By LIM SUE GOAN
Translated by SOONG PHUI JEE
World's leading listed plantation company Sime Darby has just celebrated its 100th anniversary and it has once again become a focus recently due to a project cost overrun scandal involving malpractices.
When Sime Darby was said to have suffered a loss of RM2.1 billion in May this year, the market was shocked as Sime Darby has been a giant multinational conglomerate involved in five core sectors with a total annual turnover of about RM33 billion. Even the largest listed company is facing a management problem, we can actually imagine the situation of other government-linked companies (GLCs). It has seriously affected the confidence of investors in the stock market and supervision of the authorities.
There are questionable points in its four projects, including the Maersk Oil Qatar (MOQ) Project which has lost RM526 million and the Bakun hydroelectric dam project which has caused a loss of RM340 million.
Sime Darby decided to take civil action against certain individuals found culpable over the severe losses. It has reflected the seriousness of the situation and the Malaysian Anti-Corruption Commission (MACC) should also take actions. The government must disclose the internal audit report of Sime Darby to tell the people the truth.
Over the years, losses suffered by the GLCs would just be left unsolved without even an investigation. For example, the Bumiputera financial scandal in the early 1980s had caused the country a loss of RM2.5 billion, Perwira Habib Bank had lost RM670 million in 1985 and 1986, Perwaja Steel Sdn Bhd lost RM2.56 billion in the 1990s and recently, Pos Malaysia Berhad lost RM227 million due to its investment in Transmile.
When the GLCs suffered severe losses, the government will have to save them with the people's money. A Deputy Minister in the Prime Minister Office had disclosed in December 2006 that the government had spent RM11 billion on seven privatised companies facing malpractice problems and financial crisis, including spending RM8.2 billion to take over the two light rail companies.
Although former Prime Minister Tun Abdullah Badawi has set performance indicators for the GLCs in 2004, the public does not know how many of the GLCs have actually achieved the indicators and how many have been punished for misconducts.
And now, another scandal of the Sime Darby has been exposed. In fact, it should be taken as an alarm. Many people are coveting the wealth of Sime Darby. There might be more corrupt practices if it is not strictly controlled.
The Parliament's Public Account Committee (PAC) should also conduct investigations so that the management of the GLCs will be more responsible.
Malpractices in the GLCs are also related to management problems. If the government does not employ outstanding professionals from foreign countries and experts to manage the GLCs, it is worried that the decision-makers of these companies might make wrong decisions when the international economy faces a downturn.
Also, the government should sell stagnant companies to the private sector to avoid a monopoly in the market and at the same time, allow the economy to be more vibrant, so that the private sector can share more business opportunities.
Treating the GLCs as entrepreneurs assisting the Bumiputeras will stifle the economy and not be conducive to management.
Well-managed GLCs will be a goose laying golden eggs but bad managed GLCs will turn out as a burden. The government wishes to focus on economic transformation, but would it be able to manage the GLCs well at the same time? A choice must be made between the two.
Sin Chew Daily