THE PEOPLE RESPONSIBLE FOR MAS DOWNFALLAnother "forensic" damning analysis of the so called "untouchables"! You may or may not agree entirely or partly with the hard hitting criticisms of all those mentioned in this report since they are indeed "colourful" personalities. Well, some of us may also know some of them personally; or even have current if not past dealings with some of these people - so draw your own conclusions! Hopefully this won't spoil your coming weekend. And if you are financial analysts these accounts may shock you if you don't have background knowledge of the mess. No cheers
THE PEOPLE RESPONSIBLE FOR MAS DOWNFALL.
Reasons Why Malaysia Airlines Bailout Will Not
Work
Finally, Malaysia’s national carrier which was founded in 1946 (then known as Malayan Airways) and later commenced operation as Malaysia Airlines System in 1972, dies a natural death. Well, that’s a polite way to bid farewell to the 68-year-old airline. In reality, Malaysian Airlines System (KLSE: MAS, stock-code 3786) or popularly known as MAS was having serious financial cancer for too many years. State fund Khazanah Nasional Berhad (KNB), which already owns 69.37% stake in MAS, is offering RM0.27 for each share in the company it does not own, amounting to almost RM1.4 billion (£260.8 million, US$438 million). With due respect, the missing MH370 and the downing of MH17 somehow “help”Najib administration solves one of the biggest headaches – closing down MAS for a major overhaul.
Actually it isn’t an overhaul but rather a bailout. Of course, overhaul sounds so much nicer compares to bailout. But is there anyone out there who actually believes this is an overhaul? KNB is taking MAS private and will likely inject more funds into it, either directly or indirectly. KNB itself is the investment arm of the government, which in turn gets money from taxpayers’. It’s one big supply chain of sucking public money to rescue UMNO’s companies.This may sound absurd, but the fact is MAS does not belong to the public. It belongs to UMNO disguised under nominees. Telekom Malaysia, Tenaga Nasional, Axiata (formerly Celcom), CIMB, PLUS, UEM Land and MAS are just some of the 50 companies worth more than US$30 billion (£18 billion, RM96 billion) under KNB’s management. KNB is just like a fund manager acting on behalf of UMNO.
The fact is this is not the first time MAS needs a bailout. Everything started the moment former prime minister Mahathir Mohamad and former finance minister Daim Zainuddin inspired by Germany’s past anti-Jew policy. In order to jumpstart ethnic Malays who were extremely slow in controlling the country’s economy, both Mahathir and Daim started their evil idea of cronyism in a huge scale in the 1990s; again, disguised under the infamous racist New Economic Policy (NEP).
What Daim did next was pretty amazing – select a group of cronies as his protégés, and divide the country’s conglomerates among them, as if they were toys. People such as Wan Azmi, Amin Shah, Mohd Razali, Halim Saad, Tajudin Ramli, Rashid Hussain were some of the supposedly “successful Malay ethnic” groomed under NEP. Tajudin Ramli was entrusted with telecommunication company Celcom (now Axiata) via his 24.3% stake in now-defunct TRI (Technology Resources Industries).
In 1994, through Tajudin’s 47% in Naluri, he was “instructed” by Mahathir and Daim to purchase MAS in the name of “National Service” to help the Central Bank (Bank Negara Malaysia) solves Mahathir’s gambling losses – currency speculation. If you still remember, 1993 was the “Super Bull” year in Malaysia’s stock market. The economy was bullish so everyone made money. MAS made money too, of course.MAS had been making handsome profits from 1990 to 1996 (we don’t have financial data prior to 1990), until the Asia Financial Crisis hit in 1997-1998. Looking at the chart (below) prepared by FinanceTwitter, you can see how MAS was in the red for five consecutive years since 1997. In other words,MAS never actually recovered after the 1997-1998 Asia Crisis, for a very long time. And that speaks volume about MAS’s mismanagement, leakages, corruptions and whatnot.
Together with Renong, Perwaja, RHB Bank, MAS and tons other companies related to Mahathir and Daim’s cronies, billions of dollars of taxpayers’ money were used for bailout as if there was no tomorrow. It was an open secret that Mahathir had his hand in getting Petronas to bailout his son Mirzan Mahathir’s shipping company, then Konsortium Perkapalan, which had trouble servicing US$490 million debt.
MAS returned to green for the financial years 2002 to 2004. But the celebration was short-lived as the national carrier reported a stunning loss of a mind-boggling RM1.25 billion in 2005, thanks primarily to skyrocket fuel prices. Idris Jala was pinched from Shell to turnaround the company in the same year. Beside fixing fuel prices and terminating domestic routes from 114 to 23, Idris also cancelled all unprofitable international routes.
As a result, MAS once again returned to profits from 2006 to 2010. But it seemed the turnaround plan by Idris was unsustainable, as the company once again registered losses in 2011 and beyond – this time by bigger loss margin of a whopping RM2.52 billion for financial year 2011 alone. Sadly, the carrier has since been in red until this year’s missing MH370 and downing of MH17.While Idris Jala had terminated domestic routes, obviously due to budget carrier AirAsia’s cannibalizing, the open problem of excessive staffs was never tackled. In spite of lesser flights, both domestic and international, MAS’s staffs remain roughly the same. MAS Employees Union which represents half of the 20,000 employs was so strong that not even prime minister Najib himself dares to touch.
But was MAS really overstaffed and require a serious downsizing?Coincidently, MAS had bloated its staffs number to about 20,000 in 1992 (from about 16,000 in 1990), the year Mahathir and Daim hatched the idea of jumpstarting Malay entrepreneurs (read: cronies). Interestingly, the union pointed out that the problem was with the airline’s chief executive, Ahmad Jauhari Yahya, who has little experience running an airline.
Of course, the union can always display the statistic (refer to chart below) that the “Revenue Per Employee” has been on the uptrend ever since – from RM182 million (1990) to the present RM772 million (2013). So, to point finger at internal staffs alone is unfair. It’s hard to retrench staffs using any excuses when corruptions are still alive and kicking, ever since Tajudin Ramli started looting the company to the tune of tens of millions back in early 1990s.Almost everybody in MAS know the tale about Tajudin conspired with three other MAS officers and directors through two nominee companies, one in Singapore and the other in Hong Kong, to establish a company called Advanced Cargo Logistics GmbH Germany, at Hahn Airport in Frankfurt, Germany, to provide ground-handling services for MAS. And guess who were the directors of this company? They were Tajudin’s own brother (Bistamam Ramli) and sister-in-law (Rizana Mohd Daud).Heck, during Tajudin’s rule between 1994-2001, MAS had accumulated losses in excess of RM8 billion (US$2.5 billion, £1.5 billion). Till today, Tajudin is still a free man, not to mention untouchable. Then came Munir Majid as MAS chairman who ruled from 2004-2011. Munir was less disastrous though (*grin*). He just helped himself to RM1.56 million paintings for his office, but not before renovating his office for a peanut RM841,000 (*tongue-in-cheek*).
Not only Munir paid crazy price for little known Colombian artist’s artwork, he also paid RM60 million to about 20 foreign consultants to do, well, basically nothing at MAS. And these senior executives also enjoyed special perk such as car scheme where their choice of cars were subsidized by MAS for up to 70%. So much for grooming Malay entrepreneursDuring Munir’s 7-years in office, MAS was bloated with tons of senior executives. At one time, there were a staggering 55 Assistant General Managers (RM13,000 per month), General Managers (RM16,000 per month) and Senior General Managers (RM20,000 per month) in the company. The most expensive of them was Chris Andrew. He was paid a mind-boggling RM7,250 per day.
Wait a minute, wasn’t Munir’s entry into MAS coincides with the company’s 2005 jaw-dropping losses of RM1.25 billion? Sure it was, and where is Munir Majid now? He’s the chairman of Bank Muamalat Malaysia and had recently appointed chairman of CIMB Asean Research Institute. What – another untouchable? You bet. So, it’s true that MAS is overstaffed but the chopping board should starts at top executives or management.Here’s the real problem – almost all the top management staffs are“protected” species, one way or another, due to their relationships and political connections. Often, family members, friends, relatives, hamsters who are related to UMNO and couldn’t find 5-digit jobs or directorships in the market would end up at MAS. And to retrench them now would require a super “golden handshake”, which in turns will involve more taxpayers’ money, yet again.
And don’t get us start talking about Brahim’s Airline Catering’s 25-year exclusive catering contract at RM6.5 billion (US$2 billion, £1.2 billion), the same company owned by former prime minister Abdullah Badawi’s brother, Ibrahim Badawi, which charges MAS a whopping RM60 for nasi lemak. MAS is not a business entity anymore, Mahathir and Daim had successfully turn it into a farm with incompetence people helping themselves to the gravy train.
Hence, for the very simple fact that MAS is already entrenched with cronyism, racism, incompetence, corruption, mismanagement and whatnot but never meritocracy, the national carrier will never recover to its previous glory, no matter how many times you overhaul or reboot it. Change the name if you like, perhaps from Malaysia Airlines to Airlines Malaysia, but as long as those thousands of parasites are entrusted again in running the show, the same bailout will keep screaming again.
If you can’t separate patriotism and national pride with Malaysia Airlines identity, it would be much faster and long lasting to beg Tony Fernandes to change AirAsia to AirMalaysia (*grin*). Scream till foam at mouth but Malaysia Airlines’ fate was already sealed 20-years ago in 1994, the moment Mahathir and Daim started their evil plan enriching their cronies. It’s the internal cancers and not Ebola virus that is killing MAS. What a marvellous grand plan enforcing NEP, was it not?
