FINANCE Minister Tengku Zafrul Abdul Aziz’s recent call for government-linked companies (GLCs) to help drive Malaysia’s economy amid the Covid-19 pandemic by investing more to create jobs has merits.

A closer look into a GLC group shows such a call is mere lip service; or worse, the right hand does not know what the left is doing in the government.

Take for example the Armed Forces Fund Board (LTAT) and Boustead Holdings (BH) Group. Unscrupulous pressing down of the Boustead Heavy Industries Corporation (BHIC) shares has been going on, and with more intensity since April this year.

A glaring example was on November 2. During the last 15 minutes of trading, when the Buy-Q was at 60 sen, a Sell-Q for 5,000 shares at 55 sen suddenly appeared and ridiculously pushed down the price.

A stealth assault and corporate boardroom manoeuvre on Friday October 23, taking advantage of the nation mesmerised by the emergency rule issue, was launched against BHIC to buy its shares cheaply.

The market, jittery on the possibility of a state of emergency, led to a sell-off on Bursa Malaysia.

Retail investors had exited the market and there was persistent selling in the small-cap stocks.

However, BHIC, also a small-cap company, saw strong buying interest. 215,900 shares changed hands to close at 58 sen.

It was obvious that an institutional seller was selling cheap to a favoured party. The trading over the previous two days was only less than 20,000 shares each day, closing at 62 sen.

Urusharta Jemaah, another GLC and special purpose vehicle set up by the ministry, is gradually disposing of BHIC shares in the depressed market, inconsiderate in its act to apparently sabotage another GLC.

A shrewd investor would buy even more at the current low price just to average down the high price bought at RM 2.50 per share when bailing out Tabung Haji in 2018.

What is so special about BHIC to attract such buying interest after all the bad press about non-delivery of the littoral combat ships (LCS)?

Boustead Naval Shipyard Sdn Bhd (BNS), the holder of the RM 9 billion contract to build the six LCS, has not been able to deliver a single ship, despite inking the contract in 2014.

A forensic analysis shows BHIC has much value. First, all the costs of the three variation orders (VO) had been taken into the accounts in the earlier years, but nothing was recognised as profit.

The delay in VO approval inflicted high financial cost although this could be claimed from the government. This and a large portion of the VO, when approved, can be taken as profit.

Second, BHIC had adopted a high degree of “kitchen sinking” in 2018 and 2019, a common tactic used by a new management team to portray maximum fault of the old team.

Both years saw huge losses in BHIC. Provisions and write-offs were taken into account.

The annual report of 2019 showed the 20% stake in BNS of RM34 million was written off with no explanation given.

Such callous disregard for reporting losses can later be written back, along with VOs and liquidated ascertained damage (LAD) claim waiver, to make the company look good again.

Third, BHIC’s subsidiary has in recent months secured three contract renewals totalling about RM750 million. They are for in-service support for the submarines, maintenance for MMEA Dauphin helicopters and maintenance for RMAF helicopters.

Fourth, all current maintenance, repair, and overhaul (MRO) work for the naval fleet goes to BHIC, allowing ongoing sustainable business and profit.

Fifth, BHIC’s Q2FY2020 result posted a RM560,000 loss. Before the June closing, a sum of RM 5.7 million was rushed into the account for retrenchment costs.

BH only announced its three-year transformation in July, meaning the company’s closure and retrenchment would go on to 2021.

It also means Q2 could have posted a RM 5.1 million profit instead, and brought good value to the BH group and LTAT. It gives wonder if this self-devaluation has to do with pressing down the share price.

Linking this to the overall picture of the LTAT and its proposed privatisation plan, the argument becomes more compelling. Unfortunately, space does not permit elaboration and has to wait for a follow-up article.

Salvaging the LCS project is possible and necessary to help boost our economy, but first the government and the Ministry of Defence have to admit that major fault lies with them.

BHIC and BHS cannot be made responsible for the voluminous missing funds that could have been diverted. An overhaul of the management and project team for the project is necessary.

Perhaps the best person capable of heading the new management team is former LTAT CEO, MD of BH, and chairman of BHIC Lodin Wok Kamaruddin, who understood the systemic problems more than anyone.

Attitude such as “ikut perintah” from politicians higher up must be a thing of the past. Only then will the gem in BHIC shine. – November 5, 2020.

* Captain Dr Wong Ang Peng is a researcher with an interest in economics, politics, and health issues. He has a burning desire to do anything within his means to promote national harmony. Captain Wong is also a member of the National Patriots Association.