Monday, April 1, 2024

Who directed Jamaluddin to the Ncell RM6.3 billion blunder?

Two persons alerted yours truly to March 19th article, "Explainer: How Axiata lost RM6.3 billion in Nepal" and one is of the opinion MACC should check the broker and financial adviser of the deal. 

The loss is not the size of another BNM forex loss, but it is within the 1MDB or adjusted for inflation, the BMF scandal proportions. It will be a difficult and complex cross border investigation but MACC should pursue it. 

More so, the MP for Pasir Gudang, Hasan Karim raised it in Parliament. He maybe referring to the Cilisos's expose by chance or by design, but in the current fiscal predicament, every billion adds up. It should not be ignored after RM2 billion supposedly received as profit, and RM230 million from sales proceed deducted.  

Actually, the names have been talked about for quite sometime. 

Why didn't Daim's brother-in-law or elder brother to Mahathir 2.0's Economic Adviser, Dr Muhammad Abdul Khalid did something about it since his elder brother, Tan Sri Ghazali Abdul Khalid was Chairman of Axiata and Ncell?    

It raised the suspicion why no solution from that political regime and sale was only made in December 2023.  

NCell in a nutshell

To cut the Cilisos story short, the deal made by government-owned Axiata in 2016 was shady from the beginning. The acquisition supposedly received clearance from all relevant parties in Nepal, but strangely slapped with a weird capital gain tax. 

Isn't the practise for seller's or beneficial party's to pay for capital gain tax?

When the deal was done, Ncell license was expiring. Axiata shouldn't have proceeded. Why was it pursued and ended having its stake expropriated by the Nepalese government?

No intention to reproduced the well written posting of Cilisos. Read it here

More so, yours truly wrote of it thrice back in July 2019. [Read using VPN in  "Surat Layang" on Telenor-Axiata merger Part 1, Part 2, and No more Axiata-Telenor poison pen letter ...]

The brokers and financial advisers were mentioned by the poison pen letter in Part 2. Mentioned that the then CEO Dato' Jamaluddin was advised against the deal by the CFO Chari TVT, but he engaged a Mr Annis who hooked him up with the broker Satish Lal

The CFO was replaced by a former Telenor executive, Vived Sood. He allegedly structured the merger to cover the NCell fiasco and to make the merger happen.  

The letter went on to implicate Idham Nawawi, the current CEO of Celcom-Digi Berhad, but it was only envious bitching over his entitlement. 

Back then, Idham met us over the articles but didn't used the opportunity to explain and take up the right to reply. Purely time wasting makan-makan PR exercise.

Controversial sales of Ncell     

Not only was the acquisition controversial, the exit of Axiata from Ncell was mired in one too. wrote in December below:

Axiata's Ncell sale already mired in controversy

Malaysian telco group Axiata has quickly found a buyer for its Nepali operation, but a whiff of alleged questionable dealings and regulatory rumblings could turn it into a prolonged affair.

Nick Wood

December 5, 2023

Axiata has agreed to sell Reynolds Holding, the company that owns its 80% stake in Ncell, for just $50 million – far, far less than the $1.37 billion it agreed to pay to Swedish telco group Telia for the shares in 2015.

Stranger still is the buyer, Spectrlite, which was registered in the UK in September. A search on Companies House reveals one of the directors is Nepali businessman Satish Lal Acharya, who lives in Singapore. His wife – Bhavana Singh Shrestha – just happens to own Sunivera Capital Ventures, which controls the other 20% of Ncell.

An investigation in 2021 by the Centre of Investigative Journalism-Nepal (CIJ-Nepal) uncovered a treasure-trove of questionable dealings surrounding Sunivera's purchase of the shares in 2016. It was suggested that Axiata might have paid Sunivera $90 million via an off-shore company just months before the deal was announced, implying that Axiata had found a way to circumvent Nepal's foreign investment restrictions.

As part of its report, the CIJ-N calculated the value of the stake at approximately $300 million at the time, which suggests the outstanding 80% was worth $1.2 billion.

If that estimate is at all accurate, how is it possible that the value of the remaining 80% could have dwindled to a mere $50 million just two years later? As has already pointed out, Ncell turned over 9.32 billion Nepali rupees (NPR) in Q3 alone, which equates to nearly $70 million. How can a company that generates that much revenue in three months – and serves 16.6 million customers – only be worth $62.5 million in total?

In a press release, Axiata explained that its motivation to sell was in part due to what it claims are unfair tax conditions in Nepal. It notes that between 2016 and 2020, it paid a total of NPR47 billion ($421.9 million) in capital gains tax on the Telia deal, and received assurances that no further taxes were due. However, in January 2021, the government demanded another NPR57.9 billion for the same transaction.

Axiata successfully petitioned an international tribunal to prevent the Nepali government from collecting the fee, but it has still yet to withdraw its demand.

In addition, Axiata said that the expiration of Ncell's licence in 2029 has created further uncertainty; that there exists an unfavourable foreign investment protection environment in Nepal; and that it is also concerned about the potential for the government to arbitrarily seize its stake.

"Axiata has been in Nepal for seven years, working alongside hard-working colleagues in Ncell," said Axiata CEO Vivek Sood, in a statement. "However, the increasing challenges in the operating environment represents a fundamental shift. It has led the Axiata board to conclude, after a thorough process, that our foray in Nepal cannot continue due to the unfavourable conditions for Axiata, the uncertain regulatory and tax environment and the looming risks associated with the expiry of the mobile licence in 2029."

Under the terms of the deal, Spectrlite will pay $5 million of the $50 million within six months, and will pay the remainder in two years. Axiata is also eligible to receive a share of future dividends – depending on Ncell's performance – until 2029.

This is all well and good, but there is a potential spanner in the works in the form of the Nepal Telecom Authority (NTA).

According to a Nepali Telecom report, the NTA has written to Ncell to explain that shareholders require permission from the NTA before buying, selling or transferring ownership, and that Axiata has not sought approval.

If the report is accurate, Axiata's dream of a quick and clean exit from Nepal might turn into a bureaucratic nightmare.

Satish Lal was the broker who arranged for Axiata to buy the shares and received the commission in the form of 20% stake in Ncell, presumably funded by Axiata's overinflated acquisition price of Ncell. 

And now, he is a Director of the company buying it for cheap from Axiata.  

Axiata made off-shore payment 

Axiata was made a sucker left, right and center. 

CIJ revealed that several Nepalese investors made money from the buying and selling of Ncell shares. Could it be presumably done in collusion with corrupt Nepalese officials and foreigners working within Axiata? 

As a result of the acquisition, Axiata sufferedRM5.5 billion loss for 2018 due to write-off and impairment. RM2.2 billion tax bill. Sold for USD50 million or approximately RM230 million @4.60 for December 2023. 

Boy ... were we made suckers by these Indians or Nepalese!

According to CIJ website here, there may have been suspicious money transfer in the Axiata deal. Extract below:

An investigation by the Centre for Investigative Journalism-Nepal (CIJ-Nepal) and Finance Uncovered, a British journalism organisation, has found that the primary Nepali beneficiaries from these deals appear to be leading businessman Upendra Mahato, his associate Niraj Govinda Shrestha, and businesswoman Bhavana Singh Shrestha along with her company Sunivera Capital Venture.

This trio appears to have profited enormously from their ownership, at various times since 2012, of a 20 percent stake in Ncell, which is reserved by law for domestic investors. 

Telia’s sale of 80 percent of Ncell’s share to Axiata in 2016 has caused great controversy in Nepal. But less scrutiny has been given to the buying and selling of the other 20 percent of Ncell, a deal that is so opaque it is not possible to see where hundreds of millions of dollars have ended up.

Our investigation finds that Axiata paid $90 million to a secretive offshore company with a link to Bhavana Singh Shrestha, months before her company Sunivera bought 20 percent of Ncell’s shares and became Axiata’s partner in the telecoms company. 

We estimate that today this 20 per cent stake may be worth well over US$300 million and has earned more than US$80 million in dividends since 2016, based on figures published by Axiata and Nepal’s central bank.

Our investigation finds that:

    • Axiata paid US$90 million to a secretive offshore company with a link to Bhavana Singh Shrestha, months before her company Sunivera bought 20 per cent of Ncell‘s shares and became Axiata’s partner in the telecoms company.
    • Telia lent Niraj Govinda Shrestha US$230 million via a tax haven in 2012 to buy the Ncell stake from Mahato. But Shrestha claims to have only paid Mahato US$3 million and it is not possible to see what the money from Telia’s loan was used for.

Our findings suggest overseas telecom giants provided money to Nepali investors to buy shares in Ncell in opaque ways which appears to test Nepali’s foreign investment rules.

Read on here

Who OKed acquisition? Anyone at Khazanah instruct?

Cilisos accepted the denials from Axiata on allegations of tax evasion, kickbacks and backroom dealings as honest mistake. The loss was not seen as alarming for reason company was still making profit.   

To brush off as though the shady deals do not exist, is irresponsible. Axiata, Singapore-based Satish Lal and Nepalese wife Bhavana are being accused in Nepal of defrauding the government. Did ex-Maxis CEO Jamaluddin did all this by his own?

Before assuming it is a catastropic business blunder, be reminded of BNM before the forex fiasco. It was doing well till the colossal loss put to bare the weakness of the central bank's finances. 

The forex trader was Nor Mohamed Yakcop, who rose to be the Alex Ferguson to the fledglings of young Malaysian corporate CEOs under Khazanah. Despite no more being Minister later, he remained in an active role in Khazanah and was appointed Executive Committee Chairman in June 2013.

Khazanah used to do well too, but this could be the tip of another iceberg of shady deals. One only need be reminded that two of Nor's political secretaries were charged for corruption.

Mahathir was upset for not being told of the Telenor-Axiata merger. Strange that something so big not in his radar. Perhaps the reason it was called off. Best left to one's imagination to the true reason. 

During Nor's role as Khazanah's Executive Commitee Chairman, Axiata, which split from Telekom to pursue regional telco venture, went to countries other than Nepal. 

Axiata had a venure in Indonesia under XL Axiata which had collaboration with Indosat and Ooreda. Talk is the collaboration with Indosat made lots of money. 

Not sure XL Axiata did well then but Nor later owned a motor racing company in Bangsar, had office in Dubai or Abu Dhabi, and now a shareholder in a chain of restaurants serving local comfort food.

1 comment:

Anonymous said...

Is anyone even interested to dig and look whats happening in this GLC!?

Also, looks whose is managing it now… where are the talented Malaysians