Is this a bailout or what?

 

The Talam controversy is a three-year old issue that has been boiling for some time and which created a serious rift in the party. This issue was first raised by PKR’s Secretary-General, Dato’ Salehuddin Hashim, who was outraged about the matter and who eventually resigned from the party less than two months later. If not handled properly, this controversy may yet prove to be Khalid’s albatross around his neck.

THE CORRIDORS OF POWER

Anak Selangor Jati

Amidst the clamouring priorities besieging the Selangor state government, someone convinced Menteri Besar Khalid Ibrahim that the clearing of the umpteen years-old debts of Talam Corporation owing to the state's GLCs was a top priority. Not that the state was in dire need of cash, mind you, but what was certain was that Talam, the infamous Umno-crony-ridden company that had been ripping off Selangor for decades, was distressingly close to insolvency, and its hanky-panky dealings with the previous BN state governments would now be the talk of the town.

Many of us who were in the know and had worked hard to ensure a change of government were relishing the opportunity to rid the state of such honky-dory and show the people what is meant by a Reformasi goverment. However, to our horror, we soon learned how wrong we were because ‘somebody’ would have nothing of that. These people, who are now in the PKR government and who were previously working hand-in-glove with Talam during the days they were in Umno, were worried that they would be exposed. Hence this issue needed to be settled ‘off-the-record’ so that their role in Talam would not come to the surface.

The opportunity came when a small reshuffle placed a close friend of Talam from a GLC into the office of the Menteri Besar to assist in matters that involve its corporate investment holdings -- Menteri Besar Inc. and Kumpulan Darul Ehsan. Khalid suddenly became fixated with the resolve of 'collecting' whatever Talam owed the GLCs -- ironically, as if to make the scandals go away from the public eye.

So, collected he did! Not by collecting cash payment (Talam had none) but by first reducing the huge debts to a manageable amount -- from about almost RM600 million to around RM329 million by means of writing-off 'doubtful' cases. One wonders if this reduction of millions due to the state was done by a working committee or by one advisor in the corner of the office of the Menteri Besar? And were the cases presented to the approving authorities as a fait accompli?

It would be interesting for Selcat to look at the deliberations records and the reasonings given. And it would be interesting to see if the RM329 million excuse for a state grant was requested after the reduction of the loan amounts had been approved. The minutes of the meeting of the approving authorities would certainly help.

How did the state help Talam pay its own debts, Khalid-style? First, by coughing up money it hasn't got and then ending up asking the state to grant Menteri besar Inc. RM329 million, which after all the 'round-tripping' and the cash to be paid back to Menteri Besar Inc. in payment of previous and unrelated inter-group debts, the cash will end up as part-cash payment to top-off the purchase of Talam's hopelessly failing and incomplete land development projects said to be worth around RM800 million. The balance was paid in contra with the consolidated GLC debts owed now by Talam to Menteri Besar Inc.

Was it so urgent for the state to have those lands and half-finished projects? Which state GLC had urgent plans for these lands which the state had a few years previously alienated to Talam, and rumour had it that Talam had not even finished paying for the land premiums?

Consolidating debts can be done in numerous ways. Selling the debts to the parent company at a nominal RM1 would be one way. It still enables the parent to deal with the said debts. Doing it the ‘round tripping’ way involves fees, albeit relatively small. But, more significantly, it allowed accounting creativity that would put Khalid in a good light. The question of taxability of the recovered receivables by the GLCs is settled. You pay tax even if the cash was 'returned' to Menteri Besar Inc.

However, it was urgent that Talam first clears its books, as it was already placed under PN17 listing status by the KLSE; the penultimate step to de-listing.

One wonders if the true value of the distressed projects were around the suggested RM800 million, bearing in mind that land-hungry developers would have snapped up these lands, as Talam had been busy trying to hawk them off at heavily discounted prices, but to no avail.

Perhaps Selcat can really re-examine the professional valuations or government valuations presented, if any.

So, after all that were said and done, two and half years later, Talam is out of its financial crisis and PN17, thanks to Khalid and the people of Selangor. The outrageous dealings between Talam and the state GLCs under the previous Umno government are now safe from public scrutiny and Talam now has in the bank cash to boot!

The state is now saddled with a land bank it had previously alienated to Talam with no plans for groundbreaking of new projects after two and a half years and of considerable cash, after topping off the balance purchase price in cash. Its GLC is also no better off with the 'loan-payments’ attracting tax and its 'earned' cash disappearing back to Menteri Besar Inc. What is there are little model-size projects for public exhibitions to inform the people that these lands are worth much more than they were paid for, in ‘gross development value’ terms! Bear in mind that it was ‘gross development value’ terms that enabled Talam to borrow heavily from the banks and almost went belly-up. The market decides.

Sure, no laws were ostensibly broken and nobody is going to jail over the above story considering the state of public accountability in this country. It is, however, sadly, worse than that.

For a reformist government, things must not only be legal, it must be legal and proper. After four years of governing, at its first opportunity to invalidate the previous crony-crazed BN government, and to show creativity in approaching problems, Khalid's government failed miserably to catch the imagination of the people. That it is a reformist government that only has the people's interest at heart appears to be a fallacy. What happened to its pre-election war-cry "we don't just do things differently, we do different things"!

This Talam episode is taken straight out of the BN textbook, ‘Governing For Dummies 101’, facilitated by old masters of the game. Ego is a dangerous thing to have, especially if you don't deserve one! So if we are going to have the same old stuff but dressed in skullcaps and Omega watches, why waste time and energy yelling "REFORMASI". Sure, it's probably worse with those guys on the other side. But I did not vote for them. I voted for you. Not any more, you amateurs!

ADDENDUM

The MPAJ Cover Up (Episode 1) http://malaysia-today.net/mtcolumns/letterssurat/45601-the-mpaj-cover-up-episode-1

Part 10: The MACC NFA the case against Khir Toyo (7) http://malaysia-today.net/mtcolumns/35075-part-10-the-macc-nfa-the-case-against-khir-toyo-7

A closer look at Talam Corp Bhd http://www.malaysia-today.net/mtcolumns/from-around-the-blogs/28637-a-closer-look-at-talam-corp-bhd

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Selangor Govt’s controversial move upsets PKR leader

(The Star, 18 November 2009) - The Selangor Government’s controversial buyover of Talam Corp Bhd’s RM391mil debt has stirred an hornet’s nest in PKR.

A furious party secretary-general Datuk Salehuddin Hashim has despatched a strongly-worded e-mail to all PKR MPs and assemblymen in the state questioning why Mentri Besar Tan Sri Khalid Ibrahim has kept them in the dark over the move.

Some who read the e-mail told The Star that Salehuddin, who described the move as an old trick used by crooks in the corporate sector, wanted them to seek an answer from Khalid.

The State Assembly had on Nov 9 approved a supplementary budget of RM391mil for the state investment arm, Mentri Besar Incorporated, to buy over debts owed by Talam Corporation to several state agencies.

Talam is a major player in the Malaysian property sector, involved mostly in building affordable homes.

The RM391mil was owed to subsidiaries of Selangor Development Corporation (PKNS), Kumpulan Darul Ehsan Bhd (KDEB), Permodalan Negeri Selangor Bhd (PNSB) and Universiti Selangor (Unisel).

Some have also questioned the need for the state to buy over the debts, as the multiple transactions involved might incur additional costs including consultancy charges.

Rumours are rife that certain quarters were making a quick buck out of the “round-tripping” procedure involved in the buyover.

Explaining the procedure, former Selangor Mentri Besar Dr Mohd Khir Toyo said the Selangor Industrial Corporation (SIC), a subsidiary of PKNS, had been directed to buy over the RM391mil owed by Talam Corp to the state agencies.

SIC would then apply for a bank loan from CIMB to buyover the debts, and channel the funds to the state government as payment.

“The state government would then offer a grant of RM391mil to Mentri Besar Incorporated which will then channel the fund to SIC, which will later pay off its debt to the bank,’’ he said, adding that the SIC would also have to bear a RM70,000 daily interest until it settled the debt.

A PKR MP said the matter was never discussed during political bureau meetings.

“We view this matter very seriously as it is against the spirit of Pakatan Rakyat,’’ he added.

Selangor executive councillor Elizabeth Wong, when contacted, defended the move, saying the state had to buy over the debts from three government-linked companies which had failed to recover the RM391mil owed to them by Talam for a period spanning over a decade.

“Now, we are using the full might of the state to recover the amount due,’’ she said.

Wangsa Maju MP Wee Chee Keong, who said he was not aware of the e-mail, said Salehuddin should know what he is talking about as he had experience in the corporate sector.

State Umno leaders have also jumped on the bandwagon to criticise Khalid over the controversial buyover.

Dr Khir said companies listed on bourses usually resorted to the round-tripping tactic to give a false sense of profit to impress investors.

“But it is dangerous when a state government resorts to such a tactic, as they may have a tendency to overspend under the false impression that they had generated revenue,’’ he said.

Brushing aside Dr Khir’s claims, PKR vice-president Azmin Ali said SIC should be able to settle the RM391mil bank loan within 24 hours.

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Anwar dispels party storm over Talam debt acquisition

(The Edge, 20 November 2009) - Parti Keadilan Rakyat (PKR) adviser Datuk Seri Anwar Ibrahim today played the peacemaker in a tiff between party leaders over the Selangor state government’s plan to acquire debts owed by property developer Talam Corporation Bhd to subsidiaries of several state agencies.

Anwar told reporters that PKR was satisfied with Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim's "initial explanation" on the transaction's core issues.

"In the interest of transparency and accountability, Khalid assured us that the transaction would remain open to public scrutiny," Anwar told a press conference in parliament today.

In the same breath, the opposition leader also defended PKR secretary-general Datuk Salehuddin Hashim who reportedly questioned, in a "strongly-worded" email to PKR representatives, why Khalid had kept the party in the dark over the matter.

"At the outset, we respect and defend the right of any party leader to raise and question policy matters of any state government, including states governed by Pakatan Rakyat," Anwar said.

He said Salehuddin's email expressed the latter's personal views and was meant only for internal circulation.

"The secretary-general (Salehuddin) neither alleges fraud or impropriety on the part of the menteri besar or state government," Anwar said.

Salehuddin's dissatisfaction came after the Selangor state assembly on Nov 9 approved a supplementary budget of RM392 million for the state's investment arm, Menteri Besar Incorporated (MBI), to buy over debts owed by Talam.

Khalid had explained that the move would enable MBI to recover the debts from Talam.

The RM392 million was owed to subsidiaries of Selangor Development Corporation (PKNS), Kumpulan Darul Ehsan Bhd (KDEB), Permodalan Negeri Selangor Bhd (PNSB) and Yayasan Pendidikan Selangor.

Khalid's move also drew criticism from Barisan Nasional (BN) assemblymen at the Selangor state assembly sitting.

When asked, Anwar said he had not begun work as newly-appointed Selangor state economic adviser but quipped that he would "try to do tomorrow".

Adopting a more serious tone, Anwar revealed that while he was appointed with immediate effect, the menteri besar had plans to officially welcome Anwar to the position.

Anwar said the official welcome would likely be on Dec 2, adding that Khalid also intended to brief government and government-linked companies' officers on the new position.

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PKR sec-gen Salehuddin quits post

(The Star, 8 January 2010) - PKR secretary-general Salehuddin Hashim has quit his post to return to the corporate world.

Salehuddin, who had stirred a hornet’s nest when he strongly opposed the Selangor government’s move to buy over the debts of developer Talam Corp Bhd, tendered his resignation letter to PKR president Datuk Seri Dr Wan Azizah Wan Ismail.

Salehuddin, 58, expressed his intention to quit several times since October last year. He changed his mind following an intervention by PKR adviser Datuk Seri Anwar Ibrahim.

But this time, Salehuddin said he had made up his mind.

“I have quit,” he said, adding that he wanted to resume his oil and gas consultancy business.

Speculation over Salehuddin’s resignation started when he sent a strongly worded letter of resignation on Oct 26, but he retracted the letter after Anwar convinced him to stay.

In November last year, Salehuddin sent strongly worded e-mail to his comrades in the political bureau, slamming the Selangor government’s controversial RM391mil Talam debt buyover.

He had described the debt buyover as an “old trick used by crooks in the corporate sector.”

He called on bureau members to seek an answer from Selangor Mentri Besar Tan Sri Khalid Ibrahim over the controversial buyover, but the bureau decided that there were no elements of fraud in the buyover scheme.

Salehuddin, who is said to be more of a corporate figure than a politician, is known for speaking his mind.

He was appointed PKR secretary-general in April last year, and made it clear to the party that he had no qualms in quitting the post if the situation warranted it.