Zarinah should really answer for ECM Libra-Avenue merger

Securities Commission Chairman Tan Sri Zarinah Anwar should really answer to the Malaysian public on the ECM Libra-Avenue Capital merger, which SC gave an approval in mid 2006.

Many Malaysians may conveniently forgotten the scandal that looms the merger of two financial houses Avenue Capital Bhd. and ECM-Libra Bhd., which was first proposed sometime in early December 2005. It started when Bumiputra Securities was hived off by Khazanah Holding Bhd. to some ex-Hong Leong Securities people during PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi time and the new owners and promoters of the securities firm decided to bring in then NSTP Deputy Chairman Kalimullah “Riong Kali” Hassan and then the recently resigned Deputy Chief of Staff in Prime Minister’s Office Khairy “The Most Powerful 28 years old in Malaysia” Jamaluddin into the board.

The inclusion of the two controversial characters opened a new dimension for ECM Libra. They aspire to be a boutique investment bank and wishfully, with a universal broking license. As the shareholders worth then was only RM 200 million, ECM Libra may not qualify for all the licenses they want. So it is naturally to bring in another firm  to beef and muscle up their application.

Avenue Capital Bhd. at that time was the parent company of Avenue Securities and the largest shareholder is Ministry of Finance Inc. It was particularly controversial because Khairy as a Director, who is also son-in-law to PM ‘Flip-Flop’ Abdullah  was making a proposal to MOF Inc for the the take-over (guised as a ‘merger’) and the latter is the Chairman. When rumours about the takeover were leaked in December 2005, journalist asked PM ‘Flip-Flop’ Abdullah who is also then the Finance Minister,  “I don’t know, I am not involved”. The denial was totally inexcusable.

The merger was highly controversial. Amongst the issues are:

1. Undervaluation of Avenue shares

2. Overvaluation of ECM Libra shares

3. Unfair purchase terms on Avenue Capital to acquire ECM Libra subsidiaries

4. Improper justification by independent advisers: K & N Kenanga Bhd.

5. Improper EGM for ECM Libra for the approval of the merger

6. ‘Collusion’ of the various authorities

ECM Libra’s shareholders account was valued at only RM 200 million was to merge with Avenue Capital which was valued at RM 800 million. As the gap is so huge, efforts were made to prop up ECM Libra’s market value and bring down Avenue Capital’s to a point where  goodwill was ‘impaired’ to the amount of RM 306 million, which is far more than the premium and reserve profit account combined. The impairment of goodwill  was not illegal, but irregular to common practice.

Post merger (which in actual fact should be called a ‘hostile take-over’), ECM Libra as the ‘smaller fish eating the larger fish’ took control of the combined company ECM Libra-Avenue and decided to drop the name ‘Avenue’ entirely. Shortly, SC issued a universal broking license and ECM Libra is now an investment bank. Naturally, Khairy now calls himself an ‘investment banker’.

Then another controversy happened. The manner the Avenue Capital Bhd. EGM was conducted on 17 May 2006 raised so many eyebrows. The minority shareholders raised so many questions on the ‘irregularity’  on the process of the merger, which include mandatory general offer (MGO) not conducted and ‘interested parties’ were allowed to attend and actually voted in the EGM. Minority Shareholders Watchdog Group made a protest for the minority shareholders for the irregularities.

Complaints were lodged by so many parties, especially minority shareholders to SC for the ‘irregular’ processes, EGM and eventually announcements made through media, which some considered misleading. However, SC played deaf and dumb about it, so much so that the best that anyone got as a response was just a mere acknowledgment of complaint filed. Even Police reports were made to the Commercial Crime Division,which referred the matter back to SC as the ‘subject matter expert’ and never got a response.

This is where Zarinah is accountable and should answer to the Malaysian public. She and SC have the legal, moral and ethical obligation to explain with full disclosure on the merger and all the queries and complaints filed. Many saw the ECM Libra-Avenue as the point were capital and financial market savvy people started to diminish their ‘feel good factor’ what so many had on PM ‘Flip-Flop’ Abdullah (reflected on the 11th GE April 20004 thumping landslide victory) leadership and administration. Eventually, the same bullish people lost faith on the man who so many thought to be  a ‘clean and pious’  leader.

In short, indirectly Zarinah played a strategically accessory role to BN’s poor performance in the 12th GE on 8 March 2008. Until today, BN has not manage to recover from the many of PM ‘Flip-Flop’ Abdullah’s mess, which include the ECM Libra-Avenue scandal. Now Rocky is reminding us all her role in Proton’s ‘slow death’, which was an orchestrated effort led by immediate past Proton Chairman Dato’ Azlan Hashim, who so many believed was acting on behalf of ‘Level Four Boys’. Then again, when talking about ‘Level Four Boys’, it is always about then the Mighty-Khairy.

Published in: on March 26, 2010 at 12:39  Comments (38)  

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38 CommentsLeave a comment

  1. wow… PM Flip-Flip really leaved his mark on our history…

    such a bastard…

  2. BD

    Apa kata keluarkan balik buku Khairy chronicle yang di tulis oleh RPK. Until today KJ never sue RPK. why ah ?

  3. korek, jangan tak korek…… banyak lagi !

    Mereka ini lah yang pandai cakap DEB disalahguna dan perlu dimansuh. And now to liberalise the economy..

    How about liberalise the past ‘salahguna’ records first before we move forward.

  4. This article reminded me of a story not so long ago about a helicopter company buying over a national airline!

  5. Who is playing god? Lower case in deliberate.

  6. The “back-door” acquisitions of Avenue by ECM Libra was completed within 1 week, the fastest M&A in Malaysia corporate history, thanks to the “full cooperation” of Zarinah SC and of course Tengku Zafrul (another KJ’s boy).

    Look at ECM Libra now, after the acquisition on Avenue in 2006, they are not making any big impact in the Msian financial sector.

    With Tengku Zafrul is now in Kenanga, give yourself 1-2 years before ECM Libra emerges as the major shareholders of this Bumiputra company.

    p/s Kenanga was the independent advisor for ECM-Avenue deal back in 2006, and now Zafrul is heading the Group, what a coincidence!

    • Tengku Zafrul…Kj …..Kalimullah Triangle will continue to Prosper.

      There is no way they can be unseated as they have the support of DS Najib

      • Zarinah’s contract was recently renewed for another 1 year so she can assist ECM Libra to acquire Kenanga since Zafrul is the CEO now.

  7. “It started when Bumiputra Securities was hived off by Khazanah Holding Bhd. to some ex-Hong Leong Securities people during PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi”

    Azman Mokhtar was the MD of Khazanah at that time (and still, phew!).
    This MCKK prick is responsible for selling a BUMIPUTRA entity to some Cina kurang ajar like Lim Kian Onn and David Chua. After ECM Libra acquired BBMB Securities, semua melayu in BBMB kena kicked out by those cina bangsat. Ethnic cleansing to the max. At that time, BBMB Securities was among the top 5 broking house in Malaysia (in term of revenue). What a sad story.

    Guess how the hell Lim Kian Onn, David Chua and Kalimullah got the money to acquire BBMB Securities? Earlier, they made million of commissions via private placement of several GLCs such as Celcom, etc, to local institution investors like KWAP and Tabung Haji – on the instruction of Nor Mohamed Yakcop. What a shocker! Duit orang hendak pegi haji digunakan untuk membiai ECM Libra. Only in Malaysia!

    Azman Mokhtar and Nor Mohamed Yakcop, I hope both of you will rot in HELL!

    • Hello, somebody… with brain+heart, please help us.

      Yes.. may them rot in hell.

    • After Lim Kian Onn, David Chua, KJ and Kali of ECM successfully acquired BBMB Securities, they changed name to ECM Libra Securities. Guess who is the CEO of ECM Libra Securites at that time?

      Ismee Ismail……………now he is the CEO of Tabung Haji!!!!!!

      If Najib will continue buat bodoh, someone please quickly alert Tun Mahathir about this shit.

  8. Most of this mess by UMNO linked personalities, irrespective of whether they are pro-Pak Lah aor anti-Pak Lah folks.

    Summary – UMNO fellows do not care much for the rakyats well being and for the future generations when they make such decisions.

    Then why must the rakyat be expected to support UMNO?

    This is not a pure business matter, involving individuals money. Its national resources which should benefit the rakyat.

    If the big picture itself shows squandering of national resources by UMNO, does UMNO then deserve the voters support?

    But then kalau kita tanya macam ini….then some ‘educated’ fellows will then bring in the ‘racial’ angle and tell off the rakyat.

    • Too Bad People votes from people like yourself don’t count Maaaa……

      Its the “Native’s” votes that count. As long as their support for DS Najib and 1Malaysia stays, no hope for yours truly.

      Latest: DS Najib sees Bright Hope for The Next Ulu Election….

    • Param, param

      If your intention is to takeover governance from the Malays, your first target will be to “buy” off some weak and greedy Malays linked to UMNO.

      That does not mean the whole of UMNO members are guilty as well.

      Have you confirmed that the other parties are angels not guilty of any wrongdoing, huh??

      Such a blatant character assasination …

  9. And, the alternative of UMNO (if there is any), are they any better? Citing blind hatred is easy, individuals can easily be labeled as a collective, although most of them did it for their own personal capacity, not for the party. UMNO did not ask them to do these things. It is in, probably, man’s nature to be corrupted with money and power, but again, does that means UMNO is to be blamed? Anwar when he was in power did the same thing, selling the country to americans(jews) making him, his father and brother rich as hell. And whom was it that say, sex is a sedekah? Not an UMNO ADUN, for sure. And we never see Nik Aziz in a proton saga, met him a few weeks ago and he is in a new mercedes. The Lims? don’t get me started. Does that means then, all political parties are corrupt? Or individuals in political parties are corrupt? I did not see in any official documents which says, UMNO constitutes corruption. Neither in DAP or its subsidiaries, PKR and PAS. But then I do wonder, where did the wang ehsan went, after being given to the state of Terengganu, when PAS was running the show….

    • Agree Jason.

      One corrupted individual must not be equated with the whole party’s stand.

      UMNO members were very vocal against KJ, Paklah and company. Ex-UMNO Anwar was also criticised. Tun Dr M was instrumental in “getting rid” of Paklah.

      Here we have Param conveniently accusing UMNO of “squandering of national resources” as if it is the party’s stance.

      You can surmise that there is indeed a drive/campaign to paint Malay icons as corrupted and incompetent.

  10. let her finalize what she did before… already given a year to fork out everything… may be less then a year.. like brigette lai… hehehe … where are the missing link??? Allience…EON…oh Mahathir ..oh Abdullah.. wow KJ/Kalimullah… wakaka…

    …adioss….

  11. Not only that, now Gamuda going to take water and its assets private.How the hell DS Najib is going to let this happen. Water and other public facilities should always belong to the people and the government and not some public entity.Worst,nanti cina bangsat will control another very strategic item, which is water. They alrd controlled the economy and after that the only thing left is the Malay reserved lands.

  12. With all these bashing on Zarinah, allow me to come to her defence.

    1. This accounting issue called Impairment falls under FRS 136. Link : http://www.masb.org.my/index.php?option=com_content&view=article&id=419%3Afrs136-pg1&catid=6%3Amasb-exclude-private&Itemid=14

    Now try reading the standard and be honest enough to admit that it is not an easy standard to understand. Zarinah after all is not an accountant. You can’t blame her for lacking the accounting expertise. You can bet that she asked those experts/advisers at the SC but as she is not a trained accountant, those explanation by the experts would still sound Greeks to her, still means nothing. You can’t hold her against something that she does not understand.

    2. She does not scrutinise every single deals that are handled by the SC. Why then single her out as the person who should answer about the ECM Libra deal?

    3. Nobody advise her that the deal was a dodgy one, that the interest of the public was not protected and that the deal only cared for the interest of the few i.e. kali et al. She only focuses on those deal that are brought to her attention. With regards to ECM Libra/Avenue deal, nobody gave alarming report to her. SO, how does anyone expect her to accept the blame. The deal is done, a fait accompli. She had no bearing on the outcome.

    4. Shares valuation is not exact science. It can be very subjective .How can she tell what exactly the value for the assets? There is no formula that she can apply to arrive to the proper valuation. All valuation models are mostly theoretical and have certain weaknesses and limits. Who can tell exactly the valuation of a bank, especially the goodwill part? Certain intangible asset of the bank like banking license – it is not as if the fish market where you able to know what are the prices of things being offered.

    I hope all those are helpful to you Zarinah! No thanks to me.

    • Your Grace,

      17 reports were lodged with SC plus 3 Police reports (Commercial Crime Div) – which the Police passed it on to SC eventually as the ‘subject matter expert’.

      Those are not including the ones lodged my MSWG.

      Nothing came out of it. The best anyone got was, “We acknowledge receipt”.

      Was Zarinah in cahoot of the dodgy deal, covering it up?

      Why should there be any cover up? Who were the authorities to determine whether or not securities law were broken in the deal?

      Then again, Zarinah via hubby has a private relationship with PM ‘Flip-Flop’ Abdullah. Since PM ‘Flip-Flop’ Abdullah was the Finance Minister then and the hiving off Avenue Capital was under his jurisdiction as the MOF Inc Chairman, many believed she played a role in the ‘cover up’.

      Never the less, we must admit here it can’t be proven.

  13. Lordship

    The way you defended her, you forgot she is SC chairman and not an officer. She is ultimatley responsible and should be sensitive to what is publicly being questioned.

    Another issue at the same time as ECM LIbra,was dealt with by her but not ECM Libra. Why??? Because her brother in law is close to pal lah and that helped her land that job.

    Share valuation is not an exact science but clearly as basic difference between nta and nav can be understood as play around with the goodwill figure. klse changed its indicative from valation from practised nta/share to nav/share for ecm libra.

    It takes an idiot to not smell something is cooking and lordship must be one of those.

    • Common People,

      I am glad that you are able to see the absurdity of the situation but try to sniff more and you should be able to smell what I was brewing.

  14. […] assets of GLCs and it is even easier when the regulators are looking the other way. It happened to Avenue Capital and this episode even reminded us that the vultures can even resort to share swapping transactions […]

  15. […] Zarinah as SC Chairman must explain and be held accountable for the the ECM Libra-Avenue Capital mer… in mid 2006. In early 2006, boutique stock broking firm ECM Libra had an ambition to be a full fledge investment bank and needed the universal stock broking license from the authorities, namely the SC. Shareholders and active players include then son-in-law of the Prime Minister ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi, Khairy “The Most Powerful 28 Year Old” Jamaluddin and media-dictator Kalimullah “Riong Kali” Hassan had the ambition to ‘take over’ a much larger firm Avenue Capital Resources Bhd. […]

  16. […] Zarinah as SC Chairman must explain and be held accountable for the the ECM Libra-Ave…‘ in mid 2006. In late 2005, boutique stock broking firm ECM Libra had an ambition to be a full fledge investment bank and needed the universal stock broking license from the authorities, namely the SC. Shareholders and active players include then son-in-law of the Prime Minister ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi, Khairy “The Most Powerful 28 Year Old” Jamaluddin and media-dictator Kalimullah “Riong Kali” Hassan had the ambition to ‘take over’ a much larger firm Avenue Capital Resources Bhd. […]

  17. […] Khairy “Most Powerful 28 Year Old” Jamaluddin were direct beneficiaries of the merger. She should really answer for this ‘corporate […]

  18. Such a despicable acts…we as the average malaysians are always at the expense of the greedy lots…may Allah punish them eventually…amin

  19. […] which acquisition of a  much larger public listed firm Avenue Capital Resource Bhd. in mid 2006 deemed a highly controversial deal. Neither of them had any experience what so ever in banking, investment banking and/or corporate […]

  20. […] course, it was white-washed with fancy merchant banking explanation which sound more like a corporate-cover-up, as the excuse of […]

  21. […] merger is exactly like when ECM Libra ‘took over’ Avenue Capital Resources Bhd. in a very controversial takeover laced with manipulation and failure of disclosures, where the […]

  22. […] times larger Avenue Capital Bhd, ‘The sardine going after the shark’. Well, they were very successful with the authorities backing them up. Santayana said that people who did not learn for their past mistakes are doomed to repeat that […]

  23. […] prosecution had always been the SC practice under her. For the record, in her first month in SC she ‘closed one eye’ and allowed the shoddy deal of ECM Libra taking over Avenue Capital which involved then Prime-Minister’s-son-in-law Khairy Jamamuddin five and a half years […]

  24. […] The scandalous ECM Libra taking over four-times-bigger Avenue Capital is still fresh in our minds. Notorious SC Chairman Zarinah still yet to explain all the irregularities and even securities laws b… in that mid 2006 deal, where almost all capital market players would never forget the December 2005 […]

  25. […] Malaysian corporate scene. The reason is simple; the notorious SC Chairman Tan Sri Zarinah Anwar, her previous track record in this exact corporate scandal and of course, her husband Dato’ Azizan Abdul Rahman’s role and involvement in the […]

  26. […] not forget in the early days of Zarinah in the SC top job, she got SC to ‘practically closed-one-eye’ for all the misconducts and frauds in the ECM Libra-Avenue…where MOF Inc ‘gave away’ the securities firm in favour of Riong Kali and his partners, […]

  27. […] which then just earned the universal stockbroking license from SC to be an investment bank. That scandal is still a mystery till present […]

  28. […] which then just earned the universal stockbroking license from SC to be an investment bank. That scandal is still a mystery till present […]

  29. […] which then just earned the universal stockbroking license from SC to be an investment bank. Thatscandal is still a mystery till present […]


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