The importance of being open

Hospitals are being overwhelmed by long lines of people anxious to test whether the flu-like symptoms they are experiencing mean they have influenza A (H1N1). Their near-panic is understandable in view of the mounting death toll due to the highly contagious flu that is spreading across the globe. At press time, 68 people had died from the disease in Malaysia while globally, 1,800 had succumbed to it.

Since the flu is easily transmitted, tracking its spread is proving to be truly challenging. The World Health Organisation (WHO) has already declared it a pandemic and estimates that some two billion, or one-third of the world population, will be infected before the virus exhausts itself.

As a result, some countries have stopped trying to test for the virus to avoid overwhelming their health systems with a tracking exercise. It would be more important, of course, to deploy health personnel to provide care for victims suffering from the more severe effects of the flu. Their health authorities are therefore choosing to focus on the patterns of infection and monitoring whether the virus mutates into more virulent forms.

The perils of relying on inconclusive data to infer the fatality rate of the disease were brought home earlier this month. DAP leader Lim Kit Siang was appalled that the mortality rate in Malaysia was close to 2% or four times the global average. In fact, WHO estimates that under-reporting is about 20 times the reported number. Hence, reports of the incidence of the flu in the country are likely to be considerably off the mark.

As one health policy analyst puts it, the health ministry has a difficult communications challenge to meet in making the public understand how they should react to the outbreak. As always, however, being open, accountable and responsive goes a long way towards ensuring that a critical situation does not descend into a chaotic mess.

Mismatched fines

Last week, LFE Corp Bhd announced that eight of its directors had received a public reprimand, four of whom were fined RM117,000 each. The offence was a delay in the submission of audited accounts and the annual report for FY2007 ended Dec 31 and quarterly results for the first two quarters of last year.

The underlying cause of the delay was whether a sum of RM24.1 million was recoverable, which was the subject of concern for the external auditors. Also of concern was a sum of RM4.3 million due to the company from its subsidiary LFE International Ltd (LFEI).

Furthermore, the company announced that it would not recognise LFEI’s contribution to its revenue. That is a big hit for the company because LFEI contributed 49% of LFE’s unaudited revenue of RM257.4 million for FY2007.

The fact that auditors raised the red flag on LFE’s international subsidiary clearly indicates that something is wrong. The amount in dispute is significant in relation to the size of the company.

What’s puzzling is the RM24.1 million, which the auditors do not think can be recovered from a director of the company. The question is, how did the director have access to such a large amount of money? Where were the checks and balances?

Another point to note is, the total amount the four directors were fined is RM468,000 while the amount in question is much more. Is the fine commensurate with the potential loss the company faces?

This is something the authorities ought to re-examine. If there is a cap on the fines they can impose, then the cap should be reviewed.

A heavier fine would not only serve as a deterrent but also keep directors on their toes, especially with regard to the cash movements of the company.

The more the merrier

When Telekom Malaysia Bhd (TM) got the government’s nod to roll out the high-speed broadband (HSBB) network last year, it was not given exclusive rights. Neither did the company profess to have such rights.
The only issue was government funding for TM’s initiative to facilitate faster rollout. Without government funding, TM’s rollout would be slower as it would be commercially driven.

Hence, the tacit approval from Prime Minister Datuk Seri Najib Razak for a second consortium to roll out the HSBB network over fibre-optic lines should not set alarm bells ringing. 

So what if Jalur Lebar Nasional Sdn Bhd (Jalenas), a consortium backed by the Pahang government, plans to roll out a HSBB network to complement TM’s efforts in order to bring the government’s plan of fibre-to-the-home to fruition? Based on reports, it is entirely a private-sector initiative.

TM has a head start in the race and should be able to roll out the infrastructure faster than Jalenas.
As TM’s officials rightly told analysts at a briefing late last week, the telco does not see Jalenas as a threat.

As for Jalenas, it professes that it can roll out the fibre-optic network at lower cost. The company has also said it will adopt an open concept, which means it will not impose any restrictions on the type of users. In comparision, TM is targeting users that will add significant value to the infrastructure.

At the end of the day, consumers will look at the cost and benefits of the two business propositions. For them, it is a case of the more the merrier.

This article appeared in The Edge Malaysia, Issue 769, Aug 24-30, 2009.