Lawmakers tell Sime Darby to reveal forensic audit

KUALA LUMPUR, Nov 17 — Troubled government conglomerate Sime Darby Berhad should disclose a forensic audit into a unit’s RM2.1 billion losses instead of just initiating a lawsuit, lawmakers from both sides of the divide said today.

They said the disclosure of the forensic audit was crucial to identify those responsible for the conglomerate’s huge losses in its energy and utilities (EU) division in the last financial year through possible mismanagement and wrongdoing.

“We have to see the audit to see who was responsible,” DAP publicity chief Tony Pua told The Malaysian Insider today.

“It is difficult to tell if the fault lies in middle-level managers who engaged in fraud, or if it was because the board did not do their duties, such as approving bills that should not have been approved in the first place or whether they set up ventures they have no experience in.

“We have to see the report before making conclusions,” he added.

Yesterday, Sime Darby’s acting chief executive Datuk Mohd Bakke Salleh declined to disclose the forensic report saying that it had been advised by legal counsel not to do so as it was in the midst of filing a civil suit to recover money it lost at its EU division.

Khairy said PNB, as Sime stakeholders, deserved to know the report’s contents.
He said that Sime Darby would initiate the legal proceedings by year-end, but would leave the criminal aspects to the Malaysian Anti-Corruption Commission (MACC) and the Securities Commission (SC), which have received copies of the forensic report.

An Investigative Reports Review Committee chaired by Tan Sri Samsudin Osman was established in July to review the audit reports on the troubled EU division and the results of the forensic audit was considered by the board on September 20.

Today, Pua pointed out that the government should present a white paper on the controversy to Parliament as Sime Darby was a government-linked company (GLC).

“It involves public money. It is a GLC. So they are responsible to the people as stakeholders. A white paper must be presented in Parliament together with full details of the forensic audit on what happened in Sime Darby,” said the Petaling Jaya Utara MP.

Umno Youth chief Khairy Jamaluddin, however, said that Sime Darby should first reveal the forensic report to its stakeholders at Permodalan Nasional Berhad (PNB).

“They should start by disclosing it (the forensic report) to stakeholders first. It’s only right that such information needs to be shared with relevant stakeholders... ultimately PNB,” he said.

The Rembau MP also pointed out that it was likely that the board would have been aware if mismanagement had occurred.

“If there was in some way mismanagement or negligence of this scale, it is only natural that the board should have known. If the board wasn’t aware, that is negligence itself,” said Khairy.

“We should look at the corporate governance issues that took place prior to some of these decisions being made and really identify ... not just senior management, but also the board and various committees who made these decisions,” he added.

Khairy, however, stopped short of calling for the entire board to be dismissed, saying: “We have to find out in more detail what the roles of both management and the board of directors were.”

In May, Sime Darby chief executive Datuk Seri Ahmad Zubir Murshid was asked to take a leave of absence following concerns over cost overruns amounting to RM964 million from the four troubled projects in the EU division, namely the Bulhanine and Maydan Mahzam project with Qatar Petroleum, the Maersk Oil Qatar project, the Bakun hydroelectric dam project in Sarawak and the “Marine Project”.

Today, PAS vice-president Salahuddin Ayub said initiating a civil suit was not sufficient and called for the entire board to be fired.

“It’s not just enough with a lawsuit. They should fired. But if they are not fired, they must be suspended at least,” said Salahuddin.

“This is serious as it involves a GLC that has posted such huge losses,” he added.

The Kubang Kerian MP also expressed his scepticism over the lawsuit and pointed out that an MACC investigation was imperative.

“It (the lawsuit) is a gimmick just to show that they’re serious. MACC must investigate the losses of Sime Darby,” he said.

Sime Darby’s EU division reported an operating loss of RM1.7 billion for 2010 after making additional provisions of RM777.3 million for the fourth quarter.

The last time Sime Darby saw such a large loss at one of its units came after the 1997 Asian Financial Crisis, when a plunge in the stock market and a sharp depreciation of the ringgit led its financial arm, Sime Bank, to post a RM1.6 billion loss — the largest in Malaysian banking history — for the six months to December 1997.

The plantations-to-property giant turned in a net profit of RM726 million for 2010 despite reporting a fourth quarter net loss after tax and minority interest of RM77.4 million. Sime Darby reported RM1 billion in net profit for the fourth quarter of last year and a net profit of RM2.3 billion for the whole of 2009.

- themalaysianinsider