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Protasco (5070) Probe Started after 900 UMNO-linked accounts frozen? Greedy Overpaid Executives of Gov-Linked Contractors set for review. - PHTaskLeak

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Publish date: Mon, 02 Jul 2018, 12:20 PM
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2 July 2018, Kajang, Malaysia - Former Prime Minister led Barisan Nasional Government’s contracts beneficial, the public listed company Protasco Bhd (5070) saw stock price plunged more than 50% in less than 1 year, especially since the company shown support to former Prime Minister Dato Seri Najib Razak through Najib's PPA1M project, followed by few road maintenance concession awards worth RM4.2 billion - RM5.3 billion, according to Utusan Malaysia and The Edge. The errogant stage show comes to an end when Protasco sponsored a pre-election campaign for Najib by using PDRM chiefs Tan Sri Fuzi as celebrity on 5 May 2018, or 4 days pre-Election, failed to win the GE-14.

9 May 2018, Protasco's pro-Ex-Government falls. The probe by current government into former government's cronies which potentially involved in corruption and power abuse, be it conflict of interest in awarding over valued contracts, unsustainable personal benefits and salaries paid to government-linked companies and political appointees, monopoly and unfair competition siphon out project among the cronies, all of which are taking money out of Malaysian people's pocket.

(refers to: https://www.thestar.com.my/business/business-news/2018/06/23/shakeup-at-glcs/ )

 

Protasco Fat Executive Directors & Senior Managment Under Government Slim Watch?

Protasco Bhd is 100% relied on government contracts, or so called "privatisation" of JKR road works. In other words, the company is government-linked, and the executives falls into the category of "civil servants".

The number 1 high pay executive in Protasco Bhd, as per company FY2017 annual report, shows a lower number (RM2,409,467/year) compared to year 2015-2016 (RM4,000,000/year), but still significantly higher than 2012-2013 (approx RM1,200,000/year), and far cry from pre-2012 (approx RM600,000/year).

Here are the top executive directors pay as per requested by Bursa Malaysia for better transparency and corporate governance:

 

(source: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=186514&name=EA_DS_ATTACHMENTS )

 

 

Top senior management remuneration for financial year ended 31 December 2017, count Dato' Ir. Kenny Chong Ther Nen being the highest, (Kenny Chong alone had taken RM450,000-RM500,000/year), as follows. Chong Ther Nen carries the title of "Managing Director, Property, Trading & Manufacturing and Construction", and main function as the chief who handles group property division - De Centrum Development Sdn Bhd:

 

(source: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=186514&name=EA_DS_ATTACHMENTS )

 

 

Government-Linked Companies High-Pay Executives Under Watch

 

Here are the summary of remuneration of top executives at key GLCs as compiled by The Star from Bursa Malaysia:

 
 

 

Governance Issue: Performance Based or Potential Cronysm Based Reward?

 
As can be seen from Protasco Bhd's highest paid Executive Director of RM2.5mil (2017) and RM4mil (2016), falls into the same rank of MBSB, Affin Bank (ranges between RM3.45mil-3.55mil), and higher than Telekom Malaysia, MISC, UMW Holdings, Malaysia Airports Holdings, Tenaga Nasional, Felda Global Ventures, Petronas Chemicals Group, KLCC Property Holdings, Petronas Gas, and Petronas Dagangan (ranges between RM906,922 - RM2.45mil).
 
The difference is MBSB and Affin Bank made RM417.13mil and RM417.86mil FY2017 Net Profit. Compared to Protasco Bhd RM28mil FY2017 Net Profit.
 
Performance wise, Protasco Bhd last 10 years track record shown flat performance comparing sector to sector, with no improvement from road maintenance business. Further more, road maintenance being the only meaningful income segment saw profit margin strangely decreased significantly and profits belongs to ordinary shareholders cut by more than half. 
 
However, the executive directors and senior management remuneration increased significantly during the same period, and peak at over RM10mil/year in total during 2015-2016, and reluctantly adjusted down in year 2017 due to Bursa Malaysia new regulation and request to quote individual names and amount of those taken the fees from public shareholders. Therefore, the "billion Ringgit Net Profit" category highly pay executive has to down grade his pay to RM2.5mil, from RM4mil previous year. At least for public record and to prevent public scrutiny.
 
Proportionately compared to other government-linked contractors, Protasco Bhd highest paid executive would have taken 16.82 times "over paid" remuneration, if compared the net profit of RM28mil to RM417mil.
 
Protasco Bhd audit chairman Dato Mohd Hanif bin Sher Mohamed resigned ahead of company Annual General Meeting to accept the 2017 annual report. His name was highlighted as part of the highly paid "independent director" of Protasco Bhd, fetch a whopping RM133,000 per year pay cheque.
 
Shareholders do not seems to agree on the current management practices. Share price of Protasco Bhd tells the story:
 
 
 
 

Besides Top Executive Remuneration Review, more Probes to Cut the Source of Leakages?

If the government cannot stretch their hands to government-linked contractors which leeches on Malaysian people's pocket money for potential self-gratification, the only way to stop the leakage is by reviewing government contracts and replace the management all together.
 
Ministry of Work spents about RM5 billion per year (source Wikipedia, 2017), where RM500mil per year was quoted as "favored award" to Protasco Bhd, as per quoted by top executive director of Protasco Bhd himself to The Edge on 5 April 2018. (http://www.theedgemarkets.com/article/protasco-gets-extension-three-road-maintenance-concessions)
 
It's an open secret that JKR contracts were awarded with 10% "fees" paid to designated politically linked parties upfront, followed by half of the contract margin paid to potential cronies in the Ministry-JKR-Politic cartel. JKR contracts were quoted by insider are well over 45% gross margin by taking the "red tapes" interest parties into consideration.
 
Which means, about RM50mil-RM60mil cash would have went missing from Protasco's book when the RM4.2 billion - RM5.3 billion contract (or RM500mil-RM600mil contract value per year) was awarded (bought) on 4 April 2018, followed by RM100 million per year fees "to be paid" to the relevant parties. Regardless of corruption or ill-gotten money taken from the country by feeding such high fees to the relevant parties, Protasco chief executives still has plenty of margin to pay extra-ordinary remuneration, and likely "out source" the work to sub-contractors taking margins outside, leaving petty net profit margin to "public shareholders".
 
Such corrupted and inflated government resource leakage is where the current government wanted to review and replace immediately. After the people of Malaysia replaced the government, the new government seems to probe into the UMNO associates itself by freezing 900 accounts linked to former government. The next probe could be on government-linked companies, especially those with contracts awarded during Najib Razak administration.
 
Would Protasco Bhd be on top of the list sitting on RM5.3 billion so called "favored contracts"? Compared to alleged RM2.6 billion high profile government fund probe (1MDB), this hidden contract value is double the amount of money compared to 1MDB, which is "going to be paid out" in the next few years.
 
The optimistic side is, hopefully the current government does not probe and craw back on Protasco Bhd's year 2012-2018 previous years potential ill-gotten money especially the fat remuneration paid to the executives of the company, like what government did to UMNO on their ill-gotten money trace back to year 2013 Election. Tracking Protasco Bhd's 2012-2018 Annual Reports, about RM100mil paid to the highest paid executive in Protasco in fees and dividends, as well as RM50mil-RM60mil paid to secure road maintenance contract, followed by RM30mil went missing from Protasco Bhd cash flow for unknown purposes, would fetch estimated RM200 million missing money, derived from twisted road maintenance contracts carried during Najib Razak administration from year 2012-2018.
 
The speculation if current government will let go the big fish in the murky water becomes clearer and clearer and a big NO, when 900 accounts linked to UMNO is probed and frozen. The only question is when and how far will the government will craws back. Protasco Bhd's JKR contracts is clear and big elephant in the room, and RM200 million paid back to government would left Protasco Bhd with a piece of land, managed by highest paid senior management of Protasco Bhd with zero sales last 2 years. Not to mention pilled up bank debt accounting engineered to pay dividends for the last few years.
 
 
 
 

Who Carried the Bags?

 
Public investors don't need to wait for forensic accountants to spot the "key persons" who give orders, manipulate, and exercute the money trails to pay the top exercutives and managements, as well as contractors and interest parties to secure RM4.2 billion - RM5.3 billion road maintenance contracts. The defacto CEO, DATO' SRI SU-AZIAN @ MUZAFFAR SYAH BIN ABD RAHMAN might be able to answer where the money goes, a quarter before 4 April 2018 contract award. 
 
Of cause without the chairman TAN SRI DATUK DR HADENAN BIN A JALIL cooperation, in view of his whopping RM186,000 per year "independent director fees", any budget won't be tabled and approved. 
 
The finance director Ho Chun Fuat which took RM300,000-RM350,000 per year sounds like a good staff to cover up the scheme and money trail.
 
Others in the know, as can be seen from Bursa Malaysia requested list of "highly paid exectives and management", might be able to answer to public investors.
 
 
 

Was Najib involved?

Despite Chong Ket Pen's effort to "get close to Najib Razak" during material time to "borrow Najib's fame to bully and bulldoze" deals for himself, and "show his contribution and support" to Najib Razak by doing PPA1M civil servant housing projects as well as sponsored Pre-Election Campaign to promote and give credits to Najib's government in hope to cover up his potential graft money trail of "Contractor - Dato Sri Muzaffar - Najib's people"; such fraudulant activities might not exactly planned or made known to Najib Razak on his personal objectives. It could be Najib's people who used Najib's name to take benefit from illgotten business, working together with Protasco Bhd's insiders to 'buy" the JKR road contracts. Bribery, graft, corruption, kleptocracy, etc, name it all, thanks to power abuse system under Najib's government, is the "in thing" and perceived as "OK" for Chong Ket Pen and his people.

Indirectly, Najib name and position was abused by his people in collusion with Protasco's people, and all blames could be addressed to Najib due to his reputation which could be politically driven. In other words, not his fault. 

 

 

Post Probe, Feeding on Own Flesh as the answer for On-going Concern?

 
What do you think how would Protasco Bhd sustain the whopping executive and senior management pay, as well as potential review and probe in road maintenance contracts? Not to mention the dividends paid from bank borrowings which accelerated the self-destruction process.
 
Assume a net asset value of RM200 mil after the probe, with RM50mil per year remuneration and dividend scheme, 4 years top to feed on Protasco left overs, and if current management were not replaced and in hope of "replacement of new government" to feed the former government cronies again, might be a long short for un-awared public shareholders to bet on such odds. The best part is, the relevant authorities (Bursa Malaysia and SC) supposedly protect minority investors cannot do anything about it while the new government takes back what is belongs to the people of Malaysia. They might be busy looking at wrong direction and not fast enough to catch the big fish while chasing "ikan bilis" (aka the small fishes).
 
Until that happens the next few months, if lucky, public shareholders might want to take the intrinsict risk into consideration to hold or average down on politically linked counters.
 
 
PHTaskLeak
 
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Daim4u

http://klse.i3investor.com/m/blog/Saverakyat/162192.jsp
Enjoy reading fake news with real material. Lolol.

2018-07-03 09:02

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