Learn from Mistakes – better days ahead for Transmile

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Sep 05 2007
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On the personal note, since the news that Ling Liong Sik had resigned as the President of MCA (a component party of the ruling government) as well as Transport Minister in 2003 after a political battle with his former deputy Lim Ah Lek which split the party into Camp-A and Camp-B, he has not been targeted by journalist until Monday, 3rd Sept 2007 when a filing in the KLSE (Kuala Lumpur Stock Exchange) revealed he has resigned as the Chairman of Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000).

It would be just a normal resignation which would not raise any eyebrows if not for the fact that Transmile’s recent accounting scandal skyrocketed Transmile on the world map as the Enron of Malaysia. To add salt to the wound, it is one of the companies that pride the name of the tycoon Robert Kuok being its major shareholder. Billions of ringgit was wiped out from the market capitalization when Transmile’s share price plunge from as high as RM15.00 per share to as low as RM3.50 per share within 4 months when the accounting scandal exploded.

The fact that Ling decided to quit (or was he asked to leave?) two days before its directors are due to face shareholders who will definitely demand to know more about the scandal that had caused huge losses to its minority shareholders speaks higher volume and created more rumours. Transmile will have its shareholders’ meeting (AGM) today, Wednesday 5th Sept. It was reported that although Ling holds some 75,000 Transmile shares, he will not attend the shareholders’ Robert Kuokmeeting today. Is he trying to avoid the shareholders knowing he will not be able to answer them satisfactory?

Coincidently Kuok Brothers Sdn Bhd in the filing on the same date as the day of Ling’s resignation on 3rd Sept 2007 announced it had acquired up to 800,000 shares of Transmile on 30th Aug 2007, raising its stake to 17.22%. And Transmile’s share price jumped since then, registering a high of RM0.44 (13%) gain yesterday (Tuesday 4th Sept) and as high as RM4.20 per share or a gain of RM0.48 (13%) in today’s morning trading.

Transmile Stock ChartCould Transmile finally see the light at the end of the tunnel? Whether it’s the perception that the departure of Ling means Robert Kuok is getting serious about business in revitalizing his company or the rumour that the Kuok family is getting sick and tired with the management inefficiency that it might consider a privatization and get the company listed elsewhere is up to everyones’ guess.

Ling Liong Sik and Ling Hee LeongOf course in the corporate world, Ling Liong Sik created the equally hot news during the 1997 Asia Economy Crisis when all hell breaks loose after businessman Soh Chee Wen accused Ling, who was also transport minister, of having abused his position to conduct business deals between 1996 and 1997. Soh was referring to the Linksun Avenue Sdn Bhd’s acquisition of Berjaya Industrial Bhd in late 1996. Linksun Avenue was owned by Ling’s eldest son Ling Hee Leong, aged 27 with no business experience, who made a meteoric rise in the corporate world when he acquired Berjaya Industrial (later renamed Rekapacific Bhd) from business tycoon Vincent Tan for a whopping RM1.2 billion.

Soh Chee Wen used to controll eight listed companies and was the biggest stock market player the regulating agency had investigated over his two counts of defrauding now-defunct Omega Securities Sdn. Bhd. Among the companies he controlled during his heyday were marine engineering and property concern Promet Bhd., Autoways Holdings Bhd., Kelanamas Industries Bhd. and tin-plate maker Perusahaan Sadur Timah Malaysia Bhd.

Soh Chee WenAs with mother’s nature, Soh’s political (he was the member of political party MCA) and business fortunes began to crumble during the 1997 financial crisis, when he was forced to sell many of his corporate holdings. His ties with Ling also unraveled, with Soh filing a 149 million ringgit suit against Ling’s son, Hee Liong, a former business partner, claiming Hee Liong owed him millions of ringgit. While Ling Liong Sik called him a liar, Soh threatened to expose prominent figures involved in the deals he was charged with.

Soh Chee Wen had also claimed that he had hooked up Liong Sik and his family to businessmen in Singapore, Hong Kong and Taiwan and enriched the Lings by millions of ringgit. However, Ling Liong Sik did not rebut claims made by his former close aide Soh Chee Wen regarding how he (Ling) made use of his Transport Ministry’s office and facilities to conduct personal business dealings.

TA Enterprise Tony TiahAfter on the run for three years, Soh returned to Malaysia to face charges and on May 2007, he pleaded guilty to two alternative charges for abetting Tony Tiah Thee Kian (owner of TA Securities) in submitting false information to the Kuala Lumpur Stock Exchange related to reporting of the transaction involving 7,750,000 Omega Holdings Berhad (OHB) shares and 7,752,000 Omega Holdings Berhad A share (OHB – A share).

Interestingly all the individuals in the corporate world are related, one way or another. Wong Yoke Meng who has been appointed the new Managing Director of Transmile was formerly Chief Operating Officer (COO) at RHB Capital. The founder of RHB, Tan Sri Rashid Hussain who married Robert Kuok’s daughter, Suraya, has since retired after his company was acquired by Utama Banking Group, controlled by Saraw
ak Chief Minister Abdul Taib Mahmud.

RHB Tan Sri Rashid HussanThe rumour has it that if not for Rashid Hussain’s personal bad-debts in extending his guarantee for the loan to Ling Liong Sik’s son to acquire Rekapacific Bhd, Rashid might still be commading the ship of RHB now. And of course Tony Tiah is back in commanding his flagship TA Enterprise after fined RM3 million and barred from holding any directorship for a period of five years in May 2002 for submitting false statements to the stock exchange. Tony’s wife Alicia, who stood in for him as the executive chairman in his absence, has been redesignated as managing director and chief executive officer of the company.

Regardless of the unforeseen future for Transmile, there’s no doubt investors are relieve now that almost all the obstacles are cleared and things indeed look better now than ever. If Transmile is a gem, Robert Kuok will definitely unlock it by way of privatisation, if the market still does not match its value.

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