Close Shave

I recently received a telephone call from an ex-colleague in Malaysia which was a huge relief for me. This ex-colleague was running the defence of legal proceedings brought against my ex-employer. During the Asian Financial Crisis of the late 1990s my ex-employer was coerced into selling the bank it owned and managed, to MBB, a government owned and managed and largest bank in the country. Not content with virtually forcing the sale, the regulators proceeded to compel the shareholders of my ex-employer to also sell their shares in the divesting company at a give-away price. From memory it was easily a third of what the market value was. Such was the politically driven business environment in Malaysia then. I would not be the least surprised if it had only gotten worse since.

In the course of the sale I was involved in the disclosure process of the due diligence (whatever the extent which was permitted, possible or even meaningful under the coerced sale situation). Some 10-11 years later MBB alleged the disclosures weren’t adequate and were in breach of the agreement concerned. They sued, my ex-colleague contacted me for help and things were to have culminated in a trial next week, for which I was supposed to appear as a witness. I had just read, reviewed and worked through voluminous documents in preparation of the trial, and had asked for more documents, when the call came through. MBB had decided to discontinue the proceedings after all. I like to think they decided they absolutely have no case and so decided to discontinue but in Malaysia, God only knows what the reason is/was.

As professionals, both my ex-colleague and I thought the documents assembled to date clearly showed there were no non-disclosures of a kind which amounted to a breach of the subject agreement or at law. My confidence to take the witness stand had been steadily climbing but it was a relief all the same, when the call came through. I was just thrilled I didn’t have to make the journey and be away from my family and home and friends here, even it was just a week.

While preparing for the case these last couple of days I did a quick and general background surfing, just to reacquaint myself with the Malaysian corporate scene, especially recent events affecting the parties. What I discovered, generally, were the following:

  • There was an alliance to share services – a deal to allow MBB bank services to be delivered in Pos Malaysia outlets. So why were they suing each other? I had told a mate of mine a few weeks earlier that financially it made no sense as both companies were owned by Khazanah – the investment vehicle for the Malaysian treasury – so it probably had to do with individuals’ KPIs ie the guy running MBB needed to show he was doing the right things and the guy running PMB, likewise. It probably didn’t cross their minds that they could sit down with the relevant guy in Khazanah to obtain sign-off to let this one go. The alternative – an expensive trial – was going to cost the government a lot of money. In fact kiddo observed that the cost to get me to Malaysia as a witness alone, was probably in the vicinity of an average wage earners annual income. I guess Malaysian GLCs don’t really care if money is not well spent, in fact, squandered.
  • Resignation of Haizan Khir Johari as Non Exec Director. I now recall Haizan as an analyst in the research department of Phileo. He was a lot younger than I and though smart and likeable, his ascension was symptomatic of the sort of abundant opportunities available in Malaysia provided you tick the right boxes in terms of race and connections. I have no doubt Haizan was capable and I also remembered him as hardworking but I wonder if these issues were relevant at all.
  • Striking off of several subsidiaries – sounds like the company secretarial team was asleep. Typical government owned company.
  • Announced divestment of Khazanah interest (32.5%) in PMB – I wonder how far this has been executed and how much the government was going to make from it, having acquired it at next to nothing. It possibly shows too, that the government is running low on ammunition and needs to regroup its cash position. Forget Najib’s statement about the rationale for the sale. We all know how credible that it.

Anyway, the brief re-acquaintance with Malaysiana is thankfully over. Other than the pleasure of catching up with old friends and relatives, the trip would have been such a dread.


Sent from my iPigeon