The boss called in sick this morning, I have finished most of my work, so I have a little time to do some reading.
I’ve just scanned through the report titled: “Corporate Equity Distribution: Past Trends and Future Policy”, otherwise known as “the ASLI report”, the one which showed up the government’s shameless attempt to lie to its people. The report is so intuitively correct I don’t know how anyone could seriously disagree with it. There may be bits and pieces which may be inaccurate, but even if I can pick these up, it does nothing to the reader’s convictions that it sounds absolutely spot on. The 40-page report can by no stretch of the imagination, be anything less than a true picture of the reality.
Anyway, certain bits jumped out at me:
At pages 14-16: “One key sector where the influence of non-Bumputeras has diminished and the role of GLCs and Bumiputera individuals has increased is in banking. The decline in non-Bumputera participation in this sector is a result of the government’s enforced bank consolidation exercise, in spite of much public outcry. In 1999, the government proposed to merge Malaysia’s 58 financial institutions into ten – originally it was six – anchor banks. One key protest about this consolidation exercise was that Malaysia’s most dynamic banks were being brought under the control of less entrepreneurial institutions. When the original proposal of just six anchor banks was presented, there was open discontent among non-Bumiputera bankers about this consolidation exercise as the merger of some of their most enterprising banks would diminish their presence in this sector. The number of Chinese-owned banks was subsequently increased from a mere two (Public Bank and Southern Bank) to three, when Hong Leong Bank was also given anchor bank status.”
When PhileoAllied Bank was acquired by Maybank, it had about half a dozen General Managers. Together with other senior management staff (from Senior Managers upwards), there were probably less than 20. Guess how many retained their positions or were given anything remotely close to where they were, when they became part of Maybank? From my recollection, ONE. Yes, just one and more tellingly, that individual is (surprise, surprise) a Malay. He continued to be given important roles, retained his perks and blended in more seamlessly than any other senior management personnel. To heighten the significance of it all, I should add that this was a General Manager generally perceived as the worst performing senior management personnel before the merger/acquisition. No marginalisation? Yeah, right.
I particularly like this bit:
(Bottom of page 15) “…once thriving non-Bumiputera-owned banks like PhileoAllied Bank, which was quickly gaining a reputation for innovative and efficient financial services, was merged with the government’s Malayan Banking, a larger enterprise but not renowned for its entrepreneurial capacity.”
I remember one issue we were negotiating with the investment bankers who had carriage of the transaction had to do with giving up employee share options. The options were in the listed parent company, and if employees of PhileoAllied Bank ceased to be part of the group under the parent company, they lose the options and the issue of compensation had to be addressed. The senior guy I was talking to suggested the trade-off was employment with the country’s largest bank. If only Dr Lim and his team came up with the above quoted paragraph 6 years earlier… Not only should employees of PhileoAllied Bank be compensated for giving up their share options, they should be further compensated for being made to now work with a “larger enterprise not renowned for its entrepreneurial capacity” instead of continued employment with a “thriving non-Bumiputera-owned banks like PhileoAllied Bank, which was quickly gaining a reputation for innovative and efficient financial services”.
Also on the same page – page 15: it said this: “Hong Leong Bank, the product of the Hong Leong group’s expensive takeover of MUI Bank just six years earlier,…”
I worked, for a while, for the gentleman who was the vendor, who was later to squander a bulk of the proceeds on investments which turned sour. Pity.
Again on the same page: “…RHB Bank, once developed and led by Rashid Hussain, a competent businessman with expertise in the financial sector, has come under the control of a well-connected family, with little or inadequate experience in this sector.”
I remember receiving an sms late one night, causing my wife to very suspicious. It was from a client who got into a bit of trouble with the police, and he needed help. That client was from a well-connected family, with little or inadequate experience in the banking sector and this little dance in the middle of the night in the clubbing centre of Kuala Lumpur, was not a very smart move. I turned up in the police chief’s office very early the next morning, and arranged a meeting between this client and the police chief. That was as far as I could or would go. It turned out later that this episode was just another nail in the coffin, for someone who would never be accepted into the banking fraternity of Kuala Lumpur. The Deputy Chairman of my last Malaysian employer would later regale us with stories of less than acrobatic manoeuvres in the offices of the banking regulator where pieces of furniture were forcibly and haphazardly re-arranged by this client. He’s a product feudalism and NEP, I guess.
The report then said: “Of these ten anchor banks, the government has majority ownership of four of them. Another two are owned by Bumiputera. The non-Bumiputera’ prominent – even arguably entrepreneurial – presence in banking and finance has been diminished considerably through government directive. It is probable that over-zealous implementation of polices to achieve certain goals, like the creation of anchor banks, can be of detriment to the development of enterprises, specifically those owned by Malaysian businessmen, while also undermining investor confidence.”
To many of us, that spelled the end of our interest in corporate Malaysia. To me, it was slowly becoming a joke and my days with my last Malaysian employer, where I was to witness the brazen dismissal of what is right and the bloody-mindedness to retain discriminatory and unfair policies for years to come, told me to just pack up and go. I did.