Friday, August 6, 2010

Sime Buffeting

No, it's not about Warren taking any interest in Sime Darby.

Rather, it's about the swirls and eddies surrounding the Malaysian Insider "scoop" on Sime's purported RM2.5 billion prospective loss provisioning.

Sime quickly came up with an official statement that it expects to close its current financial year in the black.

As Rocky's Bru pointed out here, the carnage on Sime's market capitalisation had already happened by the time Sime responded.

I have two things to say.

Reportage carnage

The capital market lives by rules. Though many market players live on edge on a testosterone-fueled hubris by skirting the grey areas of regulation, the rules are there nonetheless.

Were it otherwise the level of trading violence in capital markets would have killed the modern economy aeons ago.

So, here we have an Internet-based news portal who jumped the proverbial gun with the resulting effect that RM1,000,000,000 of wealth disappeared from those who had standing investments in Sime at Bursa Malaysia.

Inasmuch as shocking management ineptitude and corrupt practices may have caused Sime's current financial malaise and, needs to be brought to book, so too, should unedifying "scoops" that may not be supported by cold hard facts be held to account by the relevant authorities.

I would go further to say that even if the "scoop" is supported by cold hard facts it may still transgress the capital market rules and other laws of Malaysia that are designed to guard against precisely this type of mischief, where disclosure of "price sensitive information" is required to be made on a timely basis and, with proper procedures.

Losses kills bosses

Sime is a publicly-listed company. It is a Government-linked Company. It is an ancient company. It is a multinational company, one of the few in Malaysia.

Sime's current problems finds a good metaphor in the wonderful Selangan Batu, tropical timber tree that has lived for a glorious 100 years to achieve and straight and unbent height of 50 metres with a girth of 20 metres only to find itself at the mercy of a logger. Snuffed out with nary a blink of an eye.

I am fond of the Latin phrase, quis custodes ipsos custodes (who will guard the guards themselves).

The Malay equivalent is more rustic and appealing, pagar makan padi, which pretty much carry the same connotation.

Seppuku and falling on one's own sword

A Voice has renewed his call for the Chairman of Sime to resign. The call is extended to the entire Sime board. The call, if you read his previous posts on the matter, is categorically extended to specific managers within Sime.

Perhaps it is time that A Voice's voice be heard (pun intended).

For, if you have watched David Attenborough's seminal documentary, A Private Life of Plants, you will have seen one chapter where Attenborough showed in time-delayed fashion how a raging fire decimated forests and fields as Nature's way to regenerate.

The fire is now raging in Sime. Let a new group of directors and, selected managers tend to the charred grounds and tend to the young shoots that will, as surely as the Sun will rise, grow and thrive.

That is as Nature and good corporate governance and ethical conduct (and A Voice) demands.

4 comments:

Raison D'etre said...

quis custodes ipsos custodes?

Who watches the Watchmen?

de minimis said...

RD, your translation is more precise than mine. Thanks

donplaypuks® said...

I think to send the message home, Sime's clueless Chairman should not be allowed to resign.

He should ne sacked at an EGM convened by its major shareholders.

dpp
we are all of 1 race, the Human Race

donplaypuks® said...

"Quis custodes ipsos custodes?"

Who guards the Guardians?

I wrote about it two years ago
click here

or http://donplaypuks.blogspot.com/2008/06/quis-custodiet-ipsos-custodes-part-iii.html


Answer: We do!

dpp
we are all of 1 race, the Human Race