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Wednesday, December 29, 2010

Open your books


By R. Nadeswaran, The Sun

OVER the past two years, Malaysians were given a rare insight into the operations of companies owned by the Selangor State Government. Some executives took expensive trips for themselves and their wives; bought expensive gifts and even paid "bonuses" to non-executive directors. The manner and guise in which at least two companies spent their monies was nothing but a show of arrogance and disregard for procedures. Their unacceptable actions were heard in the open – at the hearings of the Select Committee on Competence, Accountability and Transparency. (Selcat). Because the wayward journeys to playgrounds like Disneyland far and wide had been chronicled in this newspaper previously, they did not come as a shock.

However, what shocked the taxpayers was the audacity of Kumpulan Semesta Sdn Bhd, a sand mining firm owned by the state which paid out TWO months bonus after just FOUR months of operations. And some of the non-executive directors collected theirs too. The issue of "bonus" is always a touchy subject, especially at year-end when all and sundry – employees and directors – expect to be "rewarded" for their contributions to the success of the company. Some companies prefer to term it as "deferred salary" without linking it to the financial performance of the company while others term it as "incentives".

In England, a war is looming over the quantum of money the banking industry will pay its staff. The eyes are not exactly on teller clerks or the officers, but the fat cats – senior executives who take home millions in bonus as part of their salary package. So, what’s the beef? Why is the government interfering in private firms? Not exactly. That’s because some of the banks are considered part-nationalised because of taxpayers’ funds being used to rescue them.

At the height of the financial crisis two years ago, it took taxpayers’ money to keep some of the banks afloat and understandably, there is public anger that those whose fortunes were salvaged by government bailouts need not be paid hefty bonuses. The straight-talking chancellor of the exchequer, Vince Cable, who has already angered the public by making huge cuts on public spending is taking the banking industry head-on on what are termed as "unacceptable" bonuses which sometimes run up to 100% of annual salaries.

According to a survey released by head-hunting firm Astbury Martsen, 47% of bankers said that they would quit the industry if the payouts are curbed. "Some staff will always be disappointed with their bonuses but this year’s bonus expectations are even much more at odds with reality than usual," said its director Jonathan Nicholson.

Despite the financial crisis of 2008 and the government dumping billions into saving some of the banks, a whopping £16 billion (RM80 billion) was paid out. Last year, the figure dropped to £7.3 billion (RM37.5 billion) after the outcry of public contempt for huge payouts. Although the bonuses are paid just before Christmas, this year’s figures have yet to be made public but is estimated at around £7 billion (RM35 billion).

Having said that, how many of our loss-making government-linked companies (GLCs) have paid bonuses despite having a "not-so-good" financial record? While companies like Sime Darby’s accounts are available for scrutiny because they are listed, there are scores of smaller state-owned companies whose bonus payouts could have not been justified.

Because they need not publish the figures, they may be hidden in a heap of paperwork under some miscellaneous heading, waiting to be uncovered when a new set of lawmakers take over at the next hustings as happened in Selangor.

If the Khir Toyo-led government had not lost power in 2008, would we have known about the extravagances at the top? Would we have known how their wives went on taxpayer-funded trips to "learn about poverty"? That is why the parties which shouted "accountability and transparency" during their campaigns, should now open their books and give credence to the "we practise what we preach" saying. Hiding behind rules and procedures, and paying lip service to freedom of information is not going to persuade anyone to think that they really mean what they say.

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