Frankly Speaking

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Let the market decideTan Sri Robert Tan, in a statement last week, once again urged minority shareholders of Goh Ban Huat Bhd to accept his offer of RM1.25 a share and not sell their shares on the open market as advised by independent adviser AmInvestment Bank.

He cautioned that although GBH is now trading at about 11% higher than what he is offering  (GBH closed at RM1.39 a share last Friday), given the recent low trading volume, the price will not hold if minorities were to start selling their shares en masse.

He is right in saying that GBH will fall below the RM1.25 level should there be massive selling. But isn’t that in his interest as he can then acquire shares at lower prices?

But then again, Tan’s real concern should not be minorities dumping their shares, but a scenario where those who hold on to the shares expect to share the fruits of GBH’s turnaround.

Tan had made two press statements within a month, urging minorities to accept his offer and stating that the price would collapse once the offer is withdrawn. But as the Aug 12 deadline to accept his offer draws closer, there are minorities who still are holding out.

They probably see the value in GBH, which is the parcels of land in Segambut that Tan wants to develop. He makes no secret of that.

Issuing more statements won’t be much help. A higher price is what the minorities are probably holding out for. So, let the market decide.

Irrelevant deadlinesLast week, Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui said the federal government would set a new deadline to resolve the Selangor water concession issues soon.

Those following the water sector would have sniggered, and many may be unable to recall how many times there have been extensions in the consolidation exercise.

This is getting to quite common. For instance, the last deadline set for the consolidation exercise was end-July, but it passed without a whimper and without any clear indication as to how Selangor would take over the assets of Puncak Niaga Holdings Bhd.

What is even more infuriating is that each time the deadline is changed, we hear the all-too-familiar tune of how taps in Selangor will run dry soon, or that the matter has to be resolved or bondholders will be affected.

The whole spectacle is increasingly looking like a mockery. In the first place, why is there a need for deadlines?

The water sector is market-driven and decisions are based on commercial terms. Whether there is a deadline or not, if the conditions are not mutually acceptable, the transactions to consolidate the assets will not take place.

Players will stand firm, irrespective of the minister’s wishes and the time frames set by the federal government. Even the present laws, such as the Water Services Industry Act passed by the federal government to coerce the players to consolidate, can only be effective if there is mutual consent between the concessionaire and the federal or state government.

The end result of setting irrelevant deadlines is that they will eventually not be taken seriously.

It is time to set aside the deadlines. The water consolidation exercise in Selangor is being driven on commercial terms. The state has already won over two big players, leaving only one — Puncak Niaga Bhd — to deal with. Let them carry on with their exercise without undue pressure of having to meet a time limit when they are unlikely to be met in the first place.

American writer Rita Mae Brown once said “a deadline is negative inspiration. Still, it’s better than no inspiration at all”. But in this case we need no inspiration as market forces will drive the deal.

Justice delayedJustice delayed is justice denied, a statesman once said. For commercial crimes in Malaysia, there certainly seems to be a long wait for perpetrators to be brought to face the full force of the law.

In the case of Takaso Resource Bhd, it took seven years for a judgment to be passed. Last Friday, the Kuala Lumpur High Court ordered Up & Famous Sdn Bhd and six others to make an offer and compensation scheme to all relevant shareholders of Takaso with respect to their failure to carry out a mandatory offer (MO) under the Malaysian Code on Takeovers and Mergers, 1998.

According to the Securities Commission (SC), the defendants were in breach of the code when, after collectively accumulating more than 33% of Takaso, they increased their interest by more than 2% within six months without undertaking a MO to the remaining shareholders.

The MO ought to have been made on Jan 17, 2002. The SC filed a civil suit almost five years later on Dec 22, 2006.

How about the case of a former futures broker who was sentenced and fined for falsifying books 10 years after the offence? Last Friday, the court convicted K Sivachandran Kuhiappan for falsifying books in 1999.

Why does it take ages, literally, for white-collar criminals to be brought to book? What is lacking in the country’s legal system? Perhaps it shouldn’t be surprising when graver crimes take even longer to get through the justice system.

We should learn from how swiftly justice is meted out for commercial crimes in the West. Sentencing of perpetrators in such cases as the Madoff Ponzi scam and the Enron accounting scandal was carried out while the cases were still being hotly debated.

Of course in the Madoff case, the perpetrator confessed to the crimes. Nevertheless, there must be a way to hand out sentences more quickly.

This article appeared in The Edge Malaysia, Issue 767, Aug 10-16, 2009.