Wednesday, January 04, 2006

The Questions On Transparency - Proton

Well, well, now we have questions on transparency on Proton's decision to sell "the thing" for 1 Euro. Part of the letter written by Tun Mahathir and Tengku Mahaleel is reproduced below:

"Who offered to sell or who offered to buy at one Euro?
Were there other bidders?
Was there an attempt to get the buyer to pay a higher price?
Was there an announcement that M.V. Agusta was up for sale?
If not did Proton approach only one bidder?
If other bidders were offered, did they reject?
Who in fact made the decision to sell?
Can Proton explain how selling an entity bought at Euro 70 million for one Euro would not cause Proton to lose money as is claimed?

Gevi S.p.A. is not a household name in the automotive industry. Is it a motorcycle company, confident that it can turn around M.V. Agusta, something that the sale by Proton implies that Proton has no capacity or ability to turn it around? Not having to pay Euro 70 million will be an advantage for Gevi.
These are questions that need answering. As the two people most involved in the purchase of M.V. Agusta, our credibility and honesty is at stake. We want to know the correct answers. The public too may want to know as Proton is a National project.

Dr Mahathir bin Mohamad
Tengku Mahaleel Tengku Ariff "

While waiting for Proton's board to come up with some answers, here's my take:

a) Yes, Proton's board and management need to be transparent on the transaction. Was there sufficient effort expanded to secure more bids for the company? Was there an attempt to obtain a fair price for the company?

b) The questions for more transparency on the subject is very much welcomed, but why only Proton, why only now - there were so many deals that lacked transparency, but there is one, just one which totally flabbergasted most Malaysians, maybe we should put the transparency test on why Khazanah was forced to buy out Tajuddin Ramli's stake in MAS at more than twice the market price at the time?? Why were the minority shareholders not offered the same deal?? Why the selective transparency???

c) New management at Proton, and if they decided that going forward their strategy would not include the "bike company", yes, it should be discarded. There should be no need to keep businesses for "old time's sake" when they are not part of the strategy going forward. Hence the one year period in buying and selling should not matter as new management were roped in during the in-between period.

d) As for the "no loss on disposal" statement by Proton, I have made fun of them already (please read below) but let's get at the real issues, because everyone knows that it was a bad PR job and not a malicious intent to decieve.

e) Finally, if we are going to put the sale through a transparency test, we should also put the purchase through a similar test. What was the rationale for the purchase? Was the 70 million Euro plus the assumption of 232 million Euro in debt a fair price? How was the pricing arrived at? How was the turn around strategy going to be like? What was the technology transfer value?

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