Al Capone of Broadcom, he did it in the wrong country

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Jun 06 2008
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There was a saying that two Malaysian could not outsmart one Singaporean; four Singaporean could not outsmart one Hongkies (Hong Kong) and four Hongkies could not outsmart one Chinese (China). I’m not sure about Chinese against American or Jewish though and please, there’s no racial element in the statement. Take it as a joke if you can’t think in straight line. Of course the above “comparison” referred to corporate-business although I’m pretty sure when comes to politics, the reverse makes more sense.

When you’re into business expansion, please remember to borrow as much as possible. It would be an achievement if you could borrow RM1 billion for your RM2 ringgit shell company. The fact is the more you borrow and the deeper your company is in debt the better. When you owed banks billions of dollars in loan you’re a celebrity, so much so that the banks were so scared of your security they might even provide you bodyguards foc. And if you can further convinced the banks to lend you more money to turnaround your company, you’re basically a genius.

BRCM short overviewChances are you would be sentenced to longer jail terms for stealing underwears or shampoo than for owing billions of dollars in debts. There’s very high possibility that you could just walk away a freeman instead if you’d committed such action in Malaysia. Anyway I’ve not read of any local top businessmen did anything similar to Broadcom Corporation’s (Nasdaq: BRCM, stock) co-founder Henry T. Nicholas III, a provider of semiconductors for wired and wireless communications.

Short of committing murder, the successful entrepreneur was indicted on federal narcotics charges that include allegations he slipped ecstasy into the drinks of business associates, maintained a drug warehouse and concealed his illegal conduct with bribes and death threats. Whoa! Al Capone reincarnation! The billionaire also is accused of committing conspiracy, securities fraud and other violations – Broadcom was eventually forced to write down its profits by $2.2 billion in January 2007, believed to be the largest-ever restatement related to improperly accounting for backdated options.

BRCM founder NicholasDr. Nicholas used much of his fortune to fund drug parties in airplanes and luxury homes and to build a secret tunnel and room beneath his mansion in Laguna Hills. The court documents also claim Nicholas hired prostitutes and escorts for himself, his employees and customers and conspired to get illegal prescriptions for drugs such as Valium. In fact, he smoked so much marijuana during a flight on a private jet between Orange County and Las Vegas that the pilot had to put on an oxygen mask.

BIDU scalped profitThe drug charges against Nicholas carry a maximum combined sentence of 20 years in prison. He could face up to 340 years in prison on the stock backdating charges. What? Only 20 years for drug offence but 340 years for backdated stock options? You gotta be kidding! Maybe that’s what the PM is trying to do after all. Dig as much as possible because in Malaysia it’s not an offence for politicians to be super rich (remember “Sultan” Zakaria and his palace story) and if you wish to save your arse, you got to put yourself at the same level as Marcos or Suharto. Dr. Nicholas did it at the right time but at the wrong place. Before I sign-off, I managed to make some pocket money scalped Baidu.com, Inc. (Nasdaq: BIDU, stock) yesterday. Can’t let go of such opportunity when the Dow was so bullish, can I?

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