Reform - NLFCS

Source : Reform NLFCS


Well, where do I start with this....

Let's start with what NLFCS (National Land Finance Cooperative Society) is about.

NLFCS was started by the late Tun Sambanthan out of concern for plantation workers working in fragmented plantations that were being sold by the British after Malaysia achieved independence. The idea was to pool capital from plantation workers so that they could buy out these plantations and amalgamate into larger groups. The plantation workers would own shares in the co-operative who would manage these larger holdings and provide benefits (both financial and social) to its members.

If anyone can give a better history of NLFCS please do...

After Tun Sambanthan, the chairman has been Tan Sri Somasundram (can't find dates for this, info on NLFCS is sparse).

I don't have much dealings with NLFCS, just what I hear. This is about my experience of working with Premium Nutrients and what I know. I want to remain anonymous because what I write will undoubtedly hurt people I know. It will be interspersed with things I have heard (but not directly experienced), but at the end of this piece, I hope to summarise the pertinent facts that could be checked.

Firstly to get it out of the way - the things I know about NLFCS and the questions they raise.

Tan Sri Somasundram has been there for decades (2 at least). Everyone who came to Premium Nutrients via NLFCS transformed from being strong supporters of NLFCS to being disillusionised.

As a co-operative, there is meant to be one vote per person, but challengers are not encouraged and I understand strong arm tactics are used. Like MIC, even thought a look at the rules would assume the party is democratic, the actual practice is not. A lot of feudalistic practises and hero worship really with a dash of nepotism.

Tan Sri Somasundram's son has been given a management position thought I have no idea what qualifications or experience he has or what kind of vetting process they have. From my experience in Premium Nutrients, there is no vetting process. All the orders come from the top, as I said a very feudal structure. (this is one fact that can be checked, on what basis did TSS's son get the position?)

Premium Nutrients

I will list things as I remember them and I hope they will form a cogent narrative.

Premium Nutrients was meant to be the flagship company of NLFCS. An example for people of Indian ethnic origin in Malaysia and for the co-operative concept/movement. It operates from an industrial area in Pasir Gudang and is a speciality fats (vegetable) company.

I worked in the accounts department of that company and had access to various documents during my time there.

The company has a very poor reputation. A lot of our raw materials (Palm Kernel etc) are only sold to us on an advance payment basis supply because of our poor reputation for payment (there were bankruptcy proceedings instigated by suppliers on the company when it was called Premium Vegetable Oils - this is another fact that can be checked). On the chemical side (various gases and other material we would need to run the chemical processes that would turn Crude Palm Kernel Oil into the end product) there would be a rotation of suppliers we would use, changing them when they asked for payment. The purchasing manager would promise payment to them when negotiating these supplies and then disappear and be uncontactable and the accounts department would have to deal with the resultant angry phone calls.

Most of the assets of the company of the company have covenants and liens on them and new machinery are acquired on a leasehold basis. I don't believe the company actually hold titles to any of its assets as there are first and second liens on almost everything.

While companies started in the area around the time has speed past and expanded. Premium Nutrients is in pretty much the same state it has since it started other than a minor expansion in the 1980's.

There has not been much though into the long term future of the company and it has been run as is.

It is sad to see a company which had such potential and had such dedicated and committed personnel in the lower echelons being run into the ground. The ideals of NLFCS that I thought would permeate within the company hit the brick wall of higher management and their self interest

The company is (as far as I know, I can't vouch for the history of the co since it began) on its third set of Auditors, the last 2 having resigned. They had an EGM to vote on the new auditors recently and I am not surprised that nothing seemed to have been raised about this. For auditors to choose to resign, would basically indicate that they can no longer approve the company accounts.

They co used to play a lot of tricks. They would have a tank of sludge (waste material that is a cost since you would have to pay to get rid of it/make it less pollutant) and have a layer of expensive oil on top. So when it came to value the oil in the tank, only the top level of oil would be used for analysis and hey presto, a cost would turn into a 5m dollar asset and this would in turn lower the cost of goods sold (which would affect the management fee, more on that later). I am not sure how this was down. For an analysis, they usually take samples from pretty deep in the tank, so doing the above would usually not be possible but this was what I was informed had happened during the year end audit process and is something I can't personally verify.

The other thing that I personally witnessed that was practised (and many companies do this) is to push sales on products that fail their quality test. This is to "book" higher sales for the quarter by raising an invoice and then financing on the back of the invoice (bill discounting). The product would inevitably be returned by the customer but in the next quarter (with the associated cost of return borne by the company) but by then the company would have already booked the sale and the management company would get the resulting management fees (I will talk more about the management fees below)

The personal impression I got was that the company was not profitable at all. That the profits were simply paper or accounting profits. The constant cashflow constraints, the pumping in of money from NLFCS every few years, the increasing debt that the company has taken over time would seem to prove my impression, whatever the annual accounts might indicate. A healthy profitable company that is not expanding, not increasing capital expenditure, does not need more debt and more money pumped in simply to run its operations. This would imply a deeper malaise.

I am not sure what oversight there is in NLFCS's investment in Premium Nutrients, and how the cash infusions have been approved. Tan Sri Somasundram (TSS) is also a big shareholder in the company (the 2nd largest holder with 43.5m shares – 12.93%, he bought 6.6m more on the 21/06/07 for approximately 1.8m ringgit). Therefore there is a clear conflict of interest in being the Chairman of NLFCS which is the biggest shareholder in the company and his personal shareholdings. If you have shares in a company, would you not as a chairman of its biggest shareholder, pump more money in so it would not fail? irrespective of your primary (and only) duty to NLFCS members.

There are a couple of conflicts of interest between the management of Premium Nutrients when I was there, and Tan Sri Somasundram and NLFCS.

Lets start with the management co. Before its floatation, Premium Nutrients was managed by a management company incorporated (I believe) in Singapore. I have been reliably told that this management company, 7 M Management, has as one of its beneficiary TSS, so another humongous conflict (to those with the know-how, please check to see who 7 M's ultimate beneficiaries are).

The management fee (20% (I believe - my memory may not be so good)which is a huge chunk of cash to take before all other expenses are paid) was based on the gross profit. As explained above, the accounting gross profit is easily manipulated, and calculating a management fee based on the gross profit provides absolutely no incentive to keep cost down. As you can see very poor corporate governance. What I witnessed was a company being leveraged to pay dividends and management fee to a few, while money was being pumped in from NLFCS to keep it afloat (my personal opinion, but please check the facts yourself).

The co. obviously has a very high turnover among staff. I understand they had brought new senior management recently.

Let's go through the company announcements, just to see the hanky-panky going on.

Announcement released 03/05/05

The audited and unaudited accounts had a 2.04m ringgit difference! In the unaudited accounts the company posted a 8m ringgit profit and the audited accounts showed a 6m profit!

Announcement released 02/05/06

Group Financial Controller and someof the senior staff have resigned, therefore the annual audited accounts will be delayed

Announcement released 02/06/06

Annual audited accounts could not be completed in time because the auditors resigned! Jeez, auditors want their fees, if they resign, it's basically saying things (accounting-wise) are so bad they would rather forgo their fees than audit the company's accounts and agree with it.

Announcement released 26/06/06

32m listing status cost previously written off, to be reinstated as an asset retrospectively? Why on earth do this?

Announcement released 26/10/07

Sells part of Malim Sawit (its plantation arm and crown jewel) for 22m to Revenue Direction Sdn Bhd. Who is Revenue Direction Sdn Bhd? Who are the ultimate beneficiaries? This could be legitimate of course, but after all the shenanigans I have witnessed, I have to be doubtful.

06/05/08 - Annual accounts.

Have a look at pg 53. That is a page full of conflicts of interest.

Of course everything could be managed for the best now, but with so little oversight in the past and in the present, people tend to take advantage.

I hope something is done so that such blatant abuse of trust and governance is a thing of the past in Malaysia and those who have enriched and continue to enrich themselves on the back of others know they no longer have carte-blanche.

Parameswara didn't convert, Hang Tuah not Chinese

Via M'Kini by Donplaypuks | May 7, 08 4:11pm

I refer to the letter Don't butcher history to create your own 'truths'.

‘Truth Seeker’ perpetuates a number of common errors regarding Parameswara and other matters. Historical records referring to Parameswara are attributable to 3 sources:

1. The Portuguese Gordinho D'Eredia, son of a Portuguese mariner and a Melakan lady from Macassar, referred (circa 1600) in his writings to a Melakan ruler called 'Permicuri.' Not much more information emerged from this source. The Sejarah Melayu for example, makes no mention of a Parameswara at all.

2. The Portuguese mariner Tom Pires who lived in Melaka, referred to a ‘Xaquem Darxa’ and a ‘Modafarxa’ in his 1513 Suma Oriental.

3. The Chinese Ming Dynasty (1368-1644) archives have records of the visit to Nanking of the envoys and rulers of Melaka. These were:

(a) Pai-li-mi-su-la in 1405

(b) his son Mu-kan-sa-yu-ti-er-sha in 1414 and

(c) his grandson Hsi-li-ma-ha-la-che in 1424

These visits to China and the court of Emperor Yung-Lo were to pay tributes to China and seek protection for Melaka against Thai and Indonesian invaders. The three above have been interpreted respectively as:

(a) Parameswara

(b) Megat Iskandar Shah

(c) Sri Maharaja

The two visits to China in 1414 and 1424 were also to report the deaths of Parameswara and Megat Iskandar Shah respectively, and to re-affirm the close relationship between China and Melaka. All three Rulers of Melaka and their envoys made their respective journeys to China in one of Admiral Zheng He's (Cheng Ho) several fleet-ships.

It is clear from these records that Parameswara never converted to Islam. He was an Indian Hindu or an Indian/Malay/Aboriginal Malay mixed Hindu who fled Palembang in Sumatra to eventually found Melaka circa 1400 AD.

It was Sri Maharaja who converted himself and the court of Melaka to Islam, and as a result took on the name of Sultan Muhammad Shah (possibly the ‘Modarfaxa’ of Tom Pires) sometime after 1435.

Megat Iskandar Shah was thought to have changed his name after marriage to a Pasai princess, the name ‘Megat’ signifying a marriage between a commoner and one of royal stature. But his conversion to Islam is in doubt, given that his son was named Sri Maharaja and therefore, the possibility of another non-Malay wife emerges.

These details of Parameswara and the succession to the Melakan throne were resolved definitively by our own Professor Wang Gungwu in his paper ‘The First Three Rulers of Melaka’ published in 1968. This is the basis on which current school history text-books are constructed vis-B-vis the Melaka Sultanate.

With regard to Raja Chula, we can take a more definitive stance, ie, that without a shadow of a doubt, this is a reference to Raja Chulan/Cholan of the Chola Dynasty (7-13 century AD) of South India. The most famous of these Indian Hindu Kings were Rajaraja Chola and his son Rajendra Chola who invaded Southern Thailand, Kedah, Perak, Johor and Sumatra about 1000 AD.

With regard to the legend of Hang Tuah and questions about his origin/ancestry, I believe that many have been misled that Tuah and his musketeers were of Chinese descent. That it was verified by DNA tests. Such a claim can be found on the Internet and refer to a source, viz., The Federal Association of Archaeology and Research of Michigan, USA.

This is a spurious claim and the association referred to, in fact, does not exist.
There is also a hypothesis that ‘Hang’ is associated with the Chinese Princess Hang Li Po from China who married Sultan Mansur Shah of Melaka in 1459. But there is nothing offered by way of tangible proof/evidence by those who espouse this line of thinking. What is true though, is that, Hang Tuah is dismissed in a single line in school history text-books. The Education Ministry will have to answer this mystery.

But what is really sad is that our children are taught as though Malaysian history suddenly began in 1400 with an Islamic Melaka. The cultural influences of India in particular, and China, in South East Asia span over 2,000 years, starting perhaps with the arrival from India of the Brahmanical prince/scholar Aji Saka in Java in AD78, through to Vietnam, Cambodia (Indo China), Thailand, Burma, Indonesia, Bali, Borneo, Brunei and beyond.

We are led to believe that the Indians and Chinese first arrived on the shores of Malaysia in about 1850 as desperate indentured labourers, farmers and miners.

Nothing could be further from the truth. The findings at Bujang Valley speak of an ancient Indian/Hindu presence in Kedah. There were Chinese settlements in Pahang and Kelantan around the 13th -14th century and in 12th century in Singapore. The early Brunei Sultanate had a Chinese Queen. One need not ponder at length the implications of Angkor Wat and Borobudur or that 40%-50% of Bahasa Malaysia comprises Sanskrit/Tamil words.

The time has arrived for us to record our history as the facts tell us and not as we would like to wish it for. The truth will never hurt anyone. Lies, always will.