Monday, February 19, 2024

From Board room to bedroom ....

The current Edge Weekly issue wrote in the Frankly Speaking column below:

CEO appointments require more care

Last week, the Securities Commission Malaysia (SC) won a civil suit against Datuk Aminuddin Md Desa, former CEO of the Perak State Development Corporation (PKNP) and CEO of its publicly traded unit, Perak Corp Bhd, for insider trading violations.

Aminuddin is required to pay the SC RM2.46 million, which is three times the profits gained as a result of the insider trading breach and a penalty of RM1 million with costs of RM100,000.

The SC said Aminuddin had breached Section 188(2)(a) of the Capital Markets and Services Act 2007 (CMSA) by acquiring 1.4 million Perak Corp shares between October 2013 and January 2014, when PKNP was proposing the privatisation of Perak Corp.

Aminuddin is also barred from being appointed as a CEO or director, or being involved in the management of a public-listed company or its subsidiary for five years, and trading in any securities on Bursa Malaysia for five years.

Other than the insider trading charge, Aminuddin was also charged with bribery at the Sessions Court in Ipoh in January 2019, for allegedly accepting a bribe in the form of payment for the construction of his bungalow, amounting to RM455,660, from a contractor.

To recap, Aminuddin was appointed CEO of Perak Corp in February 2013 but he resigned in May 2018.

Perak Corp is not flush with cash, quite the opposite. Perak Corp and sister company Majuperak Holdings Bhd — both units of PKNP, which owns 52.9% and 51.41% respectively of the companies — are underperforming.

While Perak Corp has been in the Practice Note 17 category for companies in financial distress since February 2020 and has sought a number of extensions to regularise its financial condition, Majuperak, in April 2020, triggered paragraph 8.03A (2b) of the Listing Requirements, which indicates that the company has insignificant business or operations.

Serious consideration should be given to the selection of CEOs whose job is to run companies and improve shareholder value.

Aminuddin was the CEO for Perak SEDC and Perak Corp appointed under former MB Dato Dr Zambery Kadir. It was reported last week that he lost an insider trading case brought against him by SC. Edge reported here.    

He took over the position as Perak Corp CEO in 2013 and resigned in 2018 on the pretext of pursuing other interest. On paper, he is academically qualified and has the work experience to back his appointment to the Perak state agency and its public listed outfits. 

It may have been a good catch to have Maybank's former CEO of its insurance arm, Executive Director and CFO to join the state government company [refer to here.] 

He went to the prestigous MCKK boarding school. 

Looking from a distance, it should be pondered as to why someone who made his mark in the corporate scene in Malaysia's biggest Bank would venture to a state-linked company. 

His name cropped up on many occasions including providing land to an associate of the then MB to pursue tourism activities. The land was pledged to Maybank for loan and when it turned sour the resolution to the problem was questionably done by SLC.  

It is believed that there was a report made to MACC and as a result the MB's associate was withdrawn from running for general election with a certain political party. He has since crossover to a political party in the Unity Government to insulate himself from being investigated and prosecuted. 

Nevertheless, this indiscretion by Aminuddin never made it into news and caused him no harm. There are those defending Aminuddin with the argument there are other crooks and corrupts holding positions in PLCs, thus why The Edge pick on him? 

To be fair, Edge may have knowledge of his reputation. In 2019, he was charged for receiving bribery to pay for his banglo home [read Astro Awani and BH here and here, respectively]. This and the insider trading is indicative of his possibly rampant indulgence in petty corruptions.

On hindsight, what was the consideration of the then MB of Perak to appoint him and whether sufficient background check were made? Was there any truth Aminuddin was dismissed by Maybank? Why?

It is important in the appointment of key position in any organisation that decision made is based on thorough background investigation on the qualification, experience, ability, and most important, the integrity of the person. 

Successful businessmen and astute investors made it a point to know the background of the person they deal with or background of management team the company they are investing in, from board room to bedroom.   

Recently, Dato Zaid Ibrahim in his defense of Dato Najib expressed his view that he was fixed up by people around him. That is likely to be true because he is a nice guy, easily impressed by branded University, corporate resume, and bloodline, and tend to be too trusting of people. 

The ensuing view is not made on hindsight after what happen at 1MDB. Najib's weakness was noticeable from day one. Still ringing in the head, his words from a meeting at his home in the early months of his premiership, "You do not know him as well as I know." 

No one replied for not wanting to embarrass the then Prime Minister. If only he knew that in the audience he was talking to then are those related through marriage, student days politics rival, and minder to a group of young Turks involving the person of subject.   

The judges may form their opinion of his SRC case, rightly or wrongly, and fairly or otherwise, from the evidences laid by prosecutor. Evidences can be designed and several of defense team requests were denied by the judges. However this weakness of Najib they may have not known. 

Nevertheless, a lesson to be learned.

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