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Thursday, October 11, 2012
The Talam fiasco requires a good financial and accounting background person to fully understand or digest the spirit of the whole issue. I will present the surface of Talam scandal without involving complicated financial calculation or explanation. Here are some of simple questions and answers what Malaysian people should know regarding Talamgate's scandal.
1. What's the fuss about Talam?
Selangor Pakatan Rakyat government has been fishy (read: defensive) in so far as Talam Scandal is concerned.
2. Why are they being fishy?
Imagine today, a seller values a house at RM139,000 and yet somebody were to purchased the house at RM181,000. If the figure is lower of RM139,000 then it still make sense but RM181,000 for a RM139,000 house is something that is very unusual. How many times we ever heard of people buying things way higher than the seller's price? Much worse if you have a friend who owned a house in similar area and his value is only RM81,000!
The example above is a good starting point to digest how come and why Selangor Pakatan Rakyat government purchased different land, property, office, shares and etc in extremely ridiculous price from what they are actually worth? And the total of overvaluation amount up to hundreds of millions .
If 1 or 2 purchase(s) are being overvalued or ridiculously priced, then maybe it is acceptable where human may overlook or being careless or whatever you name it. But then, there are easily more than 5 of their purchases that are overvalued. Would you call that a coincidence still?
Just imagine your friend has a house worth RM81,000, but I buy a nearby house from your neighbor at RM 181,000 even though seller values it at RM139,000. You want to sell a car that is valued at RM113,000, but I buy from you the same car at RM345, 000. Your watch is worth RM8,000, but I buy from you at a staggering RM27,000. Will there be so many coincidences that whenever I purchase things from you, they will always be overvalued? Will it still be a coincidence, or a mistake, or in reality, I actually do it on purpose with the intention of buying everything from you with at an overpriced value?
Then may be, you will come to a conclusion that I actually do it on purpose -- and what is the ultimate intention of me doing so? That alone should give you a cogent reply as to why Pakatan is so fishy about this whole Talam Scandal. I mean, who -- in the right frame of mind -- would buy anything at double or triple than its actual worth? Would you?
3. How did Selangor's Pakatan Rakyat gain anything if the purchases are being overvalued?
Imagine the one buying your house just now is actually a company, and the one buying from you is one of the company director. He buys it using the company money, not his own money. I repeat, it is the company money. If not, you would think that who will be so stupid to buy things at such an extreme overvalued rate?
I am just pointing out a possibility here.
Do you think it is possible for the company director to spend RM181,000 of his company money to buy your house to strike a deal with you since the property is only valued at RM139,000? For instance, let 's say I use my company money to buy from you the house at RM 181,000 and in return, you to have to reimburse me back RM21,000 and keep the remaining RM21,000 for yourself. If that's the deal, don't you think that you will actually agree to it since you can earn RM21,000 for doing nothing? Is a win-win situation, is it not?
Don't you think it is also possible for the same scenario to happen in Talam's overvaluation issue? The company here is Selangor Pakatan Rakyat, meanwhile the directors are also Pakatan Rakyat's politicians. That also gives the answer why they purchased properties at an overvalued price .
4. What is the White Paper?
When Datuk Chua Tee Yeong (MCA) found out about the whole overvalued purchases's fiasco -- where the company money is actually Selangor's tax-payer money which is being abused -- he started questioning why this company never revealed its financial report during the company's meeting as promised two years ago?
The metaphor of a company's financial report is actually the equivalent of the White Paper for a government. When you run a company you will then have to provide your company financial report during the company's meeting; similarly when you are running a state government, you will be required to present your White Paper during the State Assembly's meeting.
5. The overvalued properties are proven to be of low commercial value?
Datuk Chua Tee Yeong (MCA) has proven to us that all the overvalued purchases of Talam have low commercial value. That is why they mainly sell it only to their brothers and sisters, you can't sell it to outsiders who will not get higher price -- or any Return On Investment (ROI) -- after two years.
As to date, they have bought an empty hill slope land, a mining pond, few vacant office lots (which can’t be let out on tenancy basis) and underwater land in bad location.
6. Valuation Issue?
Let's say today you want to buy a house.
Will you buy the house based on your own research and market valuation or based on what your vendor told you?
If the house you are interested in buying is worth RM81,000, and yet the vendor told you it is RM181 000, what would you do? Would you blindly pay the downpayment or would you instead start asking around to verify your vendor's information?
That is why, in Talam fiasco - one of the main questions is: WHO ARE THE VALUER?
They are supposed to engage JPPH (a neutral valuer) to value any particular house, land or property that they are interested to purchase. A department specializing in doing just the valuation.
Now, as a state government, who do you trust most? The JPPH department or the seller's personal valuation?
2 Bukit beruntung piece of land were valued by JPPH at RM113 million, but you decided to buy the land at RM345million. Why?
7. Talam fiasco, despite being proven to be fishy, why the company directors still threaten to sue anyone who continues exposing and accusing them of wrongdoing?
This is called a psychological attack. They take calculated risk to threaten you, and hopefully you will stop raising the scandal in the company.
But then at the end of the day, even after he has threatened you, but you still march ahead to expose his fishy wrong doings -- he won't sue you.
Why? The answer is simple, he already knew he has no case against you. Another reason will be, he does not want you to further expose his wrongdoings in the court of law, because if any issue were to be brought up in court, there'll bound to cause an extreme, detailed, investigation. What that they do not want you to find out is why and where the overvalued money goes to. The person I am talking about here will be none other than the Selangor Chief Minister Tan Sri Khalid Ibrahim .
8. If they are innocent as claimed, what did they send one of the company worker to debate with Chua?
When they know they can't sue you, they will then seek another approach to spin the wrongdoings in Talam. They are just trying to 'create' the perception that they are 'innocent'. So when they challenged you for a debate, automatically people will think that there are really innocent otherwise they wouldn't dare challenged you. Moreover the one challenging you is not the company director himself. He might as well just send one of his company's toilet cleaner to provoke you for a debate.
You just imagine yourself in this situation now. You go all out to expose the wrongdoings of the company directors, but he ended up asking his office cleaner to challenge you for a debate. Will you accept it? I am sure you won't, because even if you accepted and won the debate, you will never get anything out of it.
The company director was very sneaky since he already preempted all these, and that is why he sent his least-qualified people to debate with you.
And when you ignore this debate, he will score on the opportunity to tell people that he is innocent and you are indeed scared to debate with him.
You do not want to fall into his trap, therefore you end up challenge the company director for a debate. Subsequently, you make your stand very clear that you will never debate with anybody other than him because he is the one that should be responsible and answerable to all the problems that is happening is his company.
This company director ended up during the day of your scheduled debate to travel to Bangkok and he openly told people that he got no time to debate with you (but he got time to travel to Bangkok?).
Therefore he appointed another 4 people from his company to debate with you. Those 4 people he appointed are not even the company managers . There are so many company managers in Talam, yet none of them were taskedto debate with you. The manager I am talking about now is Selangor State Exco. Selangor State Exco are the 2nd line in hierarchy of the State after the Chief Minister. He is like after our Prime Minister, then our Minister will be the biggest in the country administration.
You already told the company director clearly, you will only debate with him and none others. He already knew this fact.Yet he was adamant that the 4 people he appointed were never be accepted for the debate, that is just a show to create the perception that he is innocent.
During the debate day, 4 of them came just to walk away when you finally shocked them by allowing them to take part in Q and A session. They knew that they do not have the expertise to be involved in the Q and A session to defend the directors in this whole scandal. Therefore they quickly walked away and told the press that you did not allow them for a debate.
1 of the low class company workers even claimed that you got no rights to debate with his director ( Chief Minister). In reality you are a CFO of your company ( Federal Deputy Minister ). Even if you are not qualified to debate with their director ( just an excuse) then they are even smaller than their own company manager( state exco ) to debate with you.
9. Why did KPMG claim that there was no wrongdoing in Talam?
Every company do have their own auditors and accountants to make the company's account seemingly right. Therefore, as a corporate person, the director knew that he coulnd't just present his own financial statement and documents to seek for an advisory review.
He again predicted the outcome of the review when the audit firm came out and claim that there nothing wrong with this account. When you present something that you have already adjusted and seek for another person's opinion on it -- will they tell you that anything is wrong with it?
Those who are in auditing business will know that there's a huge difference between Forensic Auditing and Advisory Review .
They are actually seeking for advisory review to clear out the allegations in their game plan of creating the perception of they are not guilty. And in Advisory review opinion will be given base on whatever document or financial statements that is being presented to them. As I said earlier , if I were to just present everything that I have already fixed and adjusted, and asked you to find mistake wit it, will you be able to find any? That is the reason why KPMG came out and say there nothing wrong with the Company (State Government) .
That is why they dare not seek for Forensic Auditing where their entire transactions and account will be investigated in way much more complex and detail and the investigation will not only based on the documents that is given to you.
10. Why the KPMG Director, when asked is there anything wrong, she said 'no'. But when asked again if there's anything that being overvalued, she claimed 'yes'?
There is nothing wrong with her answer. This whole issue in certain point of view in auditing and accounting is not technically wrong.
So, if your house is worth RM139, 000 but I want to buy it at RM181, 000 what we often termed as 'willing buyer and willing seller'. Technically, there is nothing wrong with it.
Just like when 2 unmarried couple is having a consensus sex. Since it is consensus, then technically it's not wrong in law. But in terms of morality, is it right to have sex before marriage?
So in this case of hundreds of millions of Selangor's tax payer money are being abused, can we claim there is nothing wrong with it, just because it is not technically wrong?
The question remains: Why is it being overvalued?
Where did the extra money goes to? Who benefited the most from all the dealings? That is why it is a politician's job is to stand up and voice up what's right for the people. So politically speaking, Datuk Chua Tee Yong is right to question the company and its director.
Transmile and silverbird company have audit yearly and the report did not show any problem in their company, but then when finally there is a special investigation going on in the company, then they start to find out a lot of problems with the accounts -- even fraud sales.
Therefore Selangor Pakatan Rakyat government should prove their innocence by seeking for a special auditing service and just limited scope of work.
10. Why did Tony Pua claim that the state government is earning money from their purchased?
The seller told the Selangor state government is RM685 000, and Tony proudly told the whole world that they earned RM9000 out of it because they purchased it at RM676 000. Problem is, based on JPPH report, it should only be RM300,000 only.