Frankly Speaking

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Another PKFZ shockerIf we thought that the release of the PricewaterhouseCoopers (PwC) report on the scandalous Port Klang Free Zone (PKFZ) project two weeks ago had brought to the fore everything we needed to know about it, we were proven wrong.

Last week, a little-known corporate advisory firm slapped a RM147.86 million suit on the Port Klang Authority (PKA), purportedly for fees due to it for advisory work done for the port.

Mega-Wan Corporate Services Sdn Bhd said the claims included a whopping RM48.67 million for “financial re-engineering services” on how to negotiate better terms for the PKA for a soft  loan totalling RM4.6 billion from the Ministry of Finance (MoF) for the PKFZ project.

Yes, apparently someone in the PKA felt that it needed outside help to negotiate a better deal with the MoF and was willing to spend RM48.67 million of taxpayers’ money to do it.

And there was another RM92.28 million, which he or she apparently also inked, as fees for advisory work to enable PKA to break an agreement with the Jebel Ali Free Zone International (JAFZI) group that was supposed to manage the PKFZ.

Amazing the way taxpayers’ money was spent.

It shows that the people running the Transport Ministry and the PKA at the time had no sense of what is appropriate and what is not.

If they had or cared to have any sense of what is right, the then Transport Minister Tan Sri Chan Kong Choy would not have appointed the then deputy chairman of Wijaya Baru  Global Bhd (WBGB) Datuk Chor Chee Heung to be chairman of PKA. Wijaya Baru and its sister company Kuala Dimensi Sdn Bhd are, after all, the biggest beneficiaries of the PKFZ undertaking.

PKA was the customer and financier of the multi-billion ringgit project. KDSB is the turnkey developer, while a unit of WBGB, Wijaya Baru Sdn Bhd, is the main contractor to KDSB. What happened to the principle of keeping parties at arm’s length? What was going through Chan’s mind in appointing Chor?

Clearly, the people who committed billions of ringgit of the people’s money in such a reckless manner went about doing it with impunity because they felt they could do anything they wanted and get away with nothing more than a slap on the wrist.  It is now up to the people to exert pressure on the government to ensure that the perpetrators do not get away without accounting for their actions.Proton’s cash flow detailsNational car maker Proton Holdings Bhd should provide more details in its quarterly cash flow statement instead of just a summary.

Although the condensed statement did show the amount of cash flow generated from operations (operating cash flow), it didn’t present the “operating profit before working capital changes”, or spell out in detail how the operating cash flow was derived.

There is a huge difference between operating profit before working capital changes and operating cash flow.

The former indicates the very basic operating cash flow scenario of a company, with the assumption that payments to suppliers are made on time while collection from clients for the sale of goods is also received punctually.

A negative operating profit before working capital changes spells trouble for the viability of a company’s operations. It means the company has to pour in cash to sustain its operations instead of generating cash from the operations.

The non-disclosure of operating profit before working capital changes denies investors an important piece of information. This is because companies could bump up their operating cash flow by adjusting their working capital, by delaying payment to suppliers or expediting the receipts of cash from customers.

These may blur investors’ judgment about the basic health of the business or when they seek to compare the actual operating situation with the previous corresponding period.

Cash flow is the lifeblood of a business, which is especially important in tough times. In order to give the public a better picture of its operating condition, Proton should present its quarterly cash flow statement in detail.Maika Holdings next?Now that the cat is out of the bag on the Port Klang Free Zone (PKFZ), the government should shed some light on the Maika Holdings Bhd saga.

The firm, which is the investment arm of the MIC, has been the subject of much controversy for a long time now. It is high time that a clear explanation is given to the public about the conduct of its affairs.The fact that the company is posting losses should be sufficient reason to have its books inspected by the authorities in order to protect the interests of the investing public. Of special interest are the circumstances relating to a missing block of nine million Telekom Malaysia shares.

According to news reports, the company’s annual general meeting (AGM) should be held at the latest by the end of this month, after an extension was applied for in February.

There should be some form of pressure applied to ensure that the AGM takes place, with proper security arrangements (after lessons learnt from previous AGMs which have turned violent), to address issues, which have failed to be satisfactorily answered for a long time.

This article appeared in The Edge Malaysia, Issue 758, June 8-14, 2009