DRB-Hicom Bhd, controlled by billionaire Syed Mokhtar al-Bukhary, a longtime Mahathir friend and United Malays National Organization crony, agreed to take the ailing carmaker off the hands of Khazanah Nasional Bhd., the state-owned investment fund which owned 42.7 percent of the shares after taking the company over during an earlier period of distress. The subsequent events have raised many questions of insider trading, none of which have ever been addressed either by Proton, Hicom or Bursa Malaysia, the country’s stock exchange.

In the two months prior to the announcement of the sale, Proton’s shares went on a wild ride, beginning on Nov. 14, when the shares traded thinly, at only about 300,000 per day at a price of around RM2.70 (US88 cents)

According to official announcements by Bursa Malaysia, the Kuala Lumpur main board, the shares took off on Nov. 15, rising to RM3.21 on volume of 4.3 million traded. Over the next 12 days, daily volumes averaged 4.4 million shares. By Dec. 5, volumes increased to 20 million shares per day – 60 times the November average - with the price rocketing up by nearly 25 percent over the period to RM4.50 per share.

Proton’s Wild Ride
It wasn’t until Dec. 5, three weeks after the shares began to gyrate that Bursa Malaysia issued an Unusual Market Activity enquiry. On the next day, Proton announced: “"The Board of Directors of Proton wish to clarify that after making due enquiry with the Board of Directors and major shareholders, the company is not aware of any reason for the unusual market activity in the shares of the company recently, and further, that there is no material corporate development not previously disclosed."

Certainly not! On Jan. 17, DRB-Hicom announced it would buy Khazanah’s stake in the carmaker for RM1.291 billion, the equivalent of RM5.50 per share. That meant that those smart enough – or informed enough -- to buy the Proton shares in November at RM2.70 had effectively doubled their money in two months.

Insider trading?
“The above chain of events makes a bad overall impression. It looks very much that certain parties were privy to inside information,” wrote M A Wind, who blogs for Asia Sentinel. “Why was Bursa Malaysia so late with its Unusual Market Activity query? The share price of Proton had increased already over three consecutive weeks by a whopping 70 percent while daily turnover had risen 20-fold when it finally took action.”

The announcement on December 6, 2011 by Proton that neither it nor Khazanah Nasional were aware of any unusual activity looks puzzling to say the least. The market was rife with rumor, but neither Proton nor Khazanah Nasional said they were aware of any activity.

More suspiciously, the share price more or less stratified at RM 5.50 several days before the final announcement on January 16, 2011 – the DRB-Hicom offer price, which seems to suggest that unknown parties might have known what it would be.

Also, both Proton and DRB-Hicom appeared remarkably passive in issuing announcements, both only responding to queries from Bursa Malaysia (most notably on Dec. 6, 8 and 13, 2011 and Jan. 9, 2012), not initiating the announcements themselves although the stock exchange’s website says: "We place significant emphasis on timeliness, adequacy and accuracy of disclosure to enable investors to make informed investment decisions."

”Let’s be clear,” said a Kuala Lumpur-based investment banker. “All of Malaysia is one big insider-trading casino. There aren’t any other kind of trades.”

The banker declined to speculate on who made the killing. However, he said the clues point to top political figures. The car company was government-owned, the new ownership is close to top United Malays National Organization figures. Read more.

Penang:A Gem Or A White Man's Bluff?

Hantu Laut

Yes! I was there few months ago.

Penang is different from the rest of the Peninsula, it has its own characters and charms, a laid back and quaint place, more a resort type destination rather than an industrial city with a burgeoning economy.Very Chinese, a piece of chinoiserie of some kind, keeping much of its old traditions.

Its hawker's foods are lusciously tasty and cheap.It retained more of its colonial past while the rest of the Peninsula tried very hard to erase it and had succeeded in doing so.

More like my home state Sabah, unpretentious, rustic, friendly, hospitable and no hang-ups.

It was once called the "Pearl of the Orient" before other more enchanting destinations like Bali, Phuket and many others in the region, discovered and developed more rapidly that had put it back in the backwater.

The streets are much cleaner than before but the waterfront facing the Esplanade is still littered with rubbish of all kinds.....discarded plastic bottles,plastic bags and animal carcasses are eyesores disfiguring the waterfront.

Former Prime Minister Mahathir Mohammad while still the PM then, disgusted with its dirtiness, called it the "Rubbish of the Orient". The man who once ran this tiny island with negligence is still in the Federal cabinet. I need not mention his name.

The current state government is doing an excellent job trying to revive Penang's past glory to lure back the tourists and had embarked on excellent tourism promotion (paid for or otherwise).Read this New York Times article on Penang.

White men loves this kind of place.

My stay at the Hard Rock Hotel was pleasant and there were more domestic tourists than foreign tourists when I was there.

My wife says, probably, off-peak season.

Maybe, I'll make another visit a year from now to see whether Penang has weathered well under Pakatan's care.

A grandmother, a baby and Sabah’s poverty:A Sabah Story

FEB 15 — Waiting at the check-in lounge for my flight home to Kota Kinabalu, I saw a woman in her senior years looking rather forlorn. She looked to be at least in her 60s; far too old to be the mother of the newborn in her arms. Besides the baby, she was also clutching what looked like one of those carriers that would hold baby bottles and nappies.

When it was time for the plane to depart, she rose, awkwardly trying to juggle the baby and the bag.

I looked around for someone accompanying her, some relative or friend, but she seemed to be alone.

“Makcik seorang ka? (Are you alone, auntie?)” I asked.

She nodded. I asked to carry her bag and she thanked me, her eyes full of relief and the tenseness about her easing a little.

We chatted for awhile and she told me the baby was her daughter’s. The baby’s parents were both working in the Peninsula because it was the only place to find work. But neither earned enough for them to be able to afford childcare so it was left to her to look after the infant.

A steward, noticing that I’d helped the old woman with her bag, smiled and thanked me. At least I wasn’t the only one who noticed. Sadly the rest of my fellow passengers were a little too preoccupied to lend a hand to the old woman. I am sure the steward would likely have taken her bag for her on the plane; he took it from me when she reached her seat, placing it in the overhead compartment for her.

She had another relative waiting for her when she arrived at the airport, fortunately. Otherwise, she, the baby and the bag would be on a rickety bus home and I’m not sure if someone would have been kind enough to take her bag.

I look at the old woman and think of my middle- and upper-middle class friends in the Klang Valley with helpers. They fuss about their “stupid”, “untrustworthy” help and few things are as discussed by these “tai-tais” than how hard it is to find good help.

But maids are a luxury; they don’t see that. The working class can’t afford maids and rely on relatives to look after the children while they work. But what if there is no doting grandparent or widowed aunt? Affordable childcare facilities aren’t easy to find and are out of reach for families that take home less than RM2,500 a month.Read more.

NCR Land:The AG Is Right, Stupid!

Hantu Laut

A Sabahan, a federal minister, either he does not know the law, pretended not to know the law, or intentionally telling a lie to his people.Politicians playing to the gallery are nothing new, tools of the trade.

Quote:

"The natives have been here well before laws were made… It’s only when the British came here were laws made, but tribal communities have thrived pre-independence, pre-colonial days, they have thrived and developed the system of culture themselves, the Penampang member of parliament said.

“So this includes ownership of properties, of land, they developed it and for you to say there has to be a cut-off point for this is not correct because all the native laws and customs pre-date laws made by legislature,” Dompok told reporters after witnessing the presentation of printed KadazanDusun language calendars to SK Putaton here yesterday and when asked to comment on Roderic’s statement which many Sabahan leaders disagreed with the state AG." ...Unquote

Read more here.

Obviously, this leader of the Kadazan people want this state to live by the law of the jungle and trying to usurp the law of the land.Natives customary rights (NCR) are well covered in the Sabah Land Ordinance which the Honourable Minister did not bother to familiarise himself with before he concludes that the State AG was wrong.

The AG was right that after 1930 no state land can be considered as NCR land unless the complainant comply with the requirements under the Sabah Land Ordinance of which the relevant sections are shown below:

13. Enquiry as to native rights.
-------------------------------

Upon the receipt of any application for unalienated country land it shall be the duty of
the Collector to publish a notice calling upon any claimant to native customary rights in
such land who is not yet in possession of a registered documentary title to make or send
in a statement of his claim within a date to be specified in the notice. If no claim is
made the land shall be dealt with as if no such rights existed.

14. Collector to decide claims.
------------------------------

Claims to native customary rights shall be taken down in writing by the headman or by
the Collector, and shall be decided by the Collector.

15. Definition of customary rights.
------------------------------------

Native customary rights shall be held to be -
(a) land possessed by customary tenure;
(b) land planted with fruit trees, when the number of fruit trees amounts to fifty and
upwards to each hectare;
(c) isolated fruit trees, and sago, rotan, or other plants of economic value, that the
claimant can prove to the satisfaction of the Collector were planted or upkept and regularly
enjoyed by him as his personal property;
(d) grazing land that the claimant agrees to keep stocked with a sufficient number of
cattle or horses to keep down the undergrowth;
(e) land that has been cultivated or built on within three years;
(f) burial grounds or shrines;
(g) usual rights of way for men or animals from rivers, roads, or houses to any or all of
the above.

16. Procedure when rights established.
-----------------------------------------

(1) Native customary rights established under section 15 shall be dealt with either by
money compensation or by a grant of the land to the claimant and in the latter case a title
shall be issued under Part IV
(2) Where the Collector decides that native customary rights established under section 15
shall be dealt with by money compensation, the affected land together with all buildings,
erection and crops thereon shall vest in the Government free from all encumbrances and shall be deemed to have been surrendered by the lawful claimant thereof upon such decision
being made.

Every country must have established laws that organise, regulate and bring order to society. No modern nation can live on archaic laws.If one is to go by Bernard Dompok's argument that these archaic and unwritten native law must be preserved than he should also consider bringing back head-hunting to Sabah and Sarawak, a tradition that these groups of natives used to practised in the past.

Here, another ignorant journalist, if you can call this type of writing journalism, or just another highly embellished political tub-thumping to hoodwink the people, typical of many Malaysian so-called journalists, never do research or check the facts before embarking on their journey of political brickbats, serving their paymasters blindly.They should just called themselves reporters who report verbatim.

It reminds me of the reporter who think ultra vires as something insulting the dignity of the sultan that got Karpal Singh into trouble.The writer also tried to impress his readers that he is a man of letters as to quote something completely irrelevant to the subject matter as William the Conqueror proclaiming all of England as crown land, lest he forgets that Sabah and Sarawak were also known as crown land under British colonial rules.

His glossing over Article 153 of the Federal Constitution is completely irrelevant and has nothing to do with the land laws of Sabah and Sarawak which is different from the Land Laws of Peninsula Malaysia.

Sabah and Sarawak have their own Land Ordinance which supersede any Federal Land Ordinance.Lands are state controlled and Article 153 has no jurisdiction over land matters in both states.Article 153 is more on education,civil service, businesses, etc, encompassing the NEP (affirmative action for the Malays and natives of Sabah and Sarawak)

NCR laws are not carved in stone as asserted by the minister to be in perpetuity from time immemorial.

Compliance of the law is the rule of the game and paramount to establishing whether the claimants have customary right over the land.There is no such nonsense as blanket cover of customary rights over lands in both Sabah and Sarawak as what the minister is trying to impress his supporters.