Amirsham: Straight man but something is suspicious

Since retiring from his extended contract as CEO of Maybank, Dato Amirsham has suddenly appeared into the world of politics in the recently announced new cabinet.

He was assigned full Minister status under the JPM to take charge of the Economic Planning Unit and be appointed Senator, a backdoor entry without the hustle of a general election.

Amirsham carries a clean, straight, and professional image. He is not known (as far as the memory of this blogger who knows him personally) as being political and free from any rumours of corruption and corporate wrongdoings.

His appointment raised suspicion.

Unless there are functional changes at the EPU, he is not suited for the job that requires economic planning background. Yet he is given full Ministerial status. The first professional being given full Ministership status is Tan Sri Musa to head the Ministry of Education during Dr Mahathir's administration.

Things are going fine for Amirsham in Parliament yesterday as he disclose the size of the state oil royalties including the controversial Wang Ehsan until an issue was raised by bipartisan MPs. The Second Finance Minister Tan Sri Nor Mohamed Yakcop stepped in to answer the question but this really raised suspicion?

Bankers and Political Appointments

This seemed to be a new twist in the trend of the career development of former Bankers and former Maybank CEO.

Back in the 80s, the late Tan Sri Jaafar Hussein moved on from Chairman cum CEO of Malayan Banking Berhad to become Bank Negara Malaysia Governor. He resigned, subsequent to the huge foreign exchange losses and was replaced by another Maybank CEO, Tan Sri Ahmad Don.

The person responsible for colossul forex loss is Tan Sri Nor Mohamd Yakcop resigned. After his short and unsuccessful foray into the corporate scene with the Abrar Group and their venture Mun Loong Berhad, his experiance in forex was seeked by Dr Mahathir to combat the currency pressure during the 1997/98 financial crisis. He helped design the Selective Currency Control that got the worldly attention to Dr Mahathir. Nor Mohamad was reinstated to Bank Negara Malaysia as Adviser and the rest is history.

Amirsham's surface to full Ministership comes as a surprice to many. It is a safe to speculate he was recommended by Mohd Nor Yakcop, his fellow Banker but his full Ministerial status erked few politicians. Why was he placed to take charge of EPU?

He graduated from the Economics and Administration Faculty of University Malaya and later pursued Chartered Accountancy in United Kingdom. His career has solely been banking from his entry into Maybank Group as General Manager of Maybank Finance.

Amirsham was briefly seconded as CEO of Asiavest Group, a now non existence Discount House and Merchant Bank where Tengku Razaleigh's family used to be shareholders. He returned to Maybank as General Manager and rose to the top and only recently retired.

While he may have assumed many board membership in many companies, organisations and various governmental committee, but is his professional background involve economic planning? Or, economic plannings has chaneg its approach to risk and reurn and quantifiables only? No more social considerations, like DEB?

Unless there is a serious change in function, the post is more suited for those like Dato Mustapha Mohamad and former Deputy Finance Minister, Dato Dr Awang Adek Husin.

Purchase of Bank International Indonesia

Amirsham has a clean and professional image and free from any market rumours of improprietary wrong doings. His exposed the Wang Ehsan's sum paid in Parliament yesterday.

It lend further to his credibility as an honest banker till an issue was raised by bipartisan MPS on Maybank's equity purchase in Bank International Indonesia (BII).

Tan Sri Nor, as the person responsible for the GLCs, stepped into answer. Why was Amirsham as the CEO then and is involved in the deal not the person answering?

The excerpt of NST report today entitled "Dewan Rakyat: Maybank's equity purchase in BII an 'important step'" below:

THE Government is confident Malayan Banking Bhd's (Maybank) equity purchase in Bank International Indonesia (BII) is an important step towards making Malaysia's largest bank a competitive, strong and established financial institution in the region.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said besides enlarging its conventional banking system, Maybank also gained the opportunity to expand its Islamic banking business to Indonesia as the republic has the world's largest Muslim population.

"Maybank may have paid a higher price, but it needed to make this decision to compete with Singapore.

"So that in the long run, we can achieve our target to be the main financial centre for Islamic banking," he said when replying to points raised by members during the debate on the Royal Address.

Maybank purchased a 55.7 per cent stake of BII for a hefty price tag of RM4.86 billion, a move which generated lots of excitement as it was considered the most expensive in Indonesia's banking history.

Last March, Maybank announced it had won the bid to take over the controlling interest of BII through a 100 per cent equity purchase in Sorak Financial Holdings Pte Ltd, a subsidiary of Fullerton Financial Holdings Pte Ltd that is fully owned by Singapore's investment arm Temasek Holdings (Private) Ltd.

In 1999, Fullerton paid RM735 million to buy a 51 per cent stake in BII.

As Maybank had paid 4.5 times the market price, MPs demanded an explanation from Nor Mohamed.

Nor Mohamed said besides Maybank, other banks had also made moves into the regional banking market.

They include CIMB Bhd, which had taken a controlling interest in GK Goh Securities, a Singapore stock brokering firm, on June 2005 with a total investment of RM555 million.

Other commercial banks which had overseas conventional banking businesses were AmBank, RHB and Public Bank.

Suspicion

One part of Tan Sri Nor's answer, "Maybank may have paid a higher price, but it needed to make this decision to compete with Singapore." seemed strange. Why do we buy from Singapore to compete with Singapore?

As investors, one need to ask this pertinent qustions. Singaporean Temasek do not simply sell asset to allow the buyer to compete with them. Whats the catch? For that matter, Temasek do not simply sell asset unless there is a worm or it no more profitable venture!

Strange but not strange, NST put out a special column to defend the purchase. It's here below:

DEWAN DISPATCHES: If Temasek wants to sell BII equity, just grab it!

By Azmi Anshar

2008/05/14

It was the first of the ministerial response to points raised during the debate on the royal address but the combative spirit of the House won’t allow Tan Sri Nor Mohamed Yakcop – the Second Finance Minister who was first in line – a fluent ride towards finishing his response, such was the persistent queries bombarded by MPs on the rationale behind Malayan Banking Berhad’s purchase of the Bank Internasional Indonesia (BII).

Malaysia’s largest bank, which reportedly controls assets in excess of US$$66 billion and reportedly commands a place in the top 120 banks worldwide, is now in the process of completing the purchase of a 55.7% stake in BII from Singapore’s Temasek Holdings Bhd, according to reports.

Reports also state that Maybank is buying BII, Indonesia’s sixth largest bank, for a princely sum of RM8.6 billion. Simply too much, some MPs complained.

Devoting four paragraphs on Maybank’s BII purchase in response to Azmin Ali (PKR-Gombak) and Dr Mohd Puad Zarkashi (BN-Batu Pahat), Nor Mohamed stressed the pressing need for Malaysian banks to expand as regional banks to compete long term with Singapore and that was why the Government was confident that the BII purchase would turn Maybank into a renown, solid and competitive financial entity, on top of spreading Islamic finance expertise to Indonesia’s Muslim population, the largest in the world.

Nor pointed to CIMB’s RM555 million control of GK Goh Securities, a Singapore stock brokerage policy, and also listed out AmBank, RHB and Public Bank, as banks that embraced the regional expansion policy. However, Nor Mohamed conceded that Maybank was subjected to Indonesia’s foreign investors’ regulations and the “single presence policy”.

As a company listed on Bursa Malaysia, Maybank was also subjected to stricter administrative pre-requisites, like a tight disclosure requirement.

“Any equity buying process needs the agreement of stockholders, including the purchase of BII,” he said, acknowledging Maybank’s solid funding and capacity to expand overseas.

“Therefore, Maybank’s volatile stock price is more tied to investors’ indeterminate perception and does not necessarily reflect Maybank’s ability and position,” he summed up.

But that was just page 7 in his 20-page reply when MPs quickly erected a road block: alluding to reports that the purchase sum may be too much, Azmin disputed the purchase’s book value, which he rated at four times, when the norm is 2.5 times. Azmin also questioned whether Maybank’s purchase followed good corporate governance.

Nor Mohamed agreed with Azmin’s book value appraisal but elucidated that book value was not always a principle to be followed when a golden opportunity beckons, and in this case the rare opportunity to buy over a regional bank.

Datuk Ibrahim Ali (IND-Pasir Mas), pointing to the Minister’s intimation of Indonesia’s regulations, questioned the probity of such laws because he had heard of horror stories of Malaysian companies doing business in Indonesia.

In also questioning the risks involved, Ibrahim proposed that Maybank conduct a briefing for MPs on the soundness of the BII investment, to which Nor Mohamed enthusiastically agreed.

Gobind Singh Deo (DAP-Puchong), while recognising that the buy was wise, asked if the Government had launched an independent analysis for the buy, which Nor Mohamed replied in the negative.

However, the Minister dismissed as irrelevant queries that the Government failed to control a GLC’s activity, asserting that the Government cannot and must not intervene or make decisions on behalf of its GLCs, be it Maybank or CIMB.

He also refused to entertain the contention of Saifuddin Nasution (PKR-Machang) that since billions were being spent, more clarification was needed, when a comprehensive explanation had already been given.

Then, in a conspiratorial tone, Saifuddin contended that the purchase of BII, particularly from Temasek, hinted a “good buy but would falter later.”

More conspiratorial overtones: one MP claimed that uncomfortable questions are being asked about Maybank’s ex-president and CEO, Datuk Amirsham Aziz, who started the BII initiative but was now a Cabinet Minister. Nor Mohamed didn’t think that the conspiracy theory merited a response. ...

My earlier suspicion was that Amirsham could be a political weapon against Tengku Razaleigh. But I doubt so now.

More Suspicions

Its easy to figure out why NST is trying to defend the purchase since it is widely known fact of Kalimullah's strong affiliation and link with Singapore.

It was only few years back that Singapore were purchasing strategic assets from Malaysia like Telekom. Fingers were pointing to Khairy's behind-the-scene hands with ECM Libra as the conduit for the fire sale.

If this purchase is an attempt to counter the 'jual negara' argument with "Malaysia also buys Singapore's asset", then it's a sounds like, and looks like a typical Tingkat 4 stupidity.

Temasek made RM4.125 billion from that deal over 9 years. Imagine the broking commission!

Is it possible that Khairy is making mega bucks commission and Amirsham is taken into the Cabinet to keep a close watch from him squelling? The fact that it is not him answering in Parliament raises that suspicion.

Lets get the Finance Minsiter to answer or will it be "I do not know and I am not involved" like in the case of ECM Libra and Avenue Asset.

Could this be why Pak Lah has to stay and suffer through all these embarassments?