Ali Kadir , the SC, Berjaya and a conflict of interest; story circa 1997

 by Ganesh Sahathevan 

One from the archives 

        Former EY Executive Chairman Ali Kadir

First published in July 1997, website at link below no longer exists and is not archived at WebArchive.

 

http://www.malaysia.net/lists/sangkancil/1999-07/msg00038.html

While Ali Kadir, the new SC head was quick to make public the SC's

intention to investigate Pilecon and Soh Chee Wen et al, he has been

deafeningly silent on the issue of DigiSwisscom's greater than forecast losses, despite the fact that there is precedent for the SC acting against promoters of companies that did not meet their forecast earnings. Recall the prosecution of Tan Kim Leng, former MD of UCM.

 

Ali's silence may have to do with the fact that Ernst and Young, the

firm of chartered accountants that he was principal of prior to his

appointment as head of the SC, were in his time, and continue to be

auditors for Berjaya Toto; the engine of the Berjaya Group,and various other ventures that Vincent Tan gets himself into.  The issue of BToto's massive inter-company loans, and the consequent detriment to minority shareholders in that company has been raised here before; readers might remember that the SC's response to that issue was to say that it was an issue for the minority shareholders and not the SC to pursue.

 

The use of BToto to finance other BGroup and Vincent Tan related

ventures continues. Most recent among these is BToto's investment in a 5% stake in Sun Media S/B, publisher of the SUn, and in which Vincent Tan is controlling shareholder and chairman. It is unclear if this investment has been declared publicly via any notification to the KLSE.

 

Be that as it may, the manner in which Ernst and Young came by the

Berjaya Toto audit should be considered now given Ali's promotion to the SC. Berjaya Toto, together with the all the Berjaya companies were until late 1992 audited by PriceWaterhouse.  Berjaya initiated the change in auditors, some say because Price and Berjaya disagreed about the treatment of goodwill of RM 550-600 million which had arisen in BToto's books, as a result of BToto buying Sports Toto(M) Sdn Bhd, for RM 670 million, from another Vincent Tan controlled entity.That goodwill, which remains in the books, valued at RM 547 million, is today, one of the largest, if not the largest asset in the BGroup balance sheet. It is vital in balancing the BGroup books, given the high level of borrowing.

Ernst and Young, then still headed by Ali Kadir, did not see any

difficulty with the issue, as apparently PriceWaterhouse had.

Consequently, Ernst won the BToto audit.

END