IJN Probe (Part 1)

Barbarian at the Gate

Khairy replied to Rocky Bru’s blog posting which highlighted this blog's article on the Sime Darby’s proposed acquisition of Institiut Jantung Negara (IJN). He clarified his presence at IJN on the day the Health Minister, Liow had a working visit.

The problem with his story it doesn’t jive and he twisted the sequence of his itenary. He can't deny the many watchful and cynical eyes casting their sight on his presence. He had only raised curiosity and suspicion by being there.

If Sime Darby’s statutory public statement of interest is seen as Barbarians at the Gate of IJN, Khairy’s reaction and Musa Hitam’s unsatisfactory statement reported on December 24th, 2008 enhanced the suspicion that the Barbarians “in” the Gates of IJN.

It’s difficult to swallow but Anwar Ibrahim’s suspicion may turn out to be true. The proposal could be approved after the Kuala Terengganu by-election. He said it is a ploy to create the impression Government is now sensitive to the public’s grouses.

That’s his political motive to continue to discredit Najib. He must have forgotten that the Prime Minister is the same flip flop from his home ‘negeri tak beraja’ state of Penang.

Since the Government deferment, the issue has quiet down from the media. But beyond the public’s eyes, something sinister is happening. The issue has to be put back in the limelight. More so, with the public seemed somewhat satisfied with the postponement decision.

Curious

Khairy gave the excuse to he had some matter to discuss with Youth and Sports Minister, Dato Ismail Sabri who he claim was undergoing medical check-up.

It is highly improbable to visit someone undergoing a heart-related medical checkup. Could Ismail be doing not just a medical checkup but for more than that? If he was undergoing a check, is it a practise for VIP to be given a room? And, they bring the stress test machine or ECG into private room for the Minister’s examination?

Watchful eyes noticed Khairy visiting Ismail Sabri’s room. There were staff and press casting cynical eyes of his presence in the press room. Why did Khairy clarified a non-issue? It is already acknowledged that Dato Dr Mohd Salleh Ismail (aka Salleh Budu) is IJN Chairman and should be present with the Minister during the PC.

Is he trying to avoid his serious conversation with Dr Ezani in the open from becoming an issue? Wonder why? What were they talking seriously about? Who is Dr Ezani? Is Khairy his friend or acquaintance or something else? Why was he present? Was he assigned to be part of the entourage to escort and brief the Minister?

Since Khairy brought up he made a “coincidental” courtesy visit to Salleh Budu, wouldn’t we be curious to know of their conversation? Serious or casual?

Most puzzling would be why does he need to clarify his stand, if it in tandem with popular opinion? Khairy should have shut up and ignored this blog. His answer to this blog’s naughty probe only raised more suspicion and curiosity. Perhaps, the long Ketua Pemuda UMNO campaign made him paranoid. To repeat again, is it a case of “siapa makan cili, dia rasa pedas?”

Takeover

The news break of Sime Darby’s takeover proposal of IJN was first made by December 17th the same day Sime Darby made official its intention.

Sime Darby proposed to takeover 51% interest in IJN Sdn Bhd and gave assurance that the charges for the poor will not be raised. The Government’s reaction was as per the Star SMS news service report:

8/12 Govt will allow private sector to take over National Heart Institute (IJN) provided it continues to service low-income groups: PM Abdullah/STAR

18/12 Govt will continue to regulate fees at IJN even after privatisation so that patients will not be overcharged: Health Minister Liow/STAR

18/12 The Govt in principle has no objection to Sime Darby move to acquire a stake in the National Heart Institute (IJN): DPM Najib/STAR

Najib’s remark doesn’t jive and was dropping hint of his discomfort. As a new favourite target of opposition, he is quite aware of the murmurs on the ground. The problem was he is in the precarious position of having an incompetent boss who is in the habit of making hasty and often flip flop decisions.

The Najib detractors may not agree with that 'excuse'. They would point to brother, CIMB Nazir’s role in the monstrous merger into Synergy Drive. However, Sime Darby, PNB and CIMB are under the purview of Khazanah and MoF II, Tan Sri Mohamad Nor Yakcop. Khazanah Chairman was and still is the Prime Minister, Abdullah Badawi.

Without any party supporting Sime Darby’s proposal, the Government announced it deferred decision on the proposal on the next day, December 19th, 2008. On the same day, there was press release from the present medical consultants protesting Sime Darby statement that the medical staff of IJN are demanding higher pay and will leave if this demand is not met. They disputed the high staff turnover claim by Sime Darby.

The issue had quiet down but the public is yet to be satisfied with a mere postponement. They want a complete rejection. Sime Darby Chairman, Tun Musa Hitam made statement reported in the press on December 24th to give comforting assurance but it only reinforced public suspicion.

Anwar may have attempted to exploit the issue to accuse the decision is only postphoned for after the Kuala Terengganu by-election. This time, he maybe right. Voters could believe him since Government predictably raised petrol prices by a heft 78 sen after the March 2008 General Election.

IJN Sdn Bhd had a Board of Directors’ meeting on the evening of Christmas Eve. There was an incident. Arising from that, one member broke a disturbing piece of information. It tallies with the tip-off first published on SDW blog:

“The Minister of Finance Inc owns 99 per cent of IJN. I was informed by high level Government sources that the deal is almost sealed.”

Shocking! It happened right around the time Abdullah had just enacted a new law to address corruption as one of his legacy. Will IJN be another legacy of the destruction kind by Abdullah?

Merger Mess and Vision City Illusion

Since the preposterous and monstrous merger of the three plantation giants – conglomerate-style Sime Darby, plantation-property based Golden Hope, and research-based plantation Guthrie – into Synergy Drive which later became Sime Darby, it has yet to prove the claim the Merger would transform the Company into a more dynamic organisation.

The mess of the original Sime Darby seemed to weigh-down the merged entity. Its motor division is a losing concern. Its foray into engineering, and banking failed miserably and culminated into massive losses. There was that recent blunder in commodity trading/speculation.

Although former Guthrie Chairman, Musa is retained as Chairman, he is of no consequence. The driver seat remained with the ‘original’ Sime Darby management. Capable people from Guthrie and Golden Hope are being sidelined. Morale among staff and management in the group is down. Sime Darby's calculative and uncaring ways with its staff was felt by former Guthrie and Golden Hope staff. There is growing disenchantment.

The management (including the Board of Directors) establised a high financial benchmark - 13-15% Internal Rate of Return (IRR) and 20% annual growth. Every division busted on the first year already.

Rationalisation process is not going well. It too big a task. As once said by this blogger, the skill in rationalising the operations (particularly in blending the different corporate cultures and business approach) is beyond the management's capability.

With impending poor plantation results as result of plummeting commodity prices, next year’s profit is expected to be really bad. The stodgy elephant need something cheerful to tell its shareholders. The analyst needs a story to peddle their snake oil of favourable future profit, justify high PE ratio, and share price artificially high.

Analyst usually don't dig deep to analyse management. They are happy as long as there are accountants, lawyers and some Investor Relation officer to 'leak' insider info. It doesn't matter the ‘accountants’ can’t differentiate CPO as in Crude Palm Oil with Chief Police Officer and clay brick and cement bricks. They only appreciate numbers on paper and couldn't spot Sime Darby has no real plan. Its corporate strategy is generic and the vision and mission statements uninspiringly not strategic and unclear.

What corporate leadership can one expect from a long retired master in the art of political backstabbing and knowledge of economics next to naught?

This is the same Chairman of Iskandar Malaysia’s Advisory Council that described WPI as emulating today’s business model called Copy Cat economy. He must have confused it with Macau’s cabaret Kit Kat Klub. Perhaps, he is mentally trapped in 1960s Japan in the midst of building its industrial sector by copying and commercial espionage of American and European technology.

Sime Darby announced a story; a 12,000 hectare Labu Vision City at the Negeri Sembilan-side of Selangor-Negeri Sembilan border that comes with a new LCCT. That is bigger than 10,000 ha Nusajaya in Johor! Sources informed the State Government requested Sime Darby to include Airport City in the plan. A new LCCT would elevate the volume problem at the current terminal at KLIA. Air Asia will enter into a long lease arrangement. The State Government has no business in the National Aviation Policy. Why? That is another story.

The Labu Vision City is supposed to come with a College Town, Sports City and Medical City. Voila! The IJN acquisition proposal comes in handy and helps solve a lot of immediate problems. As an ongoing, well-run and reputable Medical Institution, IJN would provide the comfort in numbers and expertise. It has a RM400 million reserve, ‘officially disclosed' annual profit of RM20 million, paid-up capital of RM150 million, and revenue stream from Government of RM200 million a year (Chua Soi Lek may have confused it as Government subsidy).

The new wing with extra facility and beds will increase capacity, profit and story. Perfectly ripe for picking.

Next: IJN Probe (Part 2): Trojan Horse

* Edited 8:30 am 3/1/2009