Kasparov of Game

In the game of high risks come with high returns. Any superficial observer or player has no place in a high stake game like this. Just when Dato' Goh thought he had taken enough of the precautionary and defensive measures to ring-fence himself against any possible monetary loss from the deal, little did he know that  the civil engineer from the United States had been secretly drawing up a chess building plan of his own.

Siow Chung Peng is taking the chess game one level up. He reckoned that if he can loads himself up and be ready with a stake of around 20% in Lii Hen when the Dato' eventually finds a firm buyer, he will be in a knight's position to checkmate both the carpenters and the new purchaser of the 32% stake from Assets Muar Sdn Bhd. A knight in the game of chess can either moves forward, backward or stands pat. His game plan is that the carpenters will have to somehow kowtow to him in order to sell their 32% stake since he holds a significant 20% interests. As an experienced player, he is fully awared that he is within striking distance to the crucial 25% mark embedded in the Articles of Association of Lii Hen. Provisions in the articles stated very clearly that a minimum 75% approval of the shareholders of Lii Hen must be sought in an extraordinary general meeting to be convened on any material acquisition or disposal of assets. Therefore, his 20% stake can materially weigh on the outcome of any motion sought for in an extraordinary general meeting. No one can proceed with any proposed material transaction without him nodding. It will be insane therefore for anyone to pay an eight digits cheque just to become a carpenter in Muar, the very reason the carpenters themselves are cashing out.

Looking from his vantage point atop this 20% stake, he will barge only if the carpenters are willing to sort him out by monetary compensation or a benevolence to the King of sort in order for them to sell the 32% stake without his roadblock. Or he can buck ahead with the assistance of financing to go for it alone when the stock price is up. Or he can stand pat and let the new purchaser comes in, but not without some gesture of monetary incentive to him. He knows that the moment he is able to accumulate close to a 20% stake, he will cement himself in a sure win sweet spot.

In order to get to the sweet spot as quickly as he could, he will need to install a few pawns in his master plan. The Dato' is a very useful pawn. He can even bring a few pawns into his game. He is the bridge to the Muar carpenters. He is also the most important pawn in the arsenal Siow Chung Peng is assembling. Without this pawn there will be no bishop and no game. But what the Dato' can do come with a hefty price tag which Siow Chung Peng is more than happy to pay considering the end game result. This would explain as to what have been said in the affidavits of the TA suit, that a seemingly generous 30% profit sharing were offered to Dato' Goh.

After taken delivery of most of the placement shares that the carpenters sold since April 16, 2004 and with both the market price and traded volume of Lii Hen started to improve, a stark difference to what Lii Hen was like six months prior to this, many stockbrokers came knocking on Siow Chung Peng's door wanting a piece of the actions. The bloating paper profit hastened Siow Chung Peng to bring forward the 20% goal as he knew Dato' Goh is already in talk with several interested parties for stage two of the deal. He knew he is in a position to dictate by the hungry look of these stockbrokers. And at the same time he would like to take some of the profit off the table. He told them that they can have part of his business but they have to trade the Lii Hen shares using their own nominees. And they agreed. From our research in several court filings as well as Siow Chung Peng's complaints to Bursa Malaysia and Securities Commission, these stockbrokers are identified as OSK Securities, Arab Malaysian Securities  and PM Securities.

This move of him is indeed multi-pronged. Beside cashing out some of the profits by selling into the stockbrokers' nominees, it served to keep the trading of Lii Hen stock in good pace now that more stockbrokers are participating. And at the same time he is able to recall all these shares that are being traded by the stockbrokers at a moment's notice when the day finally arrive to checkmate the carpenters and the new purchaser. Best of all, the stockbrokers also agreed to hand over all contra profits to him since the primary intention of them doing the deal is to generate trading commission.

To assert his grip onto these new pawns so as to avoid any potential foul play in his game, he told them that they are to take instruction from Dato' Goh in the daily trading of Lii Hen shares. The same accountability he set upon him. Dato' Goh had never met these stockbrokers prior to this, as they are all personal friends or acquaintances of Siow Chung Peng.

From the outset of the stage one exercise and in consideration of the seemingly lucrative 30% profit sharing offered by Siow Chung Peng to Dato' Goh, he had demanded full accountability from the Dato' in the exercise. He told the Dato' that as he has to manage his other businesses, including the  family-controlled construction company Siow Cheng Lee Construction Sdn Bhd, he had to leave the daily trading or operation of this exercise to the good hand of the Dato'. "What's more, since you are looking at the terminal the whole day", said the chuckling Siow Chung Peng. One would have thought that Dato' Goh has the full control of the exercise in this sense but as we discovered from Siow Chung Peng's SC complaint, he is keeping both the accounting and money control all to himself.

Right from the start of the exercise, the two have agreed on an understanding that the profit sharing are to be paid to the Dato' as and when the contra profits are generated. This understanding applies to the other stockbrokers who joined subsequently.

Dato' Goh had allowed an old client of his by the name of Chan Kam Sam to partake in the exercise. He is the Mr. Chan who supported the credential of the Dato' to Siow Chung Peng as have been said in the SC complaint. He is also a close relative to Siow Chung Peng. Remember Teh Soon Seng of Aokam Perdana Bhd, which was once trading at more than RM30, or Idris Hydraulic? He is the 'sifu' to Repco Low who was his righthand man then and Chan Kam Sam is the nominee of Teh Soon Seng in Golden Plus Holdings Bhd in the super bull of 1993. The Dato' in allowing Chan to be used as Siow Chung Peng's pawn not only address his concern on the collectibility of his entitlement of profit sharing but he also had faith in Chan in the event of any losses. To play along with Dato' Goh and to induce him to use Chan as a pawn for his master plan, Siow Chung Peng even encouraged and consented to the opening of joint-name bank account for his brother Siow Chung Lin with Chan Kam Sam.

Siow Chung Peng had said in the SC complaint that part of his initial RM 3 million sum was deposited into the stock account of Chan Kam Sam with SJ Securities for the purpose of buying the Lii Hen shares. The Dato's task is to accumulate the shares as much as possible at the lower band of the market price. He has the mandate to trade them for a profit while keeping the goal of 20% stake in mind. It is not an easy task to accumulate a 20% stake in the open market without causing a big spike in the traded volume of the stock and at the same time having to contain the market price. For more than two months the Dato' seems to have done it as Chan Kam Sam only reported his notice of substantial shareholdings with 3,298,200 shares in Lii Hen on June 22, 2004. The same day also saw the notice of another substantial shareholdings by Cimsec Nominees (Tempatan) Sdn Bhd on behalf of Chok Swee Lan with 4,168,500 shares but this position was swiftly divested in less than 10 days and ceased to be a substantial shareholder on July 1, 2004.

We were told that Chok Swee Lan is a relative of Dato' Goh that maintain a respectable stock account in CIMB Securities at that time and that part of Siow Chung Peng's initial RM 3 million sum was deposited in this account. Feeling uneasy with a substantial position outside of his direct accounts, Siow Chung Peng ordered the return of this 4,168,500 shares to his own account. This coincided and tallied with his own disclosure of substantial shareholdings of July 10, 2004 of 4,617,700 shares.

However, this may be superficial to many of us. When the knight is ready to strike, the prelude of the march to Muar will be Siow Chung Peng recalling all the Lii Hen shares in a show of strength to the carpenters. But then, a little tempest happened in the tea cup of CIMB Securities that actually roiled him drumming the march in full battle array.

And that day seems fast approaching.

For the multi part stories on Lii Hen, please log on to  liihen.blogspot.com

September 3, 2013