UEM's three times stupid (Part 2)

How easy it is for people to deviate from the real issue raised.

We were quickly accused of being racial just because the Sunrise or Dato Tong Kooi Ong's people placed in the top management of UEM Sunrise are Chinese. If so, then raise the issue of Sunrise coincidentally one race policy.

Some tried to use the meritocrasy argument by highlighting Tan Sri Hasan Merican as an example. On the same note, they tried to predictably argue that UEM is better now after the merger with Sunrise.

Thanks for arguing in that manner. You've taken the issue raised in the direction we wanted it to be. In other word, you fell for our bait.

Khazanah's Stupidities

Khazanah Nasional made themselves looked three times stupid for naively believing that this is a synergistic merger where all parties benefit. Their ability and credibility have been in doubt since the Air Asia-MAS merger attempt.

What can be clearly seen is that Sunrise shareholders made money. Sunrise's management and staff get absorb into UEM Sunrise. By the look of things, they are placed in strategic positions of control and will eventually that take control of UEM Land.

We suspect the Sunrise will continue to make more money but Khazanah and government get nothing back. 

As far as the corporate structure, UEM appears to have 50% equity in UEM Sunrise and as usually happens, friendly parties close to UEM are holding shares too. Thus, UEM should effectively have more than 50% plus 1 shares to be in control.

Quite sure Khazanah is not naive not to do that. If they did not, then Khazanah is four times stupid.

Khazanah is already four times stupid for missing out the worms in the takeover described by our insider informer as overvalued takeover of Sunrise at RM1.4 billion. Standard MBA courses will warn that any acquired companies will have worms inside. It only makes Khazanah five times stupid.

The takeover happened in 2011 and it is as good as water under the bridge. However, only now will the worms come out of the wordwork. Our little bird is concerned that it could lead to further milking of UEM Sunrise.

Since Dato Tong Kooi Ong is widely known to be MCOBA Dato Seri Anwar Ibrahim's crony from the days of the 1999-2000 reformasi, it fueled the suspicion that there are people inside Khazanah and GLCs helping opposition raise their war chest to tumbangkan kerajaan through unconstitutional means.

Hopefully, UEM Sunrise will not give a cliche reply saying they have in place stringent procedures and controls with committees overseeing and monitoring to ensure company's policy are adhered to.

Surely they do not need to be defensive because this revelation made no personal attack or accusation against Izzaddin. If there is any inferences, it is the nature of the information revealed by the insider.

Friends viewed Izzaddin as someone who kow tow to teachers, bosses and anyone his superior. Despite Izzadin being not someone with much espirit de corp, they felt the happenings in UEM Sunrise would not have been his doings.

He was just diligently carrying out the instructions of his superior. Budak ANSARA tidak buat kerja jahat, mesti kerja budak-budak MCOBA :)

Furthermore, UEM Sunrise has it's own Board of Directors (BOD) and Management team. Izzaddin would only be on the BOD.

Danny's Bribe

Before going through the worms inside Sunrise, it is best to share this true story involving a slightly more than 100 acres land in Bayan Lepas, Penang.

Our little bird told us that UEM Land had participated in an open bidding of the land but lost out to Ivory Properties. Their bid was at about RM250 per square feet. 

However, UEM Land had not given up and wanted to make a presence in DAP fueled Penang's property boom. Upon their calculation, they were willing to offer at RM300 to Ivory Properties.

Suddenly, Ivory Properties announced on November 11, 2011 of their JV plan with Tan Sri Danny Tan's Dijaya Corporation in a deal claimed to be worth RM10 billion. Read the press release here.

At around that time, Danny Tan had a leg in UEM Land as one of the three major shareholders of Sunrise Berhad. UEM Sunrise deal was announced in 2010.

Out of the blue, someone in UEM Sunrise got a call from Danny Tan and a meeting was organised. He offered a piece of the Bayan Lepas land at RM600 psf. This is the same modus operandi he used in the recent land sales to Eco World from part of the questionable 1,200 acres Tropicana land purchased from Selangor state.

Suddenly, Danny Tan requested everyone to leave the room except for one. After everyone returned from a quick cigarette, they shook hand and part ways. It was known later that Danny Tan offered RM5 million bribe to seek help to push the deal through to UEM Land BODs.

But it was not brought forward. So for Eco World's purchase at double the price within a year, was there bribe involved?

The surprise to everyone was how Danny Tan knew UEM was still pursuing the land. He probably knew the list of all the bidders of the land but he would not have known UEM are still interested. Furthermore, his offer at 100% of UEM's willing price indicate he may have known of UEM detailed intention and start negotation at the usual double the bid price.

Was there a leak from within UEM Sunrise?

The Little bird that told us believed there are people inside UEM Sunrise or UEM Land that seemed to be more keen on taking care of Sunrise and it's shareholder interest than that of UEM Sunrise.

And it indicate that deals and projects taken to UEM Sunrise may come with certain people lining their pockets with bribe. So Izzaddin should be made aware and not just come out with standard statement that they will investigate into the matter then keep quiet after six months.

Worms from Sunrise

In The Star report here, they quoted Dato' Tong Kooi Ong saying, "People are always hung up over who gets a better deal. I'm not. If we all try to get a better deal at the expense of the other, then surely we can't get a deal done."

The statement raised the suspicion that he is willing to lose equity control in exchange for something  bigger and more beneficial. Let's not be naive into believing that it is about synergy with both parties coming out better off. 

Tong could have something which he can't afford to do or he is aware of worms that will eventually come out of the woodwork. Otherwise, why would Tong exit from the Board of Directors of UEM Land?

He is usually more comfortable as the deal maker and man behind the scene.

Sunrise, which was known for their flagship development Mont Kiara, had left a strata title problem behind.

Banyan condo will not get a new land grant from the land office. The stated land use on the grant was for residential but they constructed the condominium project with commercial space.

Sunrise may have bribed DBKL to change tha development order and subsequently, secure a CF but the land use issue was ignored.

Little Bird highlighted that he had prior knowledge that Sunrise's purchase of Bank Rakyat's Angkasaraya building meant for redevelopment was overprice. Now that it is in UEM Land's hand, they will now have to carry the baby.

Tong and Sunrise can wash their hands now from Bank Rakyat. It was reported in July 2013, after the "merger", that Bank Rakyat is suing to reclaim the title. Deepak and an UMNO Ketua Bahagian is involved in this deal, thus suspecting the deal is padded deal.

Read Sun here and the ensuing discussion in this forum website here.  

Another questionable Sunrise deal brought into UEM Sunrise involved a Canadian land in the immigrant populated town of  Richmond, outside Vancouver.

Conveniently, Tong disappeared to Canada after selling off Phileo Allied Bank to Maybank after the forced merger post Reformasi.

The suspicion is Tong may have bought the land for investment and injected the deal into Sunrise as exit. The question should have been asked by UEM: Why did he dumped the land into Sunrise and now dumped it into UEM Sunrise?

Little bird claimed that Quintet development has a low gross profit margin below 15%. The net profit to be derived from the projects will need to deduct many other items like tax and include possible contingent liabilities.

Read on Quintet Development in their website here.  The Wikipedia description of Richmond here shows it is not quite a suburb to Vancouver and hardly a hustling and bustling property market.

UEM Sunrise seemed to be keen on developing the land. Little bird said only few people know of this deal. One is Raymond Cheah, another Tong Kooi Ong and someone in UEM. Did anyone else made them keen?

According to Little Bird, UEM also did badly in this RM1 billion housing construction in Brunei. There is also concerned on the company's foray into Australia and India. Did they not learn their lesson from Qatar?

Raymond Cheah was also instrumental in the UEM Sunrise-KL Kepong joint venture to develope their Kulaijaya plantation land of the size of 1,012 ha in Kulaijaya and 202 ha in Johor Baru in a deal dubbed as the RM20 billion Nusajaya deal. Read in Sundaily here.

CMB Research gave a glowing picture here but it only indicates Nazir could be getting a bite in the financing and corporate work. What do Analyst know of property other than the insider info leaked to them?

Edwin Lefebre wrote of it in his investment book classic, Reminisence of a Stock Market Operator way back in 1923.

Little Bird was sceptical on the price of the plantation land used to calculate the deal. It is almost 30% over price.

Knowing Nusajaya is Khazanah's baby, it couldn't be coming from Izzadin but the incompetent and no deliverable MCOBA, Tan Sri Azman Mokhtar, who even gave away Khazanah's scholarship to his already rich MCOBA cronies.

No Racial Prejudice 

In Iskandar, the UEM people down there are pissed as hell with COO Lum Tuck Meng. He is not solving but procrastinating on the project delay problems in Nusajaya.  

Little bird said the compensation paid for the too long unresolved termination of contractors will wipe profits.

Ah ... the Sunrise branding and racial prejudice into generalising Chinese as better than Malays. So let's keep it within the issue.

One commentary complained that Izzaddin had resulted in mass resignation of Malay UEM Managers. The comment below:

These past few years of Izzaddin has been seeing many of UEM Managing Directors exit from UEM. Adnan Mohamed from Faber, Azmanuddin Haq from Environment, Dato Che Halin from CIMA, Suhaimi Halim etc etc. Some of these companies are making money i.e. profitable yet the boss is shown the way out. If true they are not making money, shouldn't the Board of Directors also be replaced. In any of the Board members for each company, Izzaddin surely is one of them. Yet, the Chairman (normally those above 70 years of age)and the Board of Directors remained.

Apart from those in the Top Management being asked to leave, Senior Management post were also asked to leave. The human capital team of UEM Group are mostly female General Managers if not Senior General Managers. They have replaced quite an alarming number of experienced male HR guys who were once with top notch MNC's Shell, Philip Morris, Digi, Uniten, TPM, MBSB, Ann Joo Bhd, EON Bhd, Goodyear, Linatex, John Hancock, Texas, NCR/AT&T, Astro, General Electric, Philips, Fujitsu , Hitachi, Samsung etc. Errman Zuhady, Zainal Mat Aini, Sulaiman Ahmad, Kamal Ithnin, Syed Jalil, Hassan Sahalan and Adam Abdullah has already left either being asked to or simply was not good enough for contract extension.

A lot is being swept under the carpet, newly introduced interventions and programs being brought upon yet they have never been able to produce better results despite paying hefty sum of contract to external consultants. The management will deploy external consultants to carry out forensic audits by paying them million ringgits of money just to get rid of the hated one although the findings is non substantial and without loss of dollars and cents.

UEM is a "silver spoon deal company" with a top management who doesn't know the real in and out of its operations. They'll come up with quick solutions without really knowing the root of its problem. Qatar issue is as simple as "the Arabs were conman" although in actual, UEM experts were unable to do a proper study in the beginning.

When those in power are those who knows how to cook the books, they'll be able to justify their actions till the new people replaces them. That is if the new people are not their chosen successors or everything will remain intact.

With the power maneuvering at the top by Izzaddin and fully carried out by Rasidah Kasim without any interference by the old time unproductive Chairmans and Board of Directors, UEM will see RED soon enough. Get a real Audit to dig and you'll get a true report in all areas, not just the manipulated figures.

Pity Izzaddin gets the blame just because the manner he behaves at times in the past create a negative perception of himself.

However, Azmanuddin Haq is one guy that should have been sacked long ago. This boy from Batu Pahat is corrupt and morally deficient. If MACC or IRD or Taskforce wish to investigate him for money laundering, try locate his safe deposit box where he kept all his ill gotten gains in cash.

So do not defend a person because he or she is Chinese and villify or downgrade others because they are Malay. That is racist.

Not Quite Forthcoming

Any corporation that came under fire tend to get agitated.

Some would just reply in the typical corporate comm style which are merely denial but hardly revealed any facts to be convincing. The reason would usually be business secret or a fancy word, proprietary knowledge.

However, public listed companies can be quite revealing with Analyst and friendly Business Reporters when it comes to seek help to pump up their shares.

At times, insiders information and management accounts exchanged hands. The investing public are usually left in the lurch with shallow information if not for the likes of us prying into their affair and pushing them to answer the buzz among the public.

Since Qatar expose, Izzaddin preempted the repeat of 2009 by engaging a group of bloggers who covers corporate matters.

From our observation, he has not been quite forthcoming. He tend to do simplistic denials and repeat what was said in the papers. Sometimes, the rather casual conversation into unrelated matters seemed to be an old school trick of the lesser known the better. 

If they are angry with this expose, douse it.

Surely they cannot expect bloggers to shut up just because we were fed dinner and given corporate goodies. They cannot be mad and expect us to shrug off from our self-initiated responsibility. The dinner could then be considered bribery.

And this revelation is no stab in the back. We have not been friendly friendly to get information and report back to the disciplinary teacher. Corporate "secrets" made known have not been divulge.

What have been revealed is what is the talk around town. He should realised that there is something cooking when we kept asking the same questions. Answering in cliche mainstream media answers ain't good enough.

Our old Little Bird from the days of Qatar in 2009 confirmed what is being talk about and added a little more when we met up with him last month. But we are still holding back, so no cliche replies please.

UEM Sunrise should not keep quiet but be transparent. They should debunk these talks and explain. UEM Sunrise is a public company. And, Khazanah is not a wholly owned subsidary of MCOBA or ANSARA or other Little Napoleans but belongs to Malaysia.