On June 8th, 2009, this blog posted an article entitled Is the de-listing of UEM Group a cover-up for a major loss? prior to the appointment of Dato Izzadin as UEM Group new CEO.
That first article was explosive because it revealed a failed Salwa Road project in Qatar. It attracted 34 comment, mostly from within UEM Group and sent "tremors" up to Mercu UEM.
This blog went on a hot pursuit for a month and comments on certain postings reached more than 100. It may have made management nervous that a meeting was arranged with UEM Chairman Tan Sri Tajuddin Ali. In the meeting, Tajuddin promised to solve the Qatar road problem in two years. He promised to hand hold the new CEO, Dato Izzaddin Idris.
Ample time have been given. Tajuddin Ali did not deliver his promise. The last check with Izzadin, the Qatar matter was still left unresolved. Just like what happen at Sime Darby, it is time for Tajuddin Ali, the Board of Directors and management of UEM and Khazanah to answer to the public.
And, we do not see him guiding Izzadin in the right path. UEM was in the limelight for it's dispute with another Khazanah company, MAHB with regard to "delayed" construction of KLIA2.
However, the bigger issue on UEM this time is the takeover of Sunrise and it has raised many eye brows.
Khazanah Operational Failures
UEM will always be on our radar because Proton, MAS and UEM were the three companies Khazanah was supposed to turnaround. The incompetent and no deliverable CEO Tan Sri Azman Mokhtar promised publicly in many public forums during Tun Abdullah reign.
They failed to do all three. Not only that, Khazanah failed in all start-up ventures of strategic value for the country.
The reason behind their failures to turnaround companies and start-ups is that as Analyst/Fund Manager (CEO), Bankers, and Accountants, they only how to tinker financial numbers and shuffle papers but never capable at operations level to make projects viable and generate profitability in the long term.
National agenda and nation building is merely a clique these days.
In their turnaround efforts, Proton was subtly being planned for closure by then MD Dato Azlan and eventually after much pressure, Khazanah washed their hands by first rigging the price in the market up then off-load it to Tan Sri Syed Mokhtar at an inflated premium.
Yet Syed Mokhtar is being villified for monopolising businesses but kept quiet on the monopoly by the Kuok, Yeoh, Cheng, Lim, Tan, etc.
MAS has not only not turnaround but Bina Fikir, Penerbangan Malaysia Berhad under Khazanah themselves and Tun Abdullah's family seemed to be helping themselves as part of ensuring it's demise.
The status of UEM is not known with UEM World or now UEM Group delisted thus the true picture of the group is only known to Khazanah.
Only the crown jewel, UEM Land was kept listed because Nusajaya is profitable. As the CEO used to say, HDB flats are sold at RM1 million, thus no reason the prospect for UEM Land not to be good.
All M&A plans would usually come to and get approved by Khazanah first, thus why the need to takeover Sunrise?
UEM Sunrise merger
On many occassions, Izzadin repeatedly said that the merger with Sunrise was about securing expertise in developing high rise luxury building.
Although raised into believing "Melayu boleh" and GLC was about building Bumiputera human capital, we can't argue with that. The reason and intention seemed reasonable on the surface. And perhaps it was the changing times.
The vogue then seems to be of GLCs taking over property companies but let the vendors or previous owners run the show. It happened in the Sime Darby takeover of P&O, PNB takeover of SP Setia, etc.
To the more seasoned corporate players, it raised eye brow because UEM has Faber as subsidiary, Sime Darby had Sime UEP and PNB had lots of property companies to rely on for expertise. If they only want the milk, why buy the whole cow?
The Sunrise that they tookover was not under the control of Dato Alan Tong, the entrepreneur who build the company to where it is. It has since been led by Anwar Ibrahim's crony, Dato Tong Kooi Ong.
Tong holds 25% and the rest of the 40% controlling block in Sunrise were held by DAP Penang friendly, Dato Danny Tan and Dato Allan Lim. Quite sure at least 10% + 1 shares of Sunrise are held by proxies.
The November merger was unravelled in November 2010 with glowing praises by The Star. It marked Izzadin's presence in UEM but the suspicion is that it was Khazanah orchestrated. Judging by CIMB Research equally glowing recommendation, it is fair to suspect CIMB had their cut in it.
Conveniently, the PKR-friendly, The Edge highlighted the strength from the combined asset of over RM5 billion.
Khazanah media machinery promoted the deal as New Economic Model-compliant and in line with the vision of then new Prime Minister Dato Seri Najib. The Bernama report can be found on Iskandar Malaysia website here.
Most media highlighted the merger as a merging of brands. Read here.
Who Took Over Who?
By February 2012, The Star columnist Angie Ng hinted here that the merger is not as seamless as it seemed to be.
The integration and transition for the merger of a GLC and township developer with a company known for luxurious high rise condo and high rise integrated project had it's problems.
Subsequently, UEM Land changed name to UEM Sunrise on June 17, 2013 [read Star Property here] and that gave away bad vibes. Instead of a takeover and UEM dictating the merged entity, it was becoming clear that Tong was dictating the show.
Tong made money from his personal equity in the merged entity. Although the former Chairman of Sunrise resigned as Director of UEM Land, his team seemed to run the show operationally at UEM Sunrise.
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| Lum Tuck Meng |
When the merger took place, Raymond Cheah was merely a Senior Manager, but rose four steps to COO to replace Zakir Omar who was formerly the long time CFO from the days of Ahmad Pasdas.
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| Zakir seen with the late CEO |
Was it Izzaddin that set him up? Not sure.
Zakir was quite prudent and cautious. He rejected projects of only 60:40 confidence level, thus may have rejected Sunrise's projects.
He was in the way of Tong and he may have assigned a representative of Sunrise on the Board of Directors by the name of Oh Kim Sum as assassin to discredit Zakir. Every other proposals papers were cut to pieces and eventually, Zakir was asked to resign within 24 hours notice.
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| Raymond Cheah |
More on that in the subsequent Part 2.
Zakir's position was replaced by the current CFO Mohd Azhar Osman, an outsider from Proton. Yes, someone with the expertise in managing the financial affair of a carmaker now manage the financial affair of a property company.
The Chief Marketing Officer, Siti Mariam Mohd Desa was also an outsider from DRB Hicom.
Unless the CEO of Cahaya Jauhar, Mohd Auzir is from within UEM, management of UEM Sunrise are made up of outsiders and Sunrise people. When the Qatar project hit a major snag, UEM had to do a purge but not the good people too.
In addition to the two COOs, Sunrise people are placed at all the important and strategic positions in UEM Sunrise. One of the three Project Directors, and head divisions in charged of Construction, Procurement and Contract, Finance and assisting the CFO, and Facilities Management are all from Sunrise.
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| Ang Kee Ping |
CEO, Dato Wan Abdullah passed away recently at the end of February and the position still remain vacant. Will it be filled up by one of Tong's COOs?
By the look of it, Khazanah Nasional had made UEM look three times stupid.
They bought a company and the shareholders of the acquired company made money. The management of the acquired company remained in management. The way they are positioned, the management team of the acquired company would eventually control the company.
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| Dato' Tong Kooi Ong |
His resignation from the Board could be just a show. His comment that Sunrise has no problem with UEM taking control was also a show. Behind the scene, he is the mastermind and in charge.
Logically, does it mean Tong will continue to make money at expense of GLC UEM? In Part 2 tomorrow, it will be about worms UEM swallowed from the cow bought for it's milk.
* Edited 21/4 8:30 AM
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