Bloomberg reported that and audit on Southern Bank reveals an overstated in 2005 assets by RM160 million (US$47 million) when the Chinese-based bank was forced to be sold to Bumiputra-Commerce Holdings Berhad (KLSE: COMMERZ, stock-code 1023). PricewaterhouseCoopers discovered “inappropriate accounting” for some transactions at Southern Bank for 2005, including how some derivatives were valued.
Auditors amended the accounts of Bumiputra-Commerce as of June 30, 2006, and no further corrections are required, Bumiputra-Commerce said in a statement to the Malaysian stock exchange today.
Isn’t it puzzling how the overstatement could be amended and the case considered closed? Is there any difference in the case of Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000) where the revenue was overstated compare to this Southern Bank case? While Transmile concerns revenue, Southern Bank is in the assets. Does this mean revenues are more critical than assets? So Chief executive officer Datuk Nazir Razak (the brother of current deputy Premier Najib Razak) is OK with the overstated assets reported by Southern Bank before the purchase? Wow, I haven’t met such a generous person in my life. Doesn’t that mean Bumiputra-Commerce has over-pay Southern Bank? But on the other note, maybe the deal was still attractive even with the overstated assets since it was taken over hostility.
But I guess this is the best solution (no further corrections are required) when the former boss of Southern Bank can walk away happily (or does he?) with the money while Nazir can prevent another episode such as Transmile where the stock-slide could wipe out possibly billions of dollars in capitalization depreciation.
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June 1st, 2007 by financetwitter
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