The Star Online: Business
The Star Online: Business |
- Counsel: Bank directors and employees involved in committing fraud should be sent to prison
- The next stage of progress in M'sia
- Difficult oil or new efficient energy pursuit poser
| Counsel: Bank directors and employees involved in committing fraud should be sent to prison Posted: 09 Sep 2012 05:51 PM PDT KUALA LUMPUR: Bank directors and employees involved in committing fraud should be sent to prison, according to a UK Queen's Counsel. "What really frightens people or can induce high standards in individuals is that they may go to prison if they get caught," said Jonathan Hirst. "If a bank has to pay out a million, it's not their money; it may affect their bonus but not in a big way." "But if there was a possibility they could end up in the criminal court and face a sentence of several years in prison, that is a much more effective deterrent." Hirst said there have not been any prosecutions as yet on the scandals involving HSBC and Standard Chartered but the banks had paid out huge regulatory fines out of corporate funds. He said this in an interview after giving a lecture entitled Fraud by Bankers; Fraud on Bankers The Remedies organised by the Malaysian Inner Temple Alumni Association recently. Hirst, Master Treasurer of the Honourable Society of the Inner Temple, a professional society of barristers in England and Wales, has appeared in all the High Court divisions including the House of Lords and Privy Council. His practice covers general commercial litigation, which includes banking, insurance and reinsurance, shipping, European Union and competition law and arbitration. Referring to the London Interbank Offered Rate (Libor) scandal, he noted that people "must have realised something was going wrong with Libor but they didn't do much about it at the time." Asked who watched the regulators, he replied: "Ultimately, it's the Government's job, isn't it, to make sure the regulators have the powers they need and they exercise them properly. "But at the moment, I don't think they are doing so," he said, adding that regulators were rather slow to act against banks. He cited the money laundering regulations in the United Kingdom which "requires you to jump through so many hoops when we know perfectly well there are banks which will find it impossible to refuse money if it comes in large suitcases and in large denominations." "That appears to be what caught HSBC - in Mexico, the pickings were too good and they couldn't resist helping the cartels. "As you say, too often the small consumers get hit by these regulations and have their lives made considerably more inconvenient but it doesn't affect the big boys at all." Earlier in his lecture, Hirst said the perception that bank fraud meant fraud on bankers and not by bankers has changed in the last few years. He said things seemed to have gone from bad to worse during the world recession, proving the accuracy of Warren Buffett's famous observation: "After all, you only find out who is swimming naked when the tide goes out." "I am afraid that post Bank of Credit and Commerce International (BCCI) and the collapse of the Lehman Brothers all that has changed: crookery in BCCI was well known perhaps less well known than that in Lehman - it turned out that client funds, supposed to be segregated and ring-fenced, had been routinely used to support the bank's own trading operations." Among the more recent scandals, only the former Anglo Irish Bank chairman was charged in July over a fraud inquiry. In the Libor scandal, Hirst said that Barclays Bank had paid out US$450mil in fines imposed by British and US regulators. "It is clear that other banks were involved and we can expect regulators on both sides of the Atlantic to inflict further massive financial penalties on the institutions involved." On Aug 6, the New York State Department of Financial Services threatened to revoke Standard Chartered's banking licence, alleging the bank had "programmatically engaged in deceptive and fraudulent conduct" in order to move at least US$250bil through its New York branch on behalf of Iranian financial institutions. According to Hirst, although the bank quickly settled a fine of US$340mil to avoid a public enquiry, more fines are likely to be paid as five US regulators have an interest in the case. While European Commission regulators are working to criminalise manipulation of benchmarks such as Libor and Euribor, Hirst said that Section 2 of the British Fraud Act could be used to bring a charge against fraud there. A conviction would mean a prison term of not more than 10 years or a fine or both. However, part of the battle will be over jurisdiction. Hirst said defendants would be determined to try and have the cases decided in a jurisdiction other than the United States, but the United States is likely to prove tenacious. The latest banking scandal brewing involves Malaysia. On Aug 31, Huffington Post reported that Switzerland's Attorney-General has opened a criminal case against the Swiss banking group UBS over "suspected money-laundering of timber corruption proceeds" from Sabah. |
| The next stage of progress in M'sia Posted: 09 Sep 2012 05:49 PM PDT KEY new features have been introduced to take us into the next stage of transformation while consolidating achievements made How time flies! It seems like it was only yesterday when we embarked on the transformation programme but three years have passed rather quickly. Yes, we are pleased with the overall achievement by both the individual NKRAs and collectively, the MKRAs (www.pemandu.gov.my) but there are still lots to do. That's as it should be because a programme for transformation changes too. It moves with the times and the objectives also change as we achieve some of them and put others on our list. It may be clichd but it is true when we say that change is the only constant. We started work in 2009 and launched the first transformation programme in January 2010 to cover the years 2010-2012. The new government transformation programme is simply called GTP 2.0 and will cover the years 2013-2015. A lot of hard work has gone into and is going into the fleshing out of the new programme of transformation. We conducted labs involving 500 people from April-May this year which resulted in eight reports totalling over 4,000 pages, 126 initiatives and 116 proposed key performance indicators. We have asked the public to give their feedback after making presentations in Kuala Lumpur, Kota Kinabalu and Kuching during the recent GTP open days. These and others will be incorporated into the programme roadmap when it is finalised. Despite some of the nay-saying, our intention is to push on and with the help of the rakyat that means you we hope to do our part to continue bringing meaningful change to our country through the GTP 2.0. There are three broad thrusts in the second programme. First we continue with the initiatives from the first plan that we still need to achieve and to keep it in place, for example maintenance of rural basic infrastructure already built and measures to fight corruption. Second, we will expand on the success of initiatives in the first three years, for example in education, there is the Teachers Career Package where teachers will be evaluated with a single evaluation instrument and promoted based on performance instead of time-based. In the rural areas, we have water and electrification projects as part of infrastructure development. Third, we will come up with new ground-breaking initiatives to take us further such as a 21st century village and an online tracking system for police, using the best available technology to do things better. I will elaborate on these shortly. These will work within the seven broad areas that have been identified for transformation. They are fighting corruption, reducing crime, reducing poverty, enhancing education, improving rural basic infrastructure, improving urban public transport and monitoring the cost of living. Exciting things There are a number of very exciting things being planned. Let me give you a sneak preview of just some of them. In crime, we are introducing an online system for police report tracking. Everyone can track his or her own report from the report number you are given at the time the report is made. It will be possible for you to track your own report in the system to check on progress. This will also indicate that any report made will be reflected in the system, and hence, will add up to the overall crime statistics. This will in itself reflect the transparency in how the police conducts their processes. Another example of using technology is the MyDistress app specifically developed for smart phones which brings help for those in emergency situations at the press of a button. This basically uses the smart phone's GPS locator to get the police to your location in your time of need. This is undergoing tests in Selangor. If you are a Selangor resident or in Selangor a lot, do download the app. It is quite easy to do and very user friendly. Just go to www.mydistress.net to register. In education, one example is to raise the bar for English teachers and raise proficiency in the language among students. In July 2012, 62,000 English teachers nationwide were tested on their proficiency level and those who do not meet the minimum standard will undergo professional development course conducted by the British Council. We aim to complete this by 2015 with the first 5,000 English teachers starting their course in October 2012. In the rural development area, we have a new concept called the 21st century village. This is a pilot project to get qualified people to become successful rural-based entrepreneurs. Open to all Malaysian youths, the competition to select the first batch of rural-based entrepreneurs was held in July and saw over 500 entries, out of which 11 winners were selected. Financial assistance will be provided to the winners to carry out their rural-based businesses which in turn will create more job opportunities as well as enhance the rural economy. Pilot project Another pilot project is the allocation of up to 35 acres for the development of modern farms. We might build a prefabricated house on the land to save time. The concept is basically integrated farming, including fish culture, chicken and goat rearing and dairy farming in addition to crops. There can be elements of eco tourism too as in farm stays. The water for the fish ponds can potentially be re-circulated for cultivating high-value agricultural crops such as rock melon through the addition of necessary nutrients. Fertile land can be planted with fruit trees. We are looking forward to expanding this if the pilot project is successful. This will not only help keep people in rural areas but will also aid the rural folks in terms of food self-sufficiency, raising their incomes and provide rural employment. In corruption, we have plans to strengthen enforcement, handle the issue of grand corruption and put in place more measures to ensure government procurement is clean and efficient. All the items in the Auditor-General report will be monitored closely so that remedial actions are implemented. These monitoring reports will be tabled for discussion with the Prime Minister, Deputy Prime Minister, Chief Secretary and the relevant ministries. Well, these are just some of initiatives being done under the second stage of transformation. A week ago today, I took the oath of office to be sworn in as a senator for a second term. We are pushing forward to ensure that the transformation continues, with more coming up as we go along and you will be kept posted.
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| Difficult oil or new efficient energy pursuit poser Posted: 09 Sep 2012 05:46 PM PDT PETROLIAM Nasional Bhd (Petronas), which recorded a weaker financial performance in its second quarter for the financial year 2012, is aiming to substantially beef up its capital expenditure (capex) moving forward. Its CEO Tan Sri Shamsul Azhar Abbas and executive vice-president of finance Datuk George Ratilal had repeatedly highlighted in Friday's press conference that this will be the immediate focus for Petronas at least in the coming five years. Shamsul who appeared sombre in the press conference said Petronas' capex requirements were projected to cost it RM32bil over the next five years. These would be spent on renewing its assets to cope in the new era of "difficult oil" exploration for oil and gas companies (O&G), he said. "The era of easy oil is over. We are moving into an era of "difficult oil". To develop and produce these difficult oil involves new equipments which are costly. Entitlement in terms of production of (O&G) is going to get less and less. This will have a significant impact on Petronas' profitability," Shamsul said "Old facilities have got to be replaced these are basically critical types of facilities and equipments. It will grow (lengthen) the life of these facilities but not bring in any profits at all. That's what it is. Towards the end of this year and the next, a lot of our upstream facilities' maintenance schedule have been deferred. This is because we are facing pressure to produce gas, so we have no choice but to defer some of these maintenance work because we were forced to produce gas for the country's requirements," he said. He notes that due to this, Petronas will need to embark on "maintenance and shutdown programmes" for its asset facilities. This sentiment is also shared by George who had articulated that Petronas will need to see substantial capex spending moving forward. "Very soon you will see Petronas hitting the half a trillion ringgit mark in total assets. But the larger the base, the higher risk there is, especially when profits are down," he added. "We have embarked on some major capex programmes the pipeline of renewals will have an impact and they are not going to bring any additional profit. This is cost, but we need this, otherwise we will not have any revenue in future," he said. Petronas may need to rethink whether it is economically feasible to continue on the arduous task of exploring difficult oil or whether it should plough a portion of its resources into research and development and to eventually become a producer of new and more efficient energy sources instead. This is more so as the national oil company is reliant on the fluctuations of oil prices and other factors such as currency movements which are out of its control. As Shamsul aptly says in his presentation that should oil prices go below US$80 per barrel "it may be difficult for Petronas to continue growing, funding our capex plans and giving the government dividends." As the national oil company moves into an era of difficult oil, industry trends of late indicate that traditional O&G giants are slowly evolving to become more comprehensive energy companies instead. This is apparent in commercial oil giants such as Shell, ExxonMobil and BP which have over time developed their alternative energy company entities. On the backdrop of the evolving energy landscape, ExxonMobil had noted in its corporate profile that energy supplies can change dramatically over time considering that 100 years ago, most of the world's energy came from wood and coal. "Over the next 30 years, advances in technology will continue to remake the world's energy landscape. Fuels will continue to grow less carbon-intensive and more diverse," ExxonMobil says. Moving forward, it is forthcoming not only for commercially driven O&G entities to be in the learning curve of alternative energy production but also for state-owned giants such as Petronas to eventually step into this elaborate learning curve as well, however steep it may be. |
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