SCwatch


SIME DARBY CRISIS : ‘SILENT CONCURRENCE’ BY ALL PARTIES INVOLVED?

Reading subsequent media reports and commentary about the ‘Sime Crisis’ following the sacking of its CEO, Zubir, has only made me more convinced that the whole Board of Directors plus its external auditors, Pricewaterhouse Coopers must take responsibility for this debacle.

Why debacle, you might ask? It has not collapsed as a group, you might say!

Maybe, but the confidence in this purported blue chip, which has one of the highest market capitalisation in the market, has been dented considerably.

Of course, Malaysians are a polite lot that in front of you, they will say sweet nothings into the ears of the parties involved.

But behind the scene, especially in the grape-vine, the comments are not only damaging to all concerned but down-right vicious ….. and with justification!

To say that the group had processes in place …. it’s just that they had not been implemented properly ….. was certainly laughable ….. because it is all too familiar!

If one was to seriously respond to this ‘excuse’, it would be … that is why you have internal and external auditors. And when the internal auditors raised the red flag in August 2008, it was conveniently swept under the carpet!

If the excuse was that the non-executive independent directors were obliged to give the benefit of the doubt to management, the external auditors, Pricewaterhouse Coopers (PWC) certainly had NO such obligation or professional reason to do so!

This was their red flag to delve into the issue of cost over-runs including its recovery of such costs. This is no more an ordinary run of the mill statutory audit. PWC had been put on enquiry and were obliged to look into the concern meticulously.

But what did PWC do? They signed off the accounts of Sime Darby for 2008 and 2009 with a clean audit report! Not even an emphasis of matter especially on the possible cost over-runs and its recoverability!

The fact that official media had highlighted these matters (besides the blog media) prior to the finalisation of the 2008 and 2009 accounts speak volumes about the role (or lack of it) of PWC!

The official media currently has been quite polite about this latest incident ….. yes, they have been polite relatively speaking …. but if you read in between the lines, the insinuation is the total collapse in the ‘check and balance’ roles of the other parties involved with Sime Darby …. notably the auditors and members of the Audit Committee headed by the ex-chairman of PWC. This is so unbecoming! click HERE

Andrew Sheng, a proponent of strong corporate governance is unfortunately embroiled in this mess as director and he cannot easily extricate himself out of this especially when he was appointed in 2007!

He has to regain credibility by insisting massive and fundamental changes to the way things are done in the Malaysian corporate world in general and Sime Darby in particular!

Update : I was one of the members of public who witnessed the launching of Andrew Sheng’s latest book, ‘From Asian to Global Financial Crisis’. In his remarks, I recall him emphasising that regulators were the ones that ‘had the power to go to the ‘back part of the shop (meaning companies) to find out what was really happening’. I hope this was not his reason for inaction on his part as a member of the Audit Committee!

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