CIMB’s unethical brokering

The 'pakat pakat' MAS-Air Asia merger is a reflection of the government's modus operandi.

COMMENT

How come CIMB is acting as the common adviser or broker in the Malaysia Airlines-AirAsia deal?

It is difficult for the public to accept that CIMB, the merit-driven, results-focused bank, does something for altruistic reasons.

I am reminded of a story told to me by an accountant friend.

He said even the Pharaoh during the time of Moses had only one broker – Haman. Haman, he said, only brokered for Pharaoh and not for Moses. Even Haman was principled in that he advised only one client – the Pharaoh.

CIMB is the modern-day Haman, who is advising both Pharaoh and Moses, that is, MAS and AirAsia.

I am also reminded of the P Ramlee’s “Ali Baba and the 40 thieves” tale. Remember, the thieves don’t rob on Saturdays and Sundays. Those are public holidays. But then Ramlee’s 40 thieves were a disciplined lot.

But the present-day thieves loot every day. Public holidays included!

So, it raises the suspicions that people in Khazanah Nasional Bhd, CIMB and AirAsia chief Tony Fernandes huddled together in some watering hole somewhere, and “pakat pakat” and decided to “do a sting”.

But then I remember, this has always been the modus operandi of the government.

Perimekar Sdn Bhd, for example, the notorious service provider, was paid over RM500 million for support services.

The company was paid before completing its support services.

‘But MAS is making money!’

The MAS-AirAsia deal offers no advantage to minority shareholders.

Khazanah Nasional, being the largest shareholders of both MAS and Tune Air Shd Bhd, is flexing its muscle and disregarding the smaller holders.

In certain countries this is deemed illegal due to anti-trust laws; but it’s all ignored here in the name of making sustainable profits for Khazanah.

What does the deal look like?

It looks like a deal for Khazanah to “fund” Fernandes to buy MAS’ stake.

Of course, at the moment MAS balance sheet is shitty.

Besides costs improvement, which is clearly the effort of MAS boss Tengku Azmil Zahruddin, there are pertinent assets in MAS that are experiencing encouraging growth, such as MAS engineering which is among the best and competitive aircraft maintenance outfit.

And it is making money. Firefly too is within this bracket.

With all the financial wizards and brilliant accountants in MAS, surely they can come out with a leveraging blueprint.

Of course, Khazanah and CIMB have to be in it. Count me in, count me in!

Now, I have a final misgiving.

Blotted track record

With due respect to CIMB, how come CIMB is the adviser for both? Isn’t it unethical?

Bank of America owns Merril Lynch. Yet it does the ethical and proper thing by not appointing Merril Lynch as its adviser.

CIMB has a blotted track record as adviser. Remember Synergy Drive? Now, no more drive. It’s back to Sime Darby, whose losses have never before been experienced by the Malaysian corporate sector.

What was the advice given to Telekom Malaysia by CIMB? The advice was against the world trend (most telcos merge/take over cellular entities).

CIMB’s advice was to have TM part company from its money-making machine in the form of its mobile businesses to Axiata. What happened to TM? It has never recovered financially. Indeed it is now saddled with RM700 cash dividend yearly.

CIMB is now common adviser to MAS and AirAsia.

Point to note is that AirAsia is operating with huge debt, with 210.6 times over its equity.

Its liabilities stood at 71 times against its assets, thanks to all the deferred payments it accrued such as owing to Malaysia Airport Bhd.

Will Fernandes be leveraging AirAsia’s huge debt of RM6.6 billion into MAS later?

If that happens, then it is magic!

The writer is a former Umno state assemblyman and a FMT columnist. This excerpt is from his blog sakmongkolak47.