Potpouri on Corporate PR and Plan of Sime Darby; IJN and LCCT

From left: Sime Darby chief financial officer Sekhar Krishnan, Datuk Ahmad Zubir Murshid and
group head of strategy Hisham Hamdan at a press conference in November 2006

Sime Darby damaged its reputation and tattered it's public image with its proposed IJN takeover deal.

Believing that inside access to power and influence with mainstream media is sufficient to claim themselves as public realtion company, Brendan "Pariah"'s Fox Media fumbled big time. So, Pereira can't be synonymous as an acronym for PR. How could it be, if they can't gauge public's sentiment and sway the public perception favourably for the client.

In the The Star's Saturday Business pullout, Anita Gabriel describe IJN as a deal Sime Darby should not have pursued it. Why did it happened? Is it a case of poor Public Relation? Is it another case of the arrogance of powerful youth as iconoised by Khairy and his Band of Tingkat 4 Brothers?

Is Sime Darby likely to repeat the same mistake again for their LCCT proposal? The public build-up to oppose the new LCCT is on the rise. More and more issues against the new LCCT are being exposed from the public.

Is it a case of Abdullah's Midnight Regulation or may I bluntly accuse as Abdullah & Family as doing a "last kopek" on the nation's coffer?

To seek for that answer, I browsed the Internet this morning for a background of Hisham Hamdan, Sime Darby Bhd’s executive vice-president of group strategy and business development. Not much came up.

Hisham Hamdan

Hisham's background was obtained from Sime Darby's website here, as follows:

Hisham Hamdan
Executive Vice President, Group Strategy and Business

En. Hisham was appointed the Head of Strategic Planning of Sime Darby Group in October 2004. En Hisham was previously an Investment Banker with Dresdner Kleinwort Wasserstein (DrKW) handling Corporate Finance & Origination for the past five years. Prior to DrKW, he worked as an Equity Research Analyst in various investment banks in Kuala Lumpur - Dresdner Kleinwort Benson, Santander Research, Peregrine and Swiss Bank Corp/PB Securities. He had also worked in Malakoff's corporate finance department in 1999. Upon obtaining two separate Bachelors Degrees in Chemical Engineering and Industrial Management from Purdue University, Encik Hisham worked as a process engineer in Arvin Industries, an automotive part supplier, in Columbus, Indiana, USA from 1990 to 1992.

Interestingly, Hisham got on-board around the time Abdullah & Family are beginning to get comfortable in Putrajaya in 2006. It was about the time talks of the abuse of authority and arrogant prancing of Kamaluddin and Khairy was making its round.

My source said he is close with Kamaluddin and Tingkat 4. However, there is no addtional information to substantiate other than the fact that being within the same age group and in the corporate consulting/investment banking circle, they is the likelihood that they know each other.
In Sime Darby, Hisham is the M&A man; the man in charge of Merger & Acquisition. Widely known within Sime Darby as a workaholic, he works from early morning till midnight and even do his lunch in.

In June 23rd, 2006, Hisham's name appeared in a Malaysian Business article amidst talk of Sime Darby and Guthrie merging. Off course, the CEOs were giving standard answers of denials, unaware, etc.

Subsequently on November 8th, 2006, Hisham appearerd in a press conference after Sime Darby's AGM with boss, Datuk Ahmad Zubir Murshid and Sime Darby chief financial officer Sekhar Krishnan. Sime Darby boasted its got piles of cash and is on an acquisition drive. That supposedly is Hisham's cup of tea.

They claimed to have piled a RM3 billion war chest and just added RM700 milliuon from the sale of a Singapore Company. Zubir was boasting of all the grandplan of Sime Darby doing this and that. He claimed Sime engineering has got something like RM2.4 billion order book.

Could it be Hisham had a role in originating this monstrous tri-merger of 'original' Sime Darby-Guthrie-Golden Hope?

Rationalisation and Consolidation?

Upon completion of the Merger, the 'new' Sime Darby announced their rationalisation and consolidation plan.

The Group's business direction, as displayed in their website, are focused in the the sectors of Plantation, Property, Industrial, Motor, Energy and Utilities. China and Healththcare is placed under growing business. Travel & Tourism and Manufacturing is placed as other businesses. Gone are Finance and Financial Services. Manufacturimg is no more a vertically integrated diversification of plantation activities.

Sime Darby's Utilities or Engineering division began to falter. SD Watch blog first began poking on Hisham in June 2008 when Sime Darby pulled out of the Bakun Dam project. He described Sime Darby's reason to pullout due to escalating cost as weak. He said Hisham failed miserably for not able to foresee all those common issues of engineering work.

This blogger was aware that hundreds of millions was spent on Bakun Dam by Sime Darby. Was it compensated? Sime Darby has yet to disclose. Talks are the compensation for Sime Darby's pullout from Bakun is the tri-merger.

Healthcare as Growing Business?

Then comes Sime Darby Healthcare, which is Hisham's baby. After much talk of selling their Subang Jaya hospital in middle last year, Hisham had other ideas and Sime Darby made a change of plan.

They announced to consolidate its healthcare business with a RM3 million rebranding excercise of the Subang Jaya hospital, Megah Specialist Centre and nursing school. Elaince Chong, the Healthcare Unit CEO began to make opportunistic claims of a year-on-year 8% growth.

Later, Sime Darby announced expansion plan to build Medical Centre for Nilai, Desa Parkcity and Penang. They believed their presence in 20 countries is an opportunity to expand their healthcare business. China will be their first focus.

The plan to build a cardiac and speacialist centre like cancer in Bukit Jelutong was not announced (until the Labu Vision City announcement). So was Hisham's plan for the takeover of IJN from as early as June and July 2008. Sources believed (and still believed) that the 51% goes to Sime Darby and the 49% to a private entity.

The private entity suspected is linked with Scomi. Maybe, the LCCT construction is something for the plate for crumbling Scomi. A case of last kopek?

LCCT Crap!

The LCCT is getting a lot of brickbats from all quarters, Sime Darby Watch blog in particular. Tony Fernandes is believed to have lied in his justification. It is not just an issue of public or private fund.

Some technical aspect does not make sense. Tun raised about the runaway issue. The Malay Mail raised yesterday about Labu being out of radar, and operational inconvenience.

There is the rising cost and MPs expressed people's complain of wastage of public fund. The Government had catered to too many ad-hoc LCCT request from Airasia, including one in Melaka.

Ganesh asked how Sime Darby will make money out of it?

There is no strong and overriding basis at all for an LCCT at Labu.

Will this be another PR fumble by Sime Darby? Although Government may have announced it's approval, the public outcry will continue to pick up. The Gaza Massacre is only a temporary saviour.

Government will eventually cancel. It is glaringly self interest. The only way face saving way for for Sime Darby is to pull out by claiming to "review" the plan. Some heads must get chopped.

Musang at Work?

Tun Musa Hitam should be aware of it. He is not taking it falling down. Someone will get the blame but not Musa. His inability to identify between a haox and truly genuine talents is increasingly obvious but he will not be in question.

It seems Musa had brought in help from Segamat. Dato Ahmad Pardas, believed to be related to Musa through his wife, has retired as CEO of UEM World and was told would join Sime Darby as the new Deputy CEO. Ahmad Pardas is no Deputy CEO material, he is CEO material. Is Zubir and his hired man, Hisham Hamdan getting their head on the chopping block soon?

If there is any head to be chopped, it will not be Musa's head. Someone else will get the blame but not Musa. Thats what you get with a snaky and racoon politician as Chairman. Its always politics and never serious about business.

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A deal that was not meant to be

But good communication can subdue public outrage

Sideways - By Anita Gabriel
The Star, Saturday June 10th, 2009

IN the office of Hisham Hamdan, Sime Darby Bhd’s executive vice-president of group strategy and business development who is also responsible for the group’s healthcare business, one poster out of many hanging on the wall, I am told, stands out. It says “In God, we trust. Everyone else, bring data.”

That’s ironic given how the conglomerate had miscalculated its move to take over the National Heart Institute (IJN), which it eventually bowed out of merely three weeks after announcing its bid. As Sime Darby will vouch for now, after weeks of fending off public indignation that rippled through the nation, sometimes, number crunching alone is not enough to back up a deal.

The proposed “hostile” takeover had put Sime Darby on the grandstand of public dissent and dwarfed its status as the world’s largest plantation company to a prowling corporate predator about to swallow a venerable institution.

Nobody can say for sure that if Sime Darby had taken over IJN, it would have marked the end of the institute’s hard-earned reputation as a well-managed entity with a profitable socio-economic formula. But the scepticism was understandable.

IJN, the country’s leading heart institution, was corporatised in 1992. It is wholly owned by IJN Holdings, which in turn is controlled by Minister of Finance and has a paid-up capital of RM221.62mil. In 2007, it made an operating revenue of RM287mil and profit after tax of RM14mil.

IJN is a government-owned entity that is fairly decently run. In fact, about a year back, an idea was mooted for investment agency Khazanah Nasional Bhd, which already has a substantial portfolio in healthcare services, to assess if more value can be unlocked if it were to take over IJN. Khazanah, unlike Sime Darby, did the right thing. It said “No, thank you” for exactly the same reason that should have kept Sime Darby at bay – IJN is a government-owned entity that is fairly decently run and extracting further value from it would have meant dismantling its socio-economic agenda, which was the spirit on which the institute was set up.

Intriguing indeed then that Sime Darby, a government-linked company, would hold a different view. In August last year (8.08.08, to be precise), Sime Darby Bhd submitted a 12-page plan to takeover IJN. In that plan, it had outlined six possible areas of collaboration – to provide capital for IJN to expand; meeting human resource needs such as train IJN nurses; focus on overseas patients to boost medical tourism; clinical research and collaboration; sharing of facilities; and sharing of backroom facilities. But the plan remained a well-kept secret until much later in the year.

In mid-December last year, after the news broke of its intention, Sime Darby issued a note to Bursa Malaysia confirming that it has expressed its interest to the Government to acquire a stake in IJN Holdings and a day later, said it has received approval-in-principle from the Government on the acquisition of a 51% stake in IJN.

The news fanned much frustration among the public. Over the week, the company walked away from the deal, citing strong public sentiment and feedback.

But couldn’t Sime Darby have spared itself this wild, fruitless ride? Did the communication division forewarn the board and management of the potential public backlash?

Companies need to bear in mind that the communication team should be roped in right at the start of such plans to anticipate possible reactions and not after an incident has erupted. There is little point trying to get input after that point.

There needs to be a strategic outlining and mapping of issues and events that could possibly be triggered at the point of deliberating any deal.

In this light, much can be learned from what a US expert on risk communication Dr Peter Sandman had once said. “It’s the outrage, stupid. When people are outraged, they tend to think the hazard is more serious than it is.” To reduce the outrage, he suggests companies be open, honest, accountable and share control with the public on the issue. It’s a message he personally delivers to many of the business world’s top executives until today.

In other words, having a good corporate ear is just as important as having a good corporate mouth. That, he says, is “public affairs.”

Personally speaking, I’m pleased that Sime Darby had a change of heart. My dad, a retired member of parliament and senator, spent much of the last year of his life in IJN in the mid-90s due to a failing heart condition. During the long and most gruelling period of our lives, my family got to know the cardiologists and nurses very well.

They were a huge comfort, patiently and tirelessly answering each and every detailed question, assuring us they were doing all they could, in fact, making us feel that Dad was the most important patient at the institute, as he was to us. The Government picked up the tab, of course.

How can anyone match that?

·Anita Gabriel is business editor at The Star. She feels that commercial justifications do not trump everything else