Sime’s Musa Hitam and Gang should resign

May 17, 2010

Comment:

As a former Senior Sime executive, I am personally shocked to learn about massive losses incurred by the Sime Darby Group’s Utilities, Engineering and Oil and Gas Division. I am also saddened  at the fact that its Group Chief Executive who is due to retire in November this year has to  go on a leave of absence and he  alone takes this devastating blow to his reputation for these losses.

I know that the Sime’s system of internal controls and limits of authority are solid to enable early detection of problems, and for management to take timely remedial action. The Sime Darby Board of Directors is  always kept full informed of the Group’s operating performance. Both Tun Tan Siew Sin and Tun Ismail bin Mohamad  Ali kept a hawk’s eye on the activities of the Group without getting involved in the day to day activities.

When I was Group Treasurer in the 1980s before moving up the corporate ladder to become Regional Director  (Executive Vice President) and Member of the Group Management Committee, I used to prepare  weekly reports on the Group’s cash and borrowings position and the state of global and local financial and capital market. This report is for the information of the Chairman, the Group Chief Executive and the Group Finance Director and other Divisional Heads. It contains a quick summary of cash movements and bank borrowings in the Group around the world where we operate.

We at Group Headquarters receive monthly reports from all operating divisions which are discussed at our Management Committee meeting. Copies at these reports are given to the Chairman. Both Tun Tan and Tun Ismail would read them thoroughly and would make their comments known to the Group Chief Executive (Tunku Ahmad Yahaya).  Group Performance is reviewed at all Board meetings. In addition, we had a very strong internal audit team which reports directly to the Executive Committee of the Board and the Main Board.

It is inconceivable at least during my time that the Main Board is not aware of what is happening in the Sime Group. Our Directors without exception performed their fiduciary responsibilities well.  We had some strong personalities (Anand Panyarachun, Sir David Li, Wee Cho Yaw, Tun Tan Siew Sin, Tun Ismail Mohamed Ali,  and Michael Wong Pakshong) on the Board. The Chairman  (both Tun Tan and Tun Ismail) worked well with the Group Chief Executive (Tunku Ahmad Yahaya) and his management team.

I understand from internal sources that Musa Hitam does not get along with Zubir and has the habit of getting involved in management matters, acting more like an Executive Chairman. So if this is case, Musa cannot plead ignorance; neither can his other directors on the Main Board. They  are expected to exercise the fiduciary duty, and due diligence.

What is fiduciary responsibility? It is a director’s responsibility to act as  a corporation’s agent and custodian of its assets. Every director is bound in common law by a separate and distinct fiduciary duty to the company (the term ‘fiduciary’ being derived from the Latin ‘fiduciarius’ meaning ‘of trust’).

Directors owe their fiduciary duty to the company as a corporate being in its own right and not to the members individually, not even to a member who is a majority shareholder. Even if a director occupies his position on the board by virtue of another position he holds (for instance, where he is appointed by a major shareholder or is entitled to a seat on the Board by virtue of an executive position in the company), a director’s fiduciary duties rest upon him as an individual.

The fiduciary duty is likewise not owed directly to creditors, employees or other stakeholders of the company, although there is a range of circumstances in which a director may, by virtue of the neglect of his fiduciary duty to the company, be held personally liable to the company’s stakeholders.

In this fiduciary capacity, a director assumes two roles, as an “agent” acting on behalf of the company, and as a trustee who controls company assets.

In this fiduciary capacity, a director assumes two roles, as an “agent” acting on behalf of the company, and as a trustee who controls company assets.These roles give rise to the following directors’ duties:

• to act in good faith towards the company
• to act only within their powers and use their powers only for purposes which benefit the organisation. Directors who act outside their powers bind the company to the transaction but may be held personally liable if a loss results
• not to use for personal gain any information acquired in their capacity as a director
• to act in the best interests of the company and to avoid a conflict between personal and company interests
• to exercise independent judgment in decision-making. A director who is appointed to represent an interest group, for example employees, is nevertheless obliged to act in the best interests of the company as a whole

If we are clear what fiduciary duty means, then we can say the Sime Chairman and his Board colleagues must accept the responsibility for the losses incurred by the Utilities, Engineering and Oil and Gas Division.  So my friend, Sakmongkol AK47 is right to call for resignation of Musa Hitam and other members of the Board.–Din Merican

Sime Darby Chairman, Tun Musa Hitam and his Board of Directors must resign — Sakmongkol AK47

May 17, 2010

We hear some things aired in public to justify the losses. But not much is revealed. There seems to be another facet in the art of elegant silence. It is the art of saying a lot of things but revealing nothing. A lot of thunder, but very little rain to cheer the barren corporate land scorched by Sime Darby.

The whole team of people assembled alongside with Tun Musa Hitam the other night at the Sime Convention Centre should be fired and sacked. Each should be given the two swords to commit hara kiri. Begin with Musa first.

The public isn’t going to be mollified and satisfied with an assurance that something is being carried out; that there’s work in progress, etc and a work committee consisting of individuals with impeccable credentials are inside the work group to ensure even-handedness and complete transparency and uprightness.

Risk Management is not a perfect game, says Andrew Sheng

That means nothing other than another form of CYA(Cover Your Ass) ruse. We were even told that Musa made a trip to

The Black Fox (Musang Hitam)

Qatar to discover for himself what’s going on. He didn’t find anything amiss so it seems because nothing happened following his visit other that some meekly audible something being said by external auditors. In any case, Musa’s overseas excursions often amount to nothing other than giving this former DPM a holiday.

It is no use too to report what Andrew Sheng said, looking stoical and detached, that risk management is not a perfect game. We all know that, the Class F contractor understands risks better than Sheng. Have Sheng replaced if all he can offer is some wishy-washy talk about risk management and all that. We don’t want that, we can read things said about managing risks. We wanted to have things put right — not some artful justification of Sime’s losses attributable to deficient understanding of risk management. It seems only Datuk Ahmad Zubir Murshid in Sime Darby doesn’t understand risk management. All the rest do, because they were not asked to go on leave of absence.

Entire Board must resign

I call on the government to have the entire Board of Directors go on leave of absence. I publish here a comment by a commentator who goes by the name Askar Tua as to why the entire band of negligent brothers must go.

Musibah dan kerugian yg melanda Sime Darby ini amat memalu dan mendukacitakan. Memalukan kerana ianya berpunca daripada keputusan dasar yang amat tidak bijak kerana mengambongkan tiga syarikat yg tersendirinya cukup berdaya maju dan telah banyak membuat untung,menjadikan syarikat itu terlalu besar sehingga sukar diurus dan dikawal dengan berkesan oleh CEO yang tidak cukup berkaliber dan berpengalaman. Dan tidak pula dipantau secara efektif oleh Pengerusi dan ahli-ahli BODnya. Mendukacitakan kerana kerugian itu melibatkan wang rakyat dan mungkin ianya akan menjejaskan pendapatan pemegang-pemegang saham PNB tahun ini.

Oleh kerana Pengerusi dan seluroh ahli BOD ada peranan dan tanggungjawab didalam penyeliaan dan pemantauan terhadap perjalanan dan pentadbiran syarikat itu, mereka juga sepatutnya, dengan sukarela meletak jawatan. Jika mereka tidak bertindak demikian sudah tentunya mereka itu akan dikira sebagai orang yg tidak bermaruah, tidak ada harga diri, integriti dan tidak berperinsip. Mereka akan hilang kredebiliti dan status sebagai gentlemen.

It is a gross failure on the part of the Sime Chairman and the Board of Directors to provide effective supervision. There was a pathetic CYA ruse to suggest that Zubir tolerated the massive losses in the Energy and Utilities Division to protect the previous head of the division. Are we hearing right in this? A corporate Samaritan? A successor going all out to protect the good name of a predecessor? That’s not the rule of CYA is it? So is Zubir asked to go on leave of absence for not playing the game of CYA? He isn’t one of us after all these years. After all the champagne and caviar on the jet stream, he wasn’t converted into a thieving bastard like us.

Usually a successor will want to obliterate any legacies of the previous man. I find this argument very imbecilic as many Sime Darby employees would volunteer to say that Zubir is one heartless bastard and an MF to boot! To impute a sense of a caring soul in Zubir is very deceiving. You mean to tell us, losing over RM1 billion is OK because we care for one miserable soul?

There was also a very infantile argument suggesting that one reason why Sime got into this trouble is because the Board of Directors is made up of old people. That to overcome this weakness in order to propel Sime forward is to inject young new blood into its BOD and, by extension, the management team. Zubir is said to be 52 years old, while the rest of the Board, including Musa, are ageing fossils. What kind of argument is this and if it comes from those wizened analysts out there, which universities taught you this line?

What the Board requires is not young or old members — what it needs are people of integrity and commitment to do good business. The very first step which Sime must take is to demand the resignation of the entire Board of Directors and call in the financial Ghost busters to dissect every minutiae of transactions carried out by the four business units.

* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).