Petronas must explain case A week of back and forth exchanges between two former prime ministers and we are still nowhere close to knowing what led to the cancellation of production-sharing contracts (PSCs) in two sites in East Malaysia.
Tun Dr Mahathir Mohamad threw down the gauntlet when he accused his successor Tun Abdullah Ahmad Badawi of giving away Malaysia’s claim to oil offshore of Limbang in a deal purportedly struck with Brunei. This came about after Murphy Oil, which had entered into the PSC with Petronas for Blocks L and M, announced late last month that it was ceasing operations because the site “was no longer part of Malaysia”.
Mahathir, in his blog, accused Abdullah of signing away two sites that were potentially valued at US$100 billion (RM320 billion) in exchange for securing Malaysian sovereignty over Limbang, a point that Brunei is also contesting.
Abdullah, in a statement last week, shot back, denying Mahathir’s accusation that the oil rights were signed away. The two blocks, he said, would be jointly developed by both countries for a period of 40 years.
Whatever the case, it is apparent that no clear picture will emerge from the series of exchanges between the two former premiers. Petronas, as the party that bears the ultimate responsibility and which has seen an important revenue stream taken away, must step up to explain the situation to the public.
Ultimately, the cancellation of the PSCs will have the greatest impact on Petronas, and it cannot afford to play dumb when assets of the country, of which it is the sole guardian, seem to have been somehow taken away and placed in the domain of another sovereign state.
Neither can Petronas stay above the fray on the grounds that it was not party to the discussions between the heads of government of Malaysia and Brunei. Questions it must answer are: Who ordered the cancellation of the PSCs? What reasons were given for the cancellation? When was the order received? Why did the public have to hear the news from an announcement by an Arkansas firm?
As the prime minister, and one who has absolute authority over Petronas, Datuk Seri Najib Razak should impose his authority and clear up the confusion. He should reveal the border agreements between the country and Brunei, and order Petronas to publicly disclose the unanswered questions.
This will not look good for one or both of the former premiers, but it is something that has to be done.
Who’s the new shareholder?Plenitude Bhd’s long-time substantial shareholder Ong Bee Kuan has cashed out of the company. April 23 filings show that Ong, who owned 67.16 million shares, or a 19.59% stake, in the company, had on April 20 sold the stake to Fields Equity Management Ltd via an off-market transaction.
The deal was done at RM2.54, which is a 14.5% discount to its its closing price of RM2.97 on that day. No further information was given about Fields Equity, except that it is incorporated in the British Virgin Islands and has a Singaporean address.
When contacted by The Edge, Plenitude management said no further information was provided by Fields Equity. It also said Plenitude was only informed about the entry of this new shareholder through its company secretary after Fields Equity filed the necessary documents notifying Bursa Malaysia that it has acquired the block of shares.
While Plenitude has explained that Ong was a passive investor in the company, and the shares were subject to a moratorium until 2007, it is odd that the company is unaware of the background of the new shareholder, especially when it involves a 20% stake in the company.
What’s perplexing is that according to Plenitude, Fields Equity has thus far not sought any board representation. Typically, a shareholder with a 20% block would want to seek board representation to reflect its interest in the company.
Why is Fields Equity shying away? Doesn’t it want to ensure its interest is taken care of? Who is behind Fields Equity?
Systemic cancerSince early this year, the Malaysian Anti-Corruption Commission (MACC) has been on the trail of several syndicates involved in the theft of sand for export, according to reports. The latest reports say 19 persons have been charged and the loss to the country is in the billions, considering that the illegal activities have been going on for years and span several states in the peninsula.
The extent of the scam, ranging from extraction to export, suggests that in addition to the illegal miners, officials at various stages of the operation, from licensing to transport to export, would be involved in diverting public revenue from this natural resource for personal gain.
A pervasive network that circumvents official controls on extraction industries must be in place for sand smuggling to be carried out on such a huge scale. The MACC thus has a duty to break this circle of corruption and bring the culprits to book, including any high-level beneficiaries.
It is not just the loss of a natural resource and damage to the environment that is of concern, although these are the direct consequences. More insidious is the erosion of the regulatory environment, of the institution of good governance. This should be a matter of deep concern.In addition, the level of integrity among public officials and business operators, as integral elements of society, is cause for alarm. The need for serious action to stop this slide into a culture of corruption is becoming increasingly evident by the day.
Furthermore, the complicity of various gatekeepers that is necessary to allow corrupt practices to take place becomes more evident when other recent scandals are brought to mind. One such case is the two missing F5E jet engines from the RMAF base in Sungai Besi, Selangor, that became public knowledge late last year.
These cases indicate that corruption in this country could be at the systemic level.
This article appeared in Corporate page of The Edge Malaysia, Issue 804, May 3 - 9, 2010