Another sad story from Sime Darby Energy

The news about cost over run for Sime Darby Energy ‘jewel project’, the Bakun Dam, was out in the MSM today. The accumulated losses is RM 1.7 billion, which is the same contract sum calculated when the original award was given in 2010.

Starbiz has the report, which says it all:

Wednesday May 5, 2010

Sime’s Bakun losses balloon to RM1.7bil

By RISEN JAYASEELAN
risen@thestar.com.my

PETALING JAYA: Sime Darby has incurred around more than RM1bil in total cost overruns from carrying out the civil works contract for the Bakun hydro-electric project, sources said.

One estimate puts the total cost overrun figure in the region of a whopping RM1.7bil, almost the same size as the Sime Darby’s actual Bakun contract of RM1.8bil that it had secured back in 2002.

When contacted, Sime Darby did not deny or confirm this.

In an emailed reply, the company merely said that it had made provisions to the tune of RM130mil for its share of the cost overruns in the Bakun project.

The discovery of the more than RM1bil cost overrun in the Bakun project is believed to be among the findings of the special taskforce within the group that was set up late last year to probe losses in its energy and utilities division.

The taskforce is also looking into the reasons for the cost overruns and whether there were lapses in internal audit and whether other improprieties occurred.

It is understood the Government has agreed to reimburse Sime Darby for around RM700mil, leaving Sime Darby with around RM1bil to be dealt with, by some estimates.

Sime Darby’s energy and utilities division recorded an operating loss of RM110mil in the second half of its financial year ended Dec 31, 2009, compared with a profit of RM56.3mil previously. But within this division, its oil and gas and engineering divisions’ losses alone totalled RM201mil.

However, Sime Darby said this loss was due to overruns from another project, namely its RM2.1bil Maersk Oil Qatar (MOQ) project.

“Sime Darby recognised a project loss for MOQ amounting to RM210mil (including the impact of foreign exchange losses). As a result, the oil and gas segment recorded losses of RM201mil in 1HFY2010,” it said in the email to StarBiz.

Assuming the cost overruns have taken place in the Bakun project, the group will still need to deal with a significant amount of provisioning or expensing, which could seriously dent its profits for FY2010.

When asked if Sime Darby will be providing or expensing any amounts this year arising from the Bakun project, Sime Darby said: “As part of its disclosure obligations, Sime Darby regularly reviews its portfolio of projects and if required, makes provisions in accordance with the Group’s accounting policies.”

Assisting the taskforce in its findings were specialists from external accounting, legal and engineering firms, sources said.

To recap, Sime Engineering, a unit of Sime Darby, was awarded the civil works for the Bakun project in September 2002 at a fixed lump-sum price of RM1.8bil. It has been reported that Sarawak Hidro Sdn Bhd has approved a variation order for RM700mil for the Bakun project. Sime Darby did not confirm or deny this.

“As with all such construction projects of this nature, we have received periodic payments and agreed claims from the Government. In the past, some cost overruns were incurred due to increase in material costs and variations in design but these have been dealt with,” Sime Darby said in the email reply.

Sarawak Hidro is a wholly-owned subsidiary of the Ministry of Finance Inc Malaysia and entrusted to develop and manage the Bakun project since May 2000.

Sime Darby had yet to reply to questions posed to it by StarBiz yesterday afternoon.

But in Sime Darby’s press statement when announcing its first-half results, president and group CEO Datuk Seri Ahmad Zubir Murshid said that there were issues with the energy and utilities division.

“We have faced several challenges with the oil and gas business unit especially with operational efficiency and project management. Nevertheless, with a new management team on board, measures have been taken to increase operational efficiency and improve our project management capabilities,” he had said.

A change in leadership at its energy and utilities division had taken place recently, following the resignation of Datuk Mohamad Shukri Baharom

Mohamad Shukri was replaced by Hisham Hamdan, who was previously the executive vice-president for group strategy and business development.

Sime Darby has also said it has been taking steps to prevent a repeat of the cost overruns, including reviewing and re-evaluating systems and processes in the division.

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This is the second major blunder SDE is facing, with regards to really huge losses. First that struck attention was the RM 800 million losses in the scandalous Qatar project.

This just to show how incompetent those guys who were entrusted to manage the division. Full clean up must be done and those responsible for these debacles must accept and that they had caused great injustice to the company and division. Some heads must be chopped to ensure that the division will not go into wrong and disastrous futile direction.

PM Dato’ Seri Mohd. Najib Tun Razak, who is also the Finance Minister must instruct a full blown investigation really fast. Sime Darby Bhd., now a huge conglomerate when Synergy Drive Sdn. Bhd. amalgated the three largest plantation and property based PLCs, Sime Darby Bhd., Guthrie Bhd. and Golden Hope Bhd. to the largest merger Malaysia and South East Asia capital market ever saw.

Sime Darby is also one of the mainstay for investments of Amanah Saham Baru and Amanah Saham Nasional unit trust holders. In the past, Sime Darby is one of the major contributor for ASB’s generous dividends pay out annually. The continuous slide of Sime Darby profitability will affect the ASB and ASN in the medium term.

Sime Darby’s blunder is not a good example for PM Najib to woo foreign capital and debt market investors and punters into the Malaysian corporate scene. In fact, it would be counter productive to the ‘New Economic Model’ ambitious agenda to transform Malaysia into a high value economy when the largest listed company keeps falling into ‘bad venture pits’. Of course, the audit must also look into possibilities of ‘hanky panky’ in the procurement of materials and services, which is the major factor of the cost over run.

Two consecutive huge losses must be bad for morale and confidence. Probably it is time that ‘people restructuring’ should take place. They say “Fish gets rotten from the head”. Obviously the perils that  SDE faces today is considerably due to poor management and probably controls. Since its spring time here in the northern hemisphere, so the ‘clean up’ should be across the board. There are considerable Malaysians, which include professional Malays with vast MNC exposure to assume positions in the board rooms and management.

*Updated Thursday 6 May 2010 600pm

Sime Dary Bhd. issued this statement explaining a taskforce was set up to look into the issues raised here.

Published in: on May 5, 2010 at 20:31  Comments (8)  

Demand for RCI: A political agenda above anything else

The lawyers acting on behalf of the slain 15 year old Aminulrasyid Amzah are demanding that a Royal Commission of Inquiry (RCI) be formed and conducted instead of a cororner’s  inquest, as per suggested by IGP Tan Sri Musa Hassan, Bar Council and even Malay NGO Perkasa.

NST has the story:

Aminulrasyid’s family calls for Royal Commission

2010/05/03

SHAH ALAM: The family of the 15-year-old teenager, Aminulrasyid Amzah, who was shot dead by police on April 26 has called for a Royal Commission to investigate the incident.

Aminulrasyid’s uncle, Kamarudin Hassan, 45, who spoke on behalf of the family said the commission was hoped to do a clear and transparent investigation.

“We appreciate the Home Minister’s move to set up a special panel to investigate but we want a Royal Commission which is more transparent and comprehensive,” he told reporters at Aminulrasyid’s family home in Section 11 here.

Also present were Aminulrasyid’s mother Norsiah Mohamad and two lawyers representing Aminulrasyid’s family, N.Surendran and Latheefa Koya.

In the 2am incident, Aminulrasyid died after police shot at his car.

A special panel headed by the Deputy Home Minister, Datuk Wira Abu Seman Yusop, has been set up to investigate the incident.
Several quarters like the Bar Council, Perkasa (Pertubuhan Pribumi Perkasa Malaysia) and the police force want an inquest into the case.

Surendran said he wanted the Royal Commission to be established under the Commissions of Enquiry Act 1950 and the findings revealed to the public.

“A Royal Commission has vast powers and can summon witnesses and provide confidence to the government relating to the incident,” he said, adding that the commission needed to set up soon. – Bernama

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The fact is that, lawyers acting on behalf of the Amzah family N. Surendran and Latheefa Koya are PKR members and staunch supporters. In fact Latheefa is the PKR Information Chief. They have in the past demonstrated their anti-establishment tendency, especially against the law enforcement agencies such as the Police, MACC and AG Chambers.

N. Surendran was the lawyer who submitted a Memorandum to the Police when an Indian ethnic A. Kugan was found dead whilst in Police detention at Subang Jaya Police Station.

The demand for an RCI is a political agenda and nothing else but to turn the case into an ‘Anti Police Circus Frenzy’. Since the Police is investigating and the fact that AG’s Chambers intructed them to re-record statements from three witness, which include the 14 year old boy who was a survivor when Aminulrasyid was killed, clearly shows that the process is on going an incomplete. And yet, N Surendran went on TV to arrogantly state that “We have no doubt that the shooter is guilty. Just complete the investogation and charge him. We don’t want any inquest!” and behaved like a ‘Judge, Jury and Executioner’.

Yesterday, N. Surendran and Latheefa Koya brought forth the 14 year old boy Azamuddin Omar, who is the  key witness to a media conference, to tell his story. The appropriateness to present this 14 year old boy to media is questionable. The Police said there were discrepancies to what the boy said as compared to the statement that was recorded from him, which is admissible in court. Some people believed that the 14 year old was ‘coached’ to say certain things absent from the Police report and statement.

On another node, Oppositions such as PKR and DAP thrives on controversial issues that could pin down credibility, integrity and faith to the tone of demonising the Police Force and other law enforcement agencies such as MACC, AG’s Chambers and others. However, when the situation is reversed, they did not do anything to highlight the welfare of the families of slain Policemen and survivors, which include their immediate families.

Random examples of the 15 deaths and 89 injured cases involving Policemen on duty since 15 years ago:

1. Const Yusri Yaacob died in ‘hot pursuit’ being hit a criminal on 1 August 2003

2. Const Ramlan Bachak died because being knocked down whilst in hot pursuit on 7 December 2003

3. Sjn Manja Manaf  was shot dead by kidnappers in Muar on 1 August 2004

4.  Const Mohd. Khairul Nizam was killed manning a roadblock in August 2004

5. L/Cpl Ridzuan Jaafar was killed after being knocked down by a ‘burning’ car in Jelutong on 18 May 2005

6. Const Fakaruddin stabbed to death while crime prevention patrol in September 2006

7. Const Rosman Mohd Arshad was shot by criminals during patrol in a police car on 5 February 2007

8. C/Inspector Mohamad Hatta Alias knocked down and injured at Ops Serkap Laju @ MRR2 on 16 December 2007

9. ASP Zulkefli Khamis was shot during an anti narcotics operation “Ops Waja” on 1 January 2008

10. C/Inspector Ang Weai Leong was shot by criminals in a shootout in Sg. Long on 4 November 2008

Where are the Oppositions, especially DAP and PKR in each and all of these cases? Don’t the families of these brave men deserve to be helped and assisted too? How come no inquiry on the deaths of these men ever been mentioned by the Oppositions?

In actual fact, the Oppositions have double standards. Recently PKR MP for Batu Tian Chua had an accident near Kota Tinggi and his car caused death to a motorcyclist, who is a serving soldier. To our knowledge, he did not even visit the deceased family but went to to do his ceramah. How come Surendran, Latheefa or Gobind Singh Deo did not call for an RCI and Tian Chua be “Investigated and charge for homicide not culpable to murder”?

It is only clear. The Opportunistic Oppositions only come forth if there is a political agenda that they can ride on and the same time, demonise the credibility and integrity of the law enforcement agencies, especially the Police. Then it is easier for them to harp further on very sensitive issues like racism and stir up racial sentiments, when in the long run the rakyat have a deep distrust against the law enforcement agencies such as the Police, AG’s Chambers, MACC and others and what ever action being taken against them will be deemed as ‘political incarceration’ and ‘unjust use of force’. Of course they will hide behind the universal intellectual blanket of ‘human rights’.

Case in point is when Theresa Kok raised in Dewan Rakyat about the ‘Naked-Ear-Squat-in-the-Lockup’ where she claimed that it is Chinese national being ‘humiliated’. When it was proven that the detainee was a Malay woman, she suddenly went silent about it. She did even apologise to the Police for making a racial issue out of it.

There is strategic agenda to the Oppositions’ move to ‘demonise’ the law enforcement agencies. The ‘unholy-marriage-of-(in)conveniece-between-strange-bedfellows’ will not work in the middle term (which is already proven now) and naturally in the long run it will fail. Of course they know it too and the deep distrust between them is very apparent. So far in the ‘Political Tsunami’ result of PRU 12 and several post GE by-elections (till PM Dato’ Seri Mohd. Najib Tun Razak took over from PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi on 8 April 2009) is because the deep dissatisfaction against PM ‘Flip-Flop’ Abdullah & Co., which they vent their dismay via ballot box and BN gets the toll. Its not so much about BN. Hence, to strategically sustain, they have to resort to this ‘demonisation’ of the law enforcement agencies in the hope that more anarchy is promoted. Incitement, instigation and fanning of anarchism had only been the way DAP and PKR have managed to project themselves and gain attention.

PKR also finds the ‘shooting of Aminulrasyid’ could be conveniently used to generate some degree of anarchy, to deflect the attention from the second sodomy trial against party-less Opposition Leader Anwar “Mat King Leather” Ibrahim, which the Federal Court yesterday decided that should go on despite some legal attempts to disrupt and the same time confuse the rakyat.

Any effort to ride on the misfortunes any of the rakyat just that they can ‘demonise’ the law enforcement agencies are ‘capitalised to the max’. It is sordid political agenda and the DAP have been doing this with the Chinese chauvinist  tone and skewed along communist-terrorist-like agenda since the 1960s. It is still strong.

*Updated Wednesday 5 May 2010 1630hrs

Published in: on May 5, 2010 at 00:03  Comments (20)