Wednesday, April 29, 2009
UPDATE: Commonly prescribed drugs such as Tamiful are found to be effective against the disease[Link] and several sources reported that they have been used successfully. The main concern is the death of young health men resembling the deaths during the Spanish flu outbreak in 1918 due to cytokine storm an over-reaction of the immune system. But when the bug got out of Mexico behaved more like any other influenza virus - highly infectious but not fatal. Guys stay calm okay - this storm will soon pass. [Swine flu mysteries : Why only deaths in Mexico?]
The WHO raised the pandemic alert level to 4 yesterday. But if you read the statement from WHO, once a new disease shows human to human transmission, the alert level is raised. The WHO has to play it safe and exercise "an abundance of caution". It is also probably correct to 'overreact' given this is a new virus. The newswires and TV news has been 'bombarding' us with new cases reported - confirm and unconfirmed. The fear among people has been mounting. But is this fear rational? A number of people refuse to eat pork although there is no proof and is unlikely the disease can be transmitted by eating pork - viruses are easily killed (more easily killed than bacteria) simply by heating food ...no virus can survive frying. If you're not eating pork raw, it should be completely safe.
Given the avalanche of fear evoking bad news surrounding the swine flu, I would like to bring your attention to the article below. It describes the what happened to 4 students in Nova Scotia who contracted the swine flu. They suffered from no worse than normal flu-like symptoms and then recovered. In fact in almost all cases outside Mexico, the symptoms have been mild and nobody has died. The normal flu which sweeps seasonally through the world every year kills thousands because it infects millions of people - statistically some of them are too weak to handle it. Even chicken pox can lead to death in some cases due to complications. Scientists are now trying to figure out what happened in Mexico where 150+ people died from the flu - did the virus mutate to a milder form? Were there 2 strain of viruses and only 1 survive to infect others? In the coming days, we will probably know whether this flu is just like the common cold that makes its rounds every year or something more sinister. To put some perspective into this consider the fact that 36,000 people die from flu-related symptoms each year in the United States based on official figures from the US CDC[Link 1 Link2]. There is no framing in the reporting of the swine flu and that causes a lot of panic and fear.
My own gut feel is that this 'panic-monium' we are seeing will begin to subside soon. However, one should take the precautions just in case - good hand washing, stay at home if you get sick, no unnecessary travel to Mexico.
N.S. students with swine flu recovered: officials
Last Updated: Monday, April 27, 2009 7:35 PM AT
Students wearing face masks gather on the campus of King's-Edgehill School on Monday. (THE CANADIAN PRESS/Andrew Vaughan)The four Nova Scotia students who contracted swine flu have recovered, though 27 others with flu-like symptoms remain in isolation, school officials say.
Joe Seagram, headmaster of King's Edgehill private school in Windsor, provided the update Monday, a day after the four cases were confirmed.
Seagram said some parents were keeping their children home and attendance was lower than normal, though he didn't give any numbers.
"I suspect it will pick up as people are reassured by the news. I'm hoping that things will get back to normal as the week progresses," Seagram told reporters.
The four confirmed cases of swine flu at the school in Windsor were among the first in Canada. Compared to Mexico, where nearly 150 people are suspected to have died from the outbreak, the cases were relatively mild.
Seagram said none of the students who were confirmed to have the virus were hospitalized. He said three of them, and a number of others who had flu symptoms, have been cleared to return to class.
Dr. Mark Kasimirski, the school's physician, said he heard the fourth student, who is in Halifax, has also recovered.
Still, 27 students remain isolated from other students, while two staff members are at home, Seagram said.
Seagram said the students who remain in isolation are together in a central residence. They can watch TV, go online and interact with each other, but they've been told to remain behind closed doors.
"These are smart kids who are very responsible," Seagram said.
Public health officials suspect the virus was spread by students after a school trip to Mexico's Yucatan Peninsula earlier this month. Of the four students confirmed with the virus, only one was on the trip.
Seagram said no one thought it was the swine flu at first, particularly because the students were sick outside the incubation period and the outbreak in Mexico was in a different region.
Seagram said he got the test results confirming swine flu on Sunday morning.
He said he's pleased with the way the school has handled the matter. Public health officials are notified for any form of the flu, he added, noting the only thing the school is doing differently now is swabbing students twice for testing instead of only once.
Classes are running as usual, though attendance has dropped.
"We're all operating on a day-to-day basis and we're all trying to figure out what really our comfort levels are," Seagram said.
Seagram said his two children are still going to class.
Dr. Robert Strang, the province's chief medical officer, said there have been no other confirmed cases of swine flu in Nova Scotia, but public health officials continue to monitor the situation closely.
"This is a very fluid situation which is changing rapidly," Strang said late Monday afternoon.
In an interview with CBC News earlier in the day, Strang said he had heard reports of a rush of patients with influenza symptoms at the emergency room at Hants Community Hospital.
However, Kasimirski, who's also the hospital's chief of staff, said he believes most of those flu cases are unrelated to the swine flu cases at King's Edgehill.
Eva Lake, 76, who lives in the Windsor area, said she's not afraid, though she'll be washing her hands more frequently.
"It's too bad it's here in Nova Scotia, but I guess we can't escape it," Lake said. "I don't go out a lot, so hopefully, I don't run into anyone with it."
Tuesday, April 28, 2009
One of the main reasons cited by the new Aware exco for taking over Aware was that the sex education programme conducted by Aware promoted homosexuality. MOE has come out to explain what the programme is about, how the schools are involved in them and what was actually taught.
The new exco has taken over Aware on a false premise. That is doing a lot to hurt their own credibility. Are they going to accuse MOE of promoting homosexuality because they allowed these programmes? Are the teachers and principals involved in promoting homosexuality? Someone asked if they are getting ready to takeover the PAP for allowing "Brokeback Mountain" to be shown in the cinemas surely that movie promotes homosexuality more than the Aware programmes.
Reply to Recent Comments and Claims [Link]
About AWARE’s Sexuality Education Programme in Schools
We refer to recent claims and comments about AWARE’s sexuality education programme in schools.
Sexuality education conducted in MOE schools is premised on the importance of the family and respect for the values and beliefs of the different ethnic and religious communities on sexuality issues. The aim is to help students make responsible values-based choices on matters involving sexuality.
Core programmes are delivered by teachers but schools do collaborate with other agencies in delivering additional modules. However, in doing so, schools must ensure that any programmes run by external agencies are secular and sensitive to the multi-religious make-up of our society. Parents can choose to opt their children out of these programmes. Last year, 11 secondary schools engaged AWARE to run workshops for their students. The number of students involved in each school ranged from about 20 to 100, and each workshop lasted 3 hours. The objectives of these workshops were to provide students with accurate information on Sexually Transmitted Infections (STIs)/HIV, to help students understand the consequences of premarital sexual activity, and to equip students with skills such as decision-making and resisting negative peer pressure.
AWARE also conducted assembly talks, typically of 45-minute duration, for students in a few secondary schools. Some of the areas covered in the talks included body image, self-esteem, eating disorders, teenage pregnancies, sexual harassment and the role of women in today’s context.
The schools that engaged AWARE found that the content and messages of the sessions conducted were appropriate for their students and adhered to guidelines to respect the values of different religious groups. The schools did not receive any negative feedback from students or parents who attended the workshops and talks.
In particular, MOE has also not received any complaint from parents or Dr Thio Su Mien, who was reported to have made specific claims about sexuality education in our schools. MOE has contacted Dr Thio Su Mien to seek clarifications and facts to substantiate her claims.
If parents and members of the public know of specific instances where guidelines have not been adhered to, they should report them directly to MOE to investigate. MOE recognises that sexuality education is sensitive. In conducting these programmes, the views of parents will be respected and values taught should not deviate from the social norms accepted by mainstream society in Singapore.
Friday, April 24, 2009
Even if the new AWARE Exco is not interested in making friends, shouldn't they be trying to influence people? This is really a case study on what not to do - they have hurt their cause, got the whole nation suspicious of them, offended many people and undermined their own credibility. They got into a situation where the more they explain themselves, the more questions pop up. Lets put everything in the proper context before we see what mess this group of people created for themselves. Singapore is a multiracial and multi religious society living together on a small island. Like it or not we will never be homogenous in our beliefs and values. Everyone gets their space and it is essential to respect each others differences and right to live his/her own life. However, when there are moral issues we feel strongly about we are free to voice our opinion - some people are don't want the casinos, others are concerned about the growing prostitution problem in Geylang, and so on. All religions are free to recruit and convert others so long as you don't run down somebody else's religion. People with religion are protected by various laws including the Sedition Act. I'm all right with that except they forgot to protect the non-religious people like myself who gets ridiculed for having difficulties believing a book written 2000 years ago carries the ultimate truth and that a superior being exists and watch over us ......the point is all of us have tolerate each other and be mindful of each others' sensitivities.
In 2008 we had this big debate as a nation about 377A - a symbolic law that is not enforced but seen by many gay people as a piece of legislation that criminalises their behaviour. Nobody expected the law to be repealed given that it is politically undoable given the conservative nature of our society. However, a good debate would promote greater understanding among everyone ..for concerns to be expressed and it would be good for our leaders to tell the gay people where they stand and the difficulties they face repealing this law. The debate in parliament was quite amicable until NMP Thio took the mic. In her speech[watch it here on YouTube], she hurled numerous accusations - associated gays with pedopiles, accused them of having a broader hidden agenda to harm society and that gay people were out to take away her freedom to speak up. This is precisely the type of speech one should never give if the aim was to influence people and win them over. It was a speech that manufactured a lot of hate...she later received a few hate mail and took the opportunity to insinuate that gay people are also hateful people. If you listen to the speech carefully again, there is one part in the speech where she accused gay people of infiltrating rights group with dishonest intent - a bit bizarre you would think now that her mom found to be behind the takeover AWARE....who is infiltrating what and with what intent?
After the new AWARE exco was formed, there was intense interest in what the new exco was about what were they up to taking over a 25 year old organisation. They had a news conference in which they explained that AWARE had strayed from its feminist goals and they purpose was to bring it back. This is really a strange accusation to make because the founding feminist members of AWARE are still around....how can they have possibly strayed when the people running it were the same people running it 25 years ago! The evidence they gave was a sexuality programme that AWARE runs in schools. The New Paper (Saturday article-25 April 2009) interviewing teachers in the programme found that the main purpose was to teach girls how to say 'no' to sex. However, the programme did teach that homosexuality is not wrong by classifying it as 'neutral' - according to the New Paper this was just a small part of the programme. If some people be it parents or teachers who are not happy which this aspect of the programme, surely they can ask for it removed....the are principals involved here and they are also responsible for what is taught in their schools. Because AWARE did not condemn homosexuality, it has strayed from its feminist goals? You can't run a useful sex education programme without covering homosexuality and the use of condoms to prevent pregnancies. So the new AWARE has taken over to 'right this wrong' and have homosexuality reclassified as 'negative' .....by doing that they can prevent people from becoming gay? I think they can save more souls by recruiting more people into their religion.
Before this takeover, the old exco had members from the Sikh, Muslim and Christian communities and plenty of diversity. The same cannot be said of the new exco. When they took over AWARE, many people see them as being guilty of the same things NMP Thio was accusing the other camp of - having hidden agendas, taking over rights group to further their own selfish cause. The old guards who ran AWARE for many years providing much needed profession help to troubled many women over many years are understandably deeply hurt by all these unfair accusations. The new exco will soon discover that they have not only hurt others, they have hurt themselves and their own credibility. The lesson for the rest of us is this - whatever your cause is, whatever your beliefs remember that you have to respect others to win them over...if you to manufacture hate, suspicion and unfair accusations, you will lose credibility and hurt your own cause. This misguided group (and their moral mentor) fighting an imagined moral war are better off spending their energy to spread their beliefs...there is nothing to stop small chapels from becoming mega-churches in Singapore and saving more souls in the process....if they are right , surely they will be able to win people over ...and not have to take over somebody elses' organisation and create so much ill will, unhappiness and friction in the process.
Here are videos of Susan singing starting with the most widely seen clip:
@ Yahoo! Video
On a more serious note, I've written about S-chips and the need for more regulation[S-chip article]. Let us not be naive - we can never be able educate the public to have the financial sophistication to prevent them from being milked and exploited by various 'operators'. We should never allow govt ambition (to be a financial hub) override the need for proper regulation to protect ordinary citizens. The sad truth in the story is that those are guilty of committing crimes cannot even be brought to justice because there is not extradition treaty between Singapore and China. A number of S-chips were so blatantly fishy even for those who are 'amatuer' accountants ...why were they allowed to list??....There is a lesson here for our regulators - the question is whether they are willing to learn it.
THE CONFESSION OF AN S-CHIP CEO We are victims as well!!!
Let me tell you the story. By the time you read this article, it would reached have hundreds of investors, bankers, regulators and journalists. My purpose was to shed some light on the “dark sides” of the business of S-Chips (Chinese companies listed on Singapore Stock Exchange), so as to help prevent more financial losses in the future hurting the ordinary people on the street. From this angle, I wish to redeem myself somewhat.........
It all started some 6-7 years ago. My colleagues and I were just a few of the million of entrepreneurs in China struggling to make ends meet at the textile fibre factory that we bought from the government. Some of our older colleagues had laboured for more than 20 years before having the chance to “privatise” the state-owned textile fibre factory in Fujian Province that we have worked for since the day we left school under the Premier Zhu’s “government retreat, private sector advance” scheme, literally at a song. We thought we were going to be very rich very soon. Little we knew that when the local governments of the various counties and villages decided to “retreat”, we end up! with thousands of “privately-owned” textile fibre spinners that competed ever more aggressively. Despite ever rising revenue, margins were disappearing fast....... Sometime, we just wonder why we have worked so hard only to earn next to nothing. Perhaps, our only reward was meant to be “the master of our own destinies”...... But we never really gave up hope...... One day, we shall strike gold.......
1990, the year after the TianAnMen Incident, was really a very difficult year. Many of our clients, the textile manufacturers who were enjoying the initial euphoria of the burgeoning export demand, went belly-up within a short 2 years of economic contraction. However, we pulled through all the vanishing receivables and anguish cashflow-balancing exercises.
By 1993, we were off for the biggest boom ride of our life-time. Our textile fibre business blossomed as China becomes the clothing factory of the world, benefiting not least from the one-off Renminbi devaluation that the Chinese government engineered in 1994. Those were the good old days, where sufficient numbers of our competitors were eliminated by the TianAnMen-induced recession, and the world began to look to China for every piece of garments stretching from the heads to toes.
Money was easy......and we expanded our production capacity as quickly as we could, limited only by the fact that the state-owned banks were not really very keen to lend money to private enterprises like ours, and we just have to borrow from our villagers at some 15% interest rates!!! Nevertheless, we did good business and our leader, the general manager of the factory, could even afford a chaffer-driven Santana. In any case, he was too old to learn new trick, even as simple as driving itself. I was the rising star which had to bide my time, as I was the only person who speaks decent English. I was meant to be the tongue of the company in dealing with the external world. But I am getting impatient. For while the company was booking increasing profits, we never seems to have cash to be distributed as any excess cash generated from the business was never enough to cover the capital expenditure needed to expand the production .
We just owned an ever-growing production business. Unfortunately, good profit margins never last in China. Good demand quickly attracted new entrants into the business as the barrier of entry is relatively low. At the same time, some of the so called “obsolete capacities” came back from the grave and soon, we found ourselves struggling to churn our profit. It was like working for free again......lots of revenues but just no profit!!!
By the middle of 1990’s, we were doing great business selling to our customers in different areas of the coastal areas. In 1995, we suddenly found ourselves having to deal with fast rising cost pressure. However, the market was buoyant enough for us to raise our product prices to pass on the cost increase to our customers. Then, we realized that we must move ahead in term of technology and product offering. Like everyone else around us, we took advantage of the tax concession offered by the government to the so-called joint venture companies. We recycled our “cash” to Hong Kong, set up a “foreign company”, which in turn pumped back the cash to Fujian in the form of a joint venture entity, using the cash to purchase some second-hand German equipment to produce the chemical fibre! s needed in all kinds of fabrics and artificial leathers.
However, luck did not really favour us, at least thus far. Soon, we were told that our economy was experiencing very high inflation rates and soon, the then Premier Zhu Rongji stepped a hard brake on the economy, cutting the bank credit to many state-owned enterprises which were producing things that no consumers wanted. While as private enterprise we did not enjoy the benefit of bank credit, its sudden massive contraction hurt us as bad as the state-owned enterprises who received such reckless loans. We were entangled like the other enterprises in what we called the “triangular debt” problem, where everyone owes the next person money and there was just no money at the source for anyone to get paid.......!!! The situation last for quite sometime as we lived from hands to mouths, sometimes having to send out local thugs to chase for receivable payments from cash-strapped clients. Then again, what else can we do? We had so much or our friends’ and relatives’ money with us investing in all these machinery now that the only road for us is to struggle forwards......turning back would have made us the “outcast” of the village....... By the time the rest of the Asian economies cracked in 1997 amidst the so called Asian Financial Crisis, we were already becoming numb to bad news. I remembered there were days that I wished I had not joined the textile industry, or any industry at all......for making money out of making something is so darn difficult....... I thought I might have just wasted my youth. Somehow, we managed to pull through as a group. The general manager of the factory, who is now getting seriously old, made his sacrifice along the way by selling his Santana in order to keep more mouths fed. We all had no where else to turn to but to continue pushing hard to sell our new product, the chemical fibres.
Finally, by year 2000, the economy began to recover. Our hard work and persistence were also beginning to get paid off handsomely as China had become the centre of all textile, shoe and furniture manufacturing in the world, and all these products required some forms of chemical fibres. We were beginning to rake in cash beginning 2002!
Then my life-changing incident took place. One fine day in late 2002, I was introduced over the dinner table to one Singapore “Deal-maker” who was to become one of the richest men in his country in the next 5 years. Mr D was still a “relatively” poor deal-maker at that time. Just like many so called “deal-makers” running around China at that time, they hope to make small fees introducing companies to capital, or vice versa. Mr D claimed that he had successfully engineered a number of private equity transactions in China, helping companies with so called “mezzanine” financing to prepare the companies to be listed in stock exc! hanges outside of China. He was fully aware of the psychology of Chinese entrepreneurs and their deep dissatisfaction with the bias of the Chinese government in allowing only state-owned enterprises to list on the local stock exchanges. To us, having a listing status in China is like having acquired the right to print money. One just has to cook up a nice investment story and he could get Chinese investors to subscribe to the right issues of a listed company at any price. It was so much more an elegant way to make some money, rather than to have to toil for a few cents selling chemical fibres....... Mr D went further to claim that he had taken some of the invested companies public in both Hong Kong and Singapore Stock Exchanges and given his investors had made some money, he always have a group of ready-investors willing to back all his “stock picks”. He went on to ask quite a number of detailed questions on the operating conditions of our companies over the dinner, jotted them down carefully on a small note book along the way. Later on, we adjourned up-stair the restaurant for a KTV session. I must admit that I remembered clearly Mr D was a good Chinese song singer, having sung some hot-off-the-chart songs that I heard my niece hummed sometime shortly before the incident. His smooth handling of the KTV girls, which he asked for two concurrently, also showed that he had been around.........
The next time I met Mr D was three months later, quite unexpectedly as I had thought he could have decided to give our company a miss given our relative small size. He requested for a factory visit which, after having consulted our old general manager, I accompanied throughout. As usual, no serious business until after dinner and getting slight tipsy after a few drinks forced down by the KTV girls in the evening. I must admit that Mr D is a seasoned operator. He was quick to recognise that I was an impatient young man to take over the operation from my older colleagues. Throughout the entire evening, he was trying to convince me to move the gear one notch faster to accept some private investors into the company, beyond which he was confident to help us to get the company listed in one of the foreign stock exchanges, where everyone will be able to cash out their profit if they so ! chose. I pretended to be sceptical while deep in my heart, I need no convincing as I have known many Fujian entrepreneurs shot to fame and riches, 2 of them by turning large tracts of collective land into vegetable farms and the other bending float glasses he bought from state-owned factories into auto wind-screens and sell them to car manufacturers. I never doubted that one can make a lot of money from car wind-screen, but I could have never imagined striking it rich planting vegetable.......!!!
Mr D and myself both agreed later that we need to convince the other older colleagues of mine to approve such a scheme, and over time, move them aside to allow someone young and dynamic person like myself to be the face of the firm to cater to the likings of the investors, who were mostly English speaking. In the meantime, my task was to convince the existing shareholders to allow a group of Mr D’s friends into the shareholding first, while paying Mr D a “structuring and introduction” fee along the way. The easy part was, as Mr D coached me on how to present to the rest of the shareholders, his fees will not be in “cash” but rather in equivalent value of “shares”. He said that was to assure everyone that he could only make money should he be able to engineer an eventual listing of the company on a stock exchange, after another year of lock-up period for promoter shares aft! er listing. All interests would be aligned, as he put it.
Mr D was indeed an experienced operator. He had anticipated all the concerns of the “older” colleagues of mine, who feared that this was another one of those “leather-bag-company” deal-makers that was trying to make money out of no commitment. So he got through the first “hurdle of trust” after my carefully orchestrated presentation to the “board” of the company.
However, there was still one important issue we could not resolve amongst the board members. The finance manager correctly pointed out that the company indeed, did not need substantial amount of cash at this moment as we were not expanding aggressively anymore. The market place for our products was relatively stable right now with demand and supply growing organically. We will not be able to drive higher sales without sacrificing our margins by cutting prices. In short, we can only grow organically at around 10% ! per annum, which was probably not the most exciting story for the investors. In fact, the board members did not see the need for new capital. However, the idea of getting listed did appeal to them. They too had many friend who had become “paper millionaire” after the companies got listed. They too were looking for the big-pay-off day. So I was tasked to come up with a solution. In other words, there was a “green-light”! I did not expect my luck! Almost immediately after the board meeting, I called Mr D to tell him the outcome, as well as the issues raised. Again, I thought he must have expected the outcomes. As he explained calmly over the phone, the first round investors (which he called angels) will not put in a lot of money so that they would not dilute the existing shareholders very much. These angels are the “connected persons” that will come in with their own money (through Mr D’s personal vehicle) that will help cement the way for some of the well known direct-investment funds to step in at a slightly later stage, which would provide the company with the credibility, other than funding, to convince the stock exchanges to allow the company’s listing, and the subsequent active participation of other institutional investors during the IPO. Mr D went on to explain that the process of getting a Chinese company list! ed was in fact, an art. There were not many people like him that could have the trust of many influential people to conceal their names behind his vehicle to invest in a company, not unless they have been working on other cases together before and having developed deep working relationship. These angels will see the company through the process from getting “restructured” to “listed”, rendering their helps in one way or another through exerting subtle influences on counter-parties, bankers, regulators and other investors. Mr D’s vehicle will participate in the shareholding of the company first, where they will invest up to 5% at book value. In other words, they demand for very cheap entry. Mr D will only take his fees later after having brought in the money from direct investment funds, in larger quantum, in the form of shares of the company at book value before the entry of new capital. He wanted 2% worth of the amount of money he would bring in from the funds in such shares. Subsequently, he went on to explain that this was the modus operandi these days as he could introduce us to the senior executives of the companies who had done business with him for further due diligence on his reputation. In particular, he emphasized that my colleagues should not be worried at all given the fact that it was going to be his and his friends’ money that will be in their hands, rather than the other way round. My older colleagues did find some solace in this argument later on.
As for the use of money, Mr D simply pointed out that we will have 6 month to a year to come up with a new plan on spending the proceed of investment, in the form of new technology and new products. “Aren’t you guys always looking for money to upgrade production machinery to produce new stuff for the market? It the same bunch of the customers anyway......”, so he quipped. So the decision process took a few months, where in between, Mr D sent in some accountants and lawyer to conduct some checks on our operation and accounts. We had nothing to hide then as we had no reason to fake anything. Everything was ours.......then. Subsequently, the “angels” came in, followed by, indeed, a number of reputable direct investment funds a few months down the line. We got a whopping US$20mn to put up a new plant to produce a new type of artificial fibre, the machinery of which was to be imported from Germany. The new product was in fact, attractive to a lot of customers. However, none of them were going to buy a lot of it at the beginning as they were not sure their customers were going to like the new types of yarns made of this new fibres. Business was not as brisk as Mr D had! hoped for.......
On the other hands, Mr D seemed quite keen that we could move forward in our listing process. He began to educate us the process and requirement of the stock exchanges for listing. We paid visit to Hong Kong and Singapore, talking to bankers and exchange officials, attending seminars, as organised by Mr D. We were all psyched up to be a rich millionaire once the company is listed. However, there was just this little problem.....our new products were not accepted by the market as fast as we had wished for. Most of our customers operate under very tight cash flow situation. They only have working capital to provide for the acquisition of raw materials to produce the yarns ordered by their customers. No one was going to spend a lot of money buying our new fibres, prod! uce large quantity of products to purvey them in trade shows, despite they all fed back with good comment on the potential of the new fibres. Very quickly, Mr D came up with an idea. In order to boost our sales numbers fast, he will raise another US$20mn of money from all the direct investment funds in the name of working capital need. As he explained, they often did the same tricks with those companies they listed before. They will raise new capital to produce the new products to sell to customers, encouraging them to help push the new products by offering them more favourable and longer payment terms. With the increased sales and profitability number, he could get the company to list very quickly to get more money to help push for more sales....... He claimed he had done it many times before and it had always worked out. The economy was recovering quickly in 2003, nothing was to going to go terribly wrong. When I asked whether that would be considered “artificially inflating sales number”, he laughed and quipped, with the capital markets on your side, you can engineer self-fulfilling prophesies!” Of course, this article cannot be complete, at this juncture, without citing Mr D’s favourite quotable quote. “Water enough money into any company, even a fake one could become real some day.” He believed so much in this that I thought one day, this could cause his downfall. So we went ahead, sold the new shares at higher valuation to another bunch of investors Mr D arranged. He took another round of commission in the form of shares. We were beginning to admire Mr D. Money flows through his hands like water and he did it so effortlessly.
We were no less impressed by his connection to some of the richest and most influential people, particularly in Singapore. You see, he was viewed as a successful Singapore entrepreneur made good in the vast land of the North. Through diligence and perseverance, he carved a niche for himself identifying promising Chinese companies to groom for listing on the Singapore Stock Exchange which was losing out in race to Hong Kong Stock Exchange as the Chinese! state-owned enterprises were encouraged to list in Hong Kong. Mr D was their hero, directing promising private Chinese enterprises to list in Singapore and along the way, enriching many “angels” and local investment banks in Singapore. I chanced upon many of these angels as well.
There were occasions Mr D would have called me to help arrange for some transport and accommodation in Xiamen for groups for “secret” visitors. They are usually small groups of 4-8 people. I would generally put them in comfortable Buick mini vans, receiving them from the airports, ferrying them to golf courses, restaurants and night clubs. They would usually visit one of two factories invested by Mr D. From my impression, these were the angels behind Mr D, which for obvious reasons, he had to please. There were bankers, lawyers, other deal makers, stock brokers, fund managers and people that do not have a job, simply because they were so rich already. Occasionally, there were ex-CEOs or Chairmen of large government controlled enterprises in Singapore. Once, I even met a supposedly ex-member of parliament in Singapore.
It was obvious to me that Mr D entertained them in separate groups at separate times, taking pains in ensuring that some of them were not aware of the involvement of the others, for some reasons. I was always invited to all these golf and night entertainment events for a simple reason: I speak English and Mr D wanted to be seen as having someone like me to watch over his investment in this part of the world and helped him to tap into different kinds of local relationship. The other Chinese entrepreneurs may not be comfortable in dealing with the whole bunch of English speaking Singaporeans.
One common trait of all these trips was that all these guys from Singapore seemed to love the night clubs in China. The daily programme always ended in some night clubs, where these guys would party till the wee hours, every night they were there. Mr D would sometime, when he was half drunk, tell me that he had again “nailed” some key relationship and one of the travellers in the group would soon be in his “Club”. He would whispered that someone in the group was the senior partner of an investment fund, or someone in another group was connected to the so-and-so in Singapore, or someone was closely associated with the chiefs of some Singapore banks, or someone had “influence” over the listing approval process of the stock exchange, and some would just be some new investors that he was trying to woo to invest in his pre-IPO projects or the shares in the companies that he sponsored the IPOs.
When I asked why they were all so tireless in their nocturnal activities, Mr D laughed, “This is what I call pent-up demand. You know these people cannot even come 100-meter close to any KTV in Singapore because of their social status. The opening up of China is probably the best thing that happened to all these Singaporean men, for they can at least release their “valves” once in a while........ Do you know how boring Singapore is? I have a permanent KTV room booked up in one of most posh KTV in Singapore, costing me half a mill ion Dollar at the minimum every year. Guess what, the only important guests I have using that rooms are from China!” Watching Mr D in action, I finally understood the true meaning of “club”. He had managed to combine the “social club of friends” and KTV clubs so well that I thought every successful Chinese businessman should learn. And in so many ways, the “club” in Singapore is really not that different from the “club” in China........ So finally, we got our act together to attempt a listing towards the end of 2003, after much of the financial twisting and engineering to make our company look like a well-funded high-tech textile fibre company on the verge of experiencing explosive sales take-off. In truth, we produced a lot of the new fibre products and literally give them to our customer to produce new fabric for marketing purposes, with the promise that we will not collect money until their products are sold. Nevertheless, we book these as receivables.
To the dismay of Mr D, my older colleagues had insisted on listing the company on the Hong Kong Stock Exchange, rather than the Singapore one, where Mr D has greater control on the process. They felt that the company would probably be accorded higher valuation in Hong Kong. Besides, they were not comfortable with Mr D’s influence in Singapore fearing the ultimate loss of the control of their company. Mr D went along grudgingly, helping to smooth the way to facilitate the IPO. We got a small investment bank to underwrite the IPO. The big ones were really not interested in this small piece of business. We went on to file the application to list to Hong Kong Stock Exchange, who was equally high-handed as Hong Kong was flushed with quality large size state-owned enterprises queuing up to list there. Being relatively uninterested in small size listing and more experienced in evaluating the quality of smaller Chinese private enterprises, they were quick to notice the sudden expansion of account receivables on our accounting statements. They followed up with a number of questions with the clear purpose of delaying our listing, probably to see how these receivables will behave given longer period of time. In short, there would be no quick IPO for us.
Mr D was quick to use this delay to his advantage. He hinted to everyone on the company board was that one of the reason for the stock exchange delay was due to the lack of a convincing younger manager helming the company, and that our senior colleague was already too old to project a “dynamic” image to the Exchange and the investors subsequently. He wanted me to be promoted to the CEO position while our existing GM to become the Chairman of the board. With his insistence, my appointment was pushed through the board, which made one of my older colleagues very angry as he was supposed to be the next-in-line in seniority. But heck, he should have spent some time learning English! Mr D, being truly worried about the age of the receivables on our book that would become increasingly dubious as days go by, pushed us to shoot for a Singapore listing where he feel, with his broad relationship will help a smooth IPO. This time round, my older colleagues obliged grudgingly. So we quickly filed an application to list in Singapore. It proceeded relatively smoothly and we went through an initial hearing very quickly. The market was in relatively stable conditions and we felt we could get the IPO proceeds quickly at the turn of the year. With lot of money, like Mr D’s famous words, a fake company can become real....... To be fair, ours was not really a fake company. We were just doing what the Chinese proverb describes: Accelerating the growth of the seedling by pulling it up a little everyday...... To our surprise, we got a letter very soon from the stock exchange questioning us the reason for the failure to disclose to them we had applied to the Hong Kong Stock Exchange earlier. They asked whether we had been rejected previously and on what ground we had been rejected. Just as we wonder how they found out so quickly since one could safely assume due to competitive relationship, these exchanges should not be talking to each other on micro matters like this, Mr D came storming in over-night. “Someone wrote a poison letter to the stock exchange”, so he explained. “Someone who knows the situation very well and who is not very happy with the whole thing”, he concluded. We were fortunate, he went on to exclaim, as he felt that given the Hong Kong Stock Exchange never really rejected our application, he could still salvage the situation using his relationship and influence. While there was no hard evidence, we nevertheless took the precaution of asking for the early retirement of the senior colleague who was passed over for the post of CEO as we suspected him to be the whistle-blower. We made sure he was well compensated in monetary terms as we thought that would sooth his anger, with promises to allocate more of the shares to him so that he would share our desire to see a successful IPO. Then we went on to reply to the stock exchange disclaiming the fact that we were previously rejected, citing our need to access capital markets fast as ours business was expanding rapidly. Hong Kong was just going to be too long a wait for us.
On the other hand, Mr D worked his network and “club of friends” to sooth the nerves of the exchange officials, who were working hard to promote Singapore as the “second board for China” The launch of “second board of China in Shenzhen” hit a snag when the National Peoples’ Congress decided that the Chinese investment public was still too unsophisticated to handle investing in non-State-controlled enterprises that even the Chinese government may not be able to police effectively. So after 3 month, we were informed that we manage to secure the final hearing. Mr D and some young lawyers and accountants spent a few days preparing me to handle the questions “correctly”. I saw the signs of satisfaction on the faces of the officials during the hearing. One of them even went on to comment on the fluency of my English...... Mr D was right again. My Chairman could have fumbled and rumbled on just like any other Chinese CEO during such occasions. They were just the hardworking mulls that built the foundation of the Chinese’s manufacturing might. I belong to the generation that would take the company to soar higher as we understand and speak the language of high-finance, in English! The battle to IPO was hard won. We got listed in 2004 and to our pleasant surprise, some of our customers came back to pay down the receivables and asked for more of our new chemical fibres. By now, China has become the “factory of the World” that churned out all kinds of consumer and industrial products so cheaply that the Americans and the Europeans were so addicted to. The stock markets and physical property markets in the world were becoming buoyant and everyone was beginning to feel wealthy and began to spend more. Our new fibre products found more commercial uses and we bought more machines using the IPO proceeds to produce more products to cater to the booming demand.
Again Mr D was right. Pour more cash into the business and you will get a real company.........just like the pig-farmers l! isted on the stock exchange.......as he put it. Sensing potential to make a lot of money out of the good performance of the company and the buoyant market conditions, Mr D descended into town one day and asked me out for a dinner. As usual, we headed to his favourite KTV after dinner. After a few drinks, he leaned over and whispered to me, “Hey, this is your chance to grow really big very fast. The IPO proceed was not enough to fund your growth. Now that we are listed, we can place more shares out to raise more money to accelerate the business expansion to capture more customers before the competitors in China could replicate our capabilities, which always happen in every industry and business in China.” I was reluctant to agree to help sell the idea to my old! er colleagues as their shares were still in lock-up period and I imagined they would hate to see any dilution of their interests further at this juncture. Mr D went on, “I really needed your help as I need to get the shares placed out to some of those who helped us through the difficult times just not too long ago. We need to let them make some money as we are entering a bull market soon. In any case, the issuance of more new shares will give us more power to cement your position as the number one man in your company as we all support you rather than your older colleagues.” As usual, we kind of half forced the issue through the board with my older colleagues grudgingly approved some kind of convertible issue to assuage their fear that the new institutional investor would not be able to sell before they were allowed to.
In Mr D’s effort to consolidate his hold of the board further, a new director from the institutional investor group was appointed to the board. I had known him earlier as one of those that visited our plant before the IPO, when Mr D was just beginning to restructure the company shareholding where this new director was once introduced to me as an “angel” investor. Apparently, they were good friends that “make money together”. By 2005, the Chinese economy had entered into another “boom era” and our business was literally flying, just like any other businesses in China. Profit margins were good while sales expanded quickly, and our share prices rose more than 3 to 4 times from the IPO price. Many of older colleagues sold their shares and retired happily into the sunset in 2006, only to regret to see the shares they sold almost doubled again in 2007. Being the new helmsman, I could not easily sell my shares as it would have been construed as management not having confidence in the business. By then, Mr D had become one of the richest men in Singapore. Leveraging on his experience and the capital he accumulated from earlier successful IPOs he conducted, where in some case he made more than 50 times his capital, he exploited his new reputation as the “preferred deal-maker in Singapore” to the maximum. His “club” became increasingly larger as many people with money and “influence” joined the “club” to participate in this unprecedented “Chinese feast”. He doled out hot IPO share allocation through investment banks to repay old favour and to cultivate new relationship. Success begets success and money begets money. It all seemed so easy and so natural. Everyone got what they wanted. The Chinese companies got their money to expand their business (which at a later stage, no one is really sure which company really had any business to start with), the entrepreneurs were handsomely rewarded for the risks they undertook, the deal makers got their fees, the angels made their killings, the bankers collected their fees and dished out new loans, the lawyers and accountants recruited more young graduates to cope with the record work volume, the stock exchange got their “new mandate as the second board of the Chinese companies”, the investors got their hot-and-sizzling China concept stocks and above all, the rich and the influential members of the “invisible clubs” were all happily enriching their own pockets......
The reason why Mr D was successful, I realised, was that he always try to help the people who helped him in one way or another to become richer. Despite the fact that I could not sell my shares, I got the help of one of his banker friends to obtain some financing by securing my stake in the company to join in the biggest “Chinese feast in Singapore”. Just like all the Chinese entrepreneurs Mr D helped, I became one of his “angel investors”, taking stakes in promising new companies through his vehicles, got allocated hot IPO shares and reaped substantial gains within short span of time. I too, was becoming not only asset, but also cash rich. I took advantage of the Singapore immigration rule and got myself a per! manent resident by purchasing a property in Singapore. I wanted my son to study in the English school in Singapore and grow up as part of the establishment there. In any case, I would be able to help him join the “club” and he will be taken care of the rest of his life.
As for Mr D, he was purchasing properties in the form of “tracts of land” as he moved to diversify his assets from stock holdings to land holdings, with a sight to become a serious property developer. The Singapore property market was getting sizzling hot by the middle of 2007 and it seemed nothing could go wrong, particularly when 2 casinos were being constructed in an otherwise very conservative society. For myself, Mr D was going to be my role model. I went on to fund entrepreneurs and Chinese companies directly, hoping one day to bring these companies to someone like Mr D, and make more than the Singaporean deal-maker, at least equal........ Oh, I forgot to mention that the Chinese local stock market went through the roof as well. To take advantage of this, I needed no advice from Mr D. My friends in the local banks helped me secure the capital easily just like what they did for thousands of state-owned enterprise officials. They took the company’s cash as “invisible lien” to lend money to the managers of these companies to punt in the stock markets. The profits of such stock market speculation go directly into the pocket of the managers.
However, only in hindsight after the stock market collapse at the end of 2007 that it became obvious a lot of Chinese companies’ cash in the bank vanished into thin-air alongside the stock market bubbles. Our worlds began to unravel at the end of the third quarter of 2007. By then, the Sub-prime Crisis, as we knew it now, had hit the U.S. economy. We were still busy feasting in the spoilt of the capital market excesses, unaware of the impacts of such a crisis that originated from the housing bubbles in a country so far away. We were blind-sighted by the ease of making money from stock markets and at the peak of the markets in the middle of 2007, we all felt like the “masters of the universe”.
The first sign of trouble amongst the Singapore listed Chinese companies appeared when the share price of a Chinese steel company got sold off aggressively. In good times amidst a vibrant economy, this company presented to the investing community a story of their ability to turn in good profit margins by buying hot-rolled steel coils, coating them in zinc and sell them to car and consumer durable makers. One analyst, whom everyone ignored when the stock prices were rocketing, did question its business model as firstly, such production method is highly inefficient as most modern steel mills produce zinc-coated plates in one continuous process, and secondly, the investing world also knew that the prices of hot-rolled coils became excessively expensive as there was a preponderance of such downstream ! processing plants who got squeezed by the few integrated steel giants who have the capability to smelt iron-ore. Then there was the rumour of the company being privatised by a foreign steel giant seeking easy entry into the China market and its stock prices shot up before the trading of this steel company was suspended one day.
Rumour had it that it had been reporting fake profits, an official report of which the investing community is still awaiting after a few months. It was so obvious an insider job to cash out their position to the retail investors and apparently, the company management was not contactable anymore! By the second half of 2008, I believed many Chinese company CEOs were having tough times struggling to keep their business afloat amidst the most serious and swift crisis in memory as the credit situations around the world got frozen up. Worst, many of us were facing more serious issues in our personal finances. All our investments in stock and property markets were plunging in values amidst the so-called sub-prime crisis. Worse, we could not sell our stocks and properties as the transaction volume of these investments just vanished quickly together with the confidence of the investors globally.
While we busy feasted in the spoilt of the capital market excesses over the last 2 years, we did not realise that we were piling on quite a fair bit of leverages as we secured our investments for more bank loans to attempt to reap more profits, when it all seemed so easy. We never thought we could have any problem of repaying any of our borrowing as we were sitting on a lot of gains on our investment holdings. There was only one easy way out for all the Chinese company CEOs and that was to dip into the honey jugs. We all understood the importance of having our closest allies to be the finance managers of our companies so that any small “problems” could always be ironed out. In this case, I just “borrowed” some cash from the company accounts to fill some of the “margin calls” from the banks outside of China, which financed my “investments” in the stocks listed on Singapore Stock Exchange, as these foreign banks were ruthless in coming to seize the underlying security when the “margin calls” were not met. In some cases, I just pledged more of my personal assets to the foreign banks. I was becoming very stressed by all these happening and was not sleeping well.
Mr D was not having a good time either. He too was suffering from exactly the same problems as we were just emulating his investment styles and leveraging activities. I heard of incidents where he turned to some of other more cash-rich companies that he invested in to “borrow” some cash to bridge through some “margin calls”. He sold down quite a fair bit of his investment holdings to some “friendly hands” in a series of stock placements. At this moment, the goodwill and friendship he built over the years came to his rescue in these moments of “illiquidity” as the market transaction volume just dried up almost completely. However, the market prices of the stock holdings we used to secure our financing continued to drop by the days. Some of our friends and fellow “angels” were selling their holdings........and may just be in the same kinds of troubles as well. No one trus! ted each others at moments like these. Those that were selling their investments would not pre-warn their “fellow investors” as everyone would rush to sell at the same time! It was a time where everyone was for himself! My anguish did not escape the attention of the “director” on our board that Mr D posted in earlier. He flew over one day and was visibly concerned about the situation of my finances and of course, more importantly, that of the company. He sensed troubles as he knew that I too, had quite a fair bit of personal investments that were vanishing into the thin air in values.
By now, at the end of 2008, I was becoming desperate. Our company was going into the “audit season” and obviously, there was a large cash deficit that we would not be able to explain to the auditor. In the past, we could have just “arranged” for some cash to be credited into the bank account for a brief period to satisfy the auditors’ check. However, there was no such “temporary cash” to be found at any price as the sub-prime crisis had now developed into a full blown credit-crisis around the world. China was not spared in the process. With no where to turn to and the audit dateline closing in, I took the risks to “brief” the director of the true situation and asked for his help. I was surprised that he was not shocked by my confession. He had probably guessed it! In any case, the director asked me to remain calm while he would consult Mr D to seek some kinds of new financing to help bridge this difficult period. He asked that everything remained confidential as the last thing we wanted the world to know was the “missing cash” in the company accounts. H told me that quite a number of the S-chip CEOs were on the same boat and some of the “funds” that used to backed their IPOs have been able to extend some credit directly to them ease the pressure from the foreign banks, secured by again, stock holdings of the CEOs. Little did he know that my assets had almost been entirely secured by all kinds of creditors already!
Then the irreparable damage struck. I had borrowed some money from the local Chinese banks to punt in the local stock markets. The arrangement was such that I had to return such cash to the Chinese banks at the end of the year because they too, were subjected to annual audit. I had carefully maintained sufficient cash in our company accounts, which served as the “collateral to the conscience” of my friends in the Chinese banks. As I began to use them to fund the “margin calls” of the foreign banks and the amounts got further depleted by operation losses of the company amidst the worst economic crisis the world was now facing, my “friends” in the local Chinese banks were not going to take a chance on their own fate. They were definitely not “friends in need”. They simply deduct the amount I owed personally from our company accounts two days before their auditors came in, w! hich was of course, a few days before our company auditors came in. The rest was history...................
The auditor, which was an international firm, was not going to take a chance with their reputation. They formally informed our board of directors in early 2009. In other words, they were warning the board that the financial statements they were going to publish would be “disastrous” and could cause a serious enquiry by the regulators. I think some insiders proceeded to sell some of their shares before any official announcements were made but most of us were warned not to do anything with our holdings as that would be considered “insider trading”. Of course, all my older colleagues and company directors hated me as a consequence. I was asked to absent myself from all their meetings as they attempted to come up with a solution before the mandated result announcement date stipulated by the Stock Exchange. I was very scared. I had no one to turn to as even Mr D had stopped answering my phone calls. Everyone was trying to distance himself from me and it became obvious that I was going to be the “scapegoat”.
To protect myself, I seek the advice of some lawyers in China who in turn, consulted their friends in Singapore. To my relief, I was advised that should I be found guilty in the Singapore courts for misappropriating company assets, there was no established bilateral treaty as yet for Singapore court to extradite me from China. The China Securities Regulatory Commission, the securities regulator in China, had never once recognised their responsibility to regulate the S-chip companies listed in Singapore. In fact, the Hong Kong Stock Exchange had faced similar issues for decades in their attempt to regulate the P-chips, which were Chinese private enterprises listed on Hong Kong Stock Exchange, to no avail. In other words, as long as I refrained from stepping my feet on Singapore soil, nothing could be done to me. In any case, I thought given the hatred I faced from all my older colleagues and friends in the hometown, I should be taking some long overdue holidays. I relocate my family to a Chinese seaside town.
Although I was now an ordinary citizen, I was glad that my wife kept quite a far bit of the money I gave her along the way and that should be enough to last us a life time, at least in China. Through internet, I came to know that the company finally disclosed the incident to the Stock Exchange and the stock was suspended. They appointed an investigator but I was no where to be found. So it would be interesting on how the story could turn out post the investigation report. In fact, a number of S-chips suffered from the same problems and were suspended from trading soon after us. Inevitably, there were cases of over-stated revenues, fathom receivables, missing cash, over-leveraged financial positions of the founding entrepreneur who mortgaged away their own stocks, as well as outright manipulation of stock prices. In many cases, I suspected the irregularities had begun right from the very beginning, before the companies were even listed. Many were not real companies at the first place. My friends in the know told me that a few more had been discovered as suffering from “missing cash” and jokingly commented that the Exchange had to arrange for a smooth sequence of announcements just like the way they schedule result announcements of listed companies. With all these irregularities exposed and more promised to appear, the stock prices of all S-chips have literally collapsed. All my friends and their “club members” must have suffered tremendous losses. Some dealmakers and their syndicate members apparently were facing margin calls on daily basis and some even declared themselves bankrupt. It must have been a very trying period for everyone. However, I did not seem to have much sympathy to all these people. I witnessed how some of them became filthily rich in a short span of time without having to work hard, while other enjoyed a good ride in fortune just because they (or their friends or relatives) were in position of influence.
I was the only one that would be made a “scapegoat” and had to live a life of “exile”, while these guys could still just lick their wounds secretively and continued on with their life. I do not sym! pathize those institutional investors who lost their money as if they did, they were simply either incompetent or someone had benefited personally along the way in having committed their funds’ money in such investments. Curiously, I wonder who will speak on behalf of all the many ordinary people in Singapore who came to believe the investment potential of these S-chip companies after all the beautiful “packaging” the dealmakers and entrepreneurs wrapped around them, and went on to invest their life savings in the S-chips, only to find out one day that all these were worthless! So when dust finally settles one day, we shall all look back and evaluate what had gone wrong and who are to be blamed. I am sure all fingers will be pointing at the Chinese entrepreneurs such as myself, who are usually labelled as “greedy and unscrupulous”.
There is a ring of truth to that accusation and I admit I am guilty. But how about those dealmakers, who taught us how to cook the books? How about those angels, who hid their identities behind some dealmakers and exerted influences to assist them to succeed in their schemes? How about those institutional investors who trifled with the money entrusted to them? How about those intermediaries and professionals who were not vigilant enough to protect the interest of the investing public? I would like to end with a comparison. The Ming Dynasty collapsed only after the General (Wu San Gui) they sent to defend the border against the Manchurians opened the gate voluntarily to allow the Manchurian’s army to come into the Great Wall. General Wu did that probably out of a promise to be made a king later on and be endowed tremendous amount of riches by the Manchurians. Of course, the historians would like to add that he also needed the help of the Manchurians to defeat another general that had taken his favourite concubine. In short, the thieves and robbers are only usually allowed in by the insiders..........
If you have read the story till this part, I am sure you are either a victim or someone who is deeply interested in the development of the S-chips going forward. Please help to forward this email to any many such interested parties as possible. We need to put an end to all these irregularities lest more ordinary people on the street suffer unnecessary losses. In the process, you will help me to partially clear my name...... For I am not the only one to be blamed.................
Note: 1. Not everything is true in this story that I have just presented in order to protect some friends that still remain friends. In particular, the story before 1995 was inserted in only to give you a perspective of the difficulties that most Chinese entrepreneurs went through, and how they eventually all came to resent the ease and ruthless manner in which people like Mr D made great fortunes leveraging off their hard work.
2. At the same time, I sincerely hope that the investigation report that was pending in the case of my company comes out being at least “fair” to me. Otherwise, the more “real truths” will follow in subsequent emails......... hahahaha, the power of internet........
Wednesday, April 22, 2009
Other than charities, we also had numerous corporate scandals in the past few years. Other than those involving Chinese companies (too many to name) listed on the SGX, there were a number of corporate scandals among Singapore companies - Citiraya, JEL and ACCS had CEOs who cooked their books. A number of these CEOs were also Enterprise 50 (E50) and were held up as role models for budding entrepreneurs before the scandals broke. I took a particular interest in the Citiraya case because of the number of people involved to perpetuate the fraud. Citiraya was an electronic waste recycler that found a way to make more money. Companies like Nokia, AMD and Seagate sent its electronic parts to Citiraya to be destroyed and have precious metals extracted. Citiraya realised that it could make more money by reselling these parts to companies in China. To do this the CEO bribed employees from 3M, Advanced Micro Devices, Seagate and STMicroelectronics[Link] who were suppose to witness and verify the destruction of the electronic components. Citiraya's CEO Ng Teck Lee fled with $72M and has not been caught[Link]. This case tells us a lot about honesty and people - many will take bribes if they believe they won't be caught.
There were also scandals in private schools. A number closed down after collecting student fees. One feller teaching options trading was found to have used a fake Phd [Link]from a degree mill...the same chap also promised people attending his course that he could teach them strategies that will make big trading profits. I wonder why so many people fell for something so obvious - if this guy has the holy grail of options trading why does he need to teach to earn money. Maybe some people thought that he was just kind and wanted to share....if he was so kind, why was he charging upwards of $3K for a 3-day course? ...yeah and why did all of us go to school for 20 years to get our qualifications when all we need is a 3-day course to make loads of money?!
All these cases tell us a number of things:
1. You simply cannot trust people to handle money when there are no checks in place.
2. When there are processes in place, crooks try to get around them sometimes by bribing the people checking on them. You need external auditors....and you need to rotate people.
3. Crooks are attracted to institutions like charities which people tend to trust.
4. Transparency is important. Sunshine is the best disinfectant. People behave better when they cannot hide information.
5. What is too good to be true usually is....magic healing stones? Nigerian scam...extraordinary claims require extraordinary proof.
My advice is to view everything critically with a healthy dose of skepticism. Now watch this video.
Wah...one of the tricks people learn quickly in life is most people judge a book by its cover. If you want people to trust that you're a qigong master, you should dress like one. Notice the table cloth? No transparency on what is beneath the table. Being able to move things without touching them is extraordinary ...so remember extraordinay claims require extraordinary proof. This chap is good enough to appear on the news....can you trust everything you see on the news and read in the newspapers? Is qigong for real? [Answer here]. ...and where did the amazing powers of the qigong master in the video come from....springs...yes springs. Thanks to Lim Leng Hiong who posted in the comments section this link on how it was all done: [Link]
Monday, April 20, 2009
Harvard Professor Elizabeth Warren's work shows that banks are able to addict a large portion people to credit cards and unsecured credit...and if nothing is done society will be hurt by such predatory lending in the long run.
The other day I was at Post Office and right inside is GE Money offering unsecured loans at double digit interest rates - there were people queuing up to borrow...people with children in their 40s. The reason why I gave up my previous phone number was because I was harrassed by telemarketers offering me credit cards....5 times a day. Why did so many Singapore banks hire American CEOs? Because they have the experience to grow the credit card business and unsecured loan business ...i.e. get as many Singaporeans addicted to such loans as possible especially during this economic slump when Singaporeans need money. Citigroup Singapore is making record profits [BT : Citigroup's Singapore business still raking it in]....$1.2B primarily through consumer lending operations. The Singapore govt through GIC or Temasek has interests in these banks and this makes it hard to do the right thing - the right thing that Obama has to do now to rein in the predatory lending practices - the high fees, exorbitant interest rate, the excessive marketing, ...and the 101 tricks banks use to get consumers into debt. The American govt under Obama realises that something needs to be done - yet in Singapore we allow our banks to copy the practices of their American counterparts....the practices that got Americans into trouble. The Singapore govt seems contented to leave all the trouble caused to be handled by a small powerless Credit Councelling Service whose small office you will not find because it is hidden in some small corner of Singapore. I suggest if you have time, go attend one of their talks and talk to the others who turn up - you will be surprise by the large crowd and how many people got into trouble with these cards - you will leave without a doubt that more has to be done in terms of regulation. How can Credit Councelling Service whose goal is to promote responsible use of credit compete with the hundreds of millions banks spend on promoting their products and urging consumers to spend & borrow....banks probably spend more in 1 week than the Credit Councelling in 5 years. We are fighting a losing battle here because the people who are suppose to fight can't get themselves to do the right thing.
Obama to address credit card abusesWASHINGTON (AP):
The White House said on Sunday that it will back congressional efforts to clamp down on credit card abuses in an effort to address the recession's effect on average Americans.The House of Representatives and Senate are considering a credit card bill of rights to limit the ability of credit card companies to raise interest rates on existing balances and to require greater disclosure. White House economic adviser Larry Summers said people need to save more, but that the government also needs to curb credit card pitches that addict people to plastic.President Barack Obama is ``going to be very focused, in a very near term, on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into,'' Mr. Summers said.Mr. Summers said the administration wants to see a better-regulated financial system, encourage savings and eventually get back to a situation where government spending is not a drain on the economy.``Individuals are going to have to save more, that's why savings incentives are so important,'' he said. ``That's why we need to do things to stop the marketing of credit in ways that addicts people to it _ so that our households are again saving, and families are again preparing to send kids to college, for their retirement, and so forth.''Mr. Summers made the comments Sunday on NBC's ``Meet the Press'' while attending a summit of Western Hemispheric leaders in Trinidad and Tobago.
Friday, April 17, 2009
Wednesday, April 15, 2009
If you recall, GIC put in $9.8B for convertibles earning 7% per annum[Link] in Jan 2008 - the convertibles can be converted to common stock at US$26.35 per share. One year later Citigroup was teetering at the brink of bankruptcy. The stock price fell to US$2.42 - there were very real fears that the US govt might nationalise Citigroup and wipe out everyone including common shareholders. At $2.42, GIC's conversion price of $26.35 made the convertibles near "worthless" the only consolation was the 7% Citigroup had to pay GIC per annum and that was in the process of being wiped out as Citigroup took TARP money from the US govt and the legislators wanted to banks to stop paying dividends.
In Feb 2009, GIC was given a deal to convert its preferred to common stock at US$3.25 per share - given that the stock was trading at US$2.42 at that point in time it meant that GIC has to take an immediate loss on paper of about 30% which sounds okay because if they didn't convert the preferred wasn't worth much[Link]. Citigroup offered the deal to convert because it will improve their equity base and somehow that help to improve its balance sheet[Link]. So GIC converted 1 preferred to roughly 8 common shares ($26.35 divided by $3.25)...1 to 8 - this ratio will become very important later on in the story.
However, once GIC converted to common, Citigroup shares started to plunge like a rock all the way to US$1. GIC lost 70% of its investment when that happened. Citigroup plunged for 2 reasons - fears of further dilution, fear that it will be overwhelmed by losses as the economy weakened...but the last reason is the most important but not well known until now.
When GIC converted its preferred to common at a ratio of 1 to 8, many arbitragers (people who profit from price difference before and after a conversion) assumed that all preferred can be converted at this ratio. This assumption led them to do this arbitrage trade, that goes something like this:
1. Buy preferred at $14.
2. Short sell the 8 times the amount of Citigroup common at $2. ...collecting $16.
In the process, they made $2. Once they convert their preferred at a ratio of 1 to 8, they can cover the all the common stock they shorted. They did this repeatedly causing Citigroup stock to plunge all the way to $1. Citigroup became the most shorted stock on the NYSE[Link]. It was shorted until there were no stocks left to short. ...then it started to rise on the news that banks were operationally profitable in Jan/Feb 2009. Also, the +ve results from Well Fargo caused it to surge some more in recent days.
The problem for the arbitragers now is the 1 to 8 ratio was never a "black and white" thing - Citigroup never promised that all preferred shareholders that they get to convert at this generous ratio[Link]. If they can't and Citigroup stock keep rising, these arbitragers stand to lose hundreds of millions. So they started to reduce their exposure to this arbitrage trade by reversing it - selling the preferred and buying back the common they shorted. As they buy, the stock goes up...and they panic and buy some more. It is this panic that is driving up Citigroup stock[Link]. Video link on this : [CNBC Citigroup Arb Carnage].
GIC's Citigroup stake is profitable for the past few days after sitting on massive losses for more than a year. Hooray!? However, once this panic is over, there is no telling where it will be 9 months from now. I have to admit this turn of events is a total and complete surprise to me - maybe the geniuses at GIC had it all figured out - WOW!
Not that the old set wasn't working. It is just that we have to be more vigilant given the rising unemployment, bigger income gap and growing number of people disenfranchised so a new set of laws are required. Hungry people ought to be saving their energy by staying at home instead of protesting on the streets....and jobless people ought to be looking for jobs and people who disagree and want to change the system should just shut-up. What better way to achieve greater order.
Under the new Bill, three types of activities will require permits: Those that demonstrate support for or against views or actions of any person, group of persons or any government; those that publicises a cause or campaign; and those that mark or commemorate any event.
You will now need a permit to "commemorate any event". What has public order got to do with commemorating something?
The Act will also give police officers new powers to issue pre-emptive "move-on" orders, which will be in written form, ordering demonstrators not to congregate at the intended rally area, or give them a chance to leave without getting arrested.
The Act will also prohibit the film of law enforcement operations.
How was the abuse of power by police discovered and presecuted? 90% of the time by people who happened to have film the incident - be it the Rodney King case or the most recent use of violence against protestors during the G20 [Link]- these incidents were all caught on film. We have better policemen that the rest of the world? They use secret edge tactics that cannot be filmed?
The ultimate justification given by Second Minister for Home Affairs K Shanmugam:
"Have we gotten that balance right? Well, ask yourselves two questions. In our region, which country would you rather be in? And amongst the countries in the world which became independent in the 1950s and 60s, which country would you rather be in?"
The answer is simple. In this region I rather be in Singapore not because of its draconian public order laws but because it is my home and it is a modern city. Let me turn around to ask this question if Singaporeans want these draconian laws that repress the populace even more making it difficult for people to protest for worthy causes and injustice, why are so many Singaporeans lining up and waiting to emigrate to US, Australia, UK and New Zealand which do not have such draconian laws and allow protests. There are more people in Singapore whose security are adversely affected by loan sharks(10,000 counting just official reports last year) that terrorise the HDB dwellers than by peaceful protestors - you don't see the PAP govt proactively enacting laws to protect Singaporeans from loan sharks. These set of public order laws have little to do with the people's safety or security and every thing to do with preserving the system that allows the PAP thrive, hang on to power and repressing dissent and stopping much needed changes in our society....
Monday, April 13, 2009
So the situation is like this....Singaporean workers who incur one of the highest cost of living in Asia are expected to compete against their counterparts in China, India, Malaysia, Korea etc. The only way to do this is for a large segment of the populace to work hard, live poorly and continue to accept low wages as cost of living goes up. In places like Japan and S. Korea, there is a practical option for the people to move out of places like Tokyo & Seoul where the cost of living is unbearable to the other prefectures where life is a lot better for many...
.... in Singapore, you have only one option...
$658,000 for Tiong Bahru flat
BY DARYLL NANAYAKARA
A FIVE-ROOM flat at Block 131B, Kim Tian Road, fetched a princely $658,000 on the resale market recently - more than what it may cost to get a private apartment in Loyang. Related link: » Why go private? HDB flats are better Over at Queenstown and Ghim Moh, the HDB resale market is similarly smoking hot: A five-room flat in Queenstown commanded $600,000 while another in Ghim Moh cost $650,000. These flats are not short on amenities either: they are near food haunts, schools, MRT stations, swimming and sports complexes and a short ride from town. As the price differentials between HDB flats and condominium apartments narrow, property companies told my paper that this is the best time for flat dwellers dreaming of an upgrade, or flat sellers hoping to make a tidy profit, to get in on the act. While prices for private homes have plunged by 13.8 per cent in the first quarter this year, the price tags of resale HDB units have remained largely unaffected. PropNex's corporate communications manager, Mr Adam Tan, said this was due to strong demand for resale flats. He explained: 'The overall continued strong demand for resale flats stems from the fact that there are no more surplus flats with HDB and resale flats present a viable option for people who are unable to wait for projects under construction.' So does this slump in the economy present an opportune moment to switch to private properties? The answer is a resounding yes. 'For people with the means, now is an excellent time...given that the gap between the price indices of the two is at its narrowest,' Mr Tan explained.
Saturday, April 11, 2009
Actually I don't know why...who this group of people are and what is their agenda - personal glory or seeking real advancements for women. While I feel that AWARE has made positive contribution within the framework of our laws and society, in an island where maid abuse is rife and men 'purchase' wives from Vietnam, you will probably be able to find a good number people that feel strongly that more should be done.....and are 'disgusted' with the status quo. I really don't know if this is the reason why these people took over AWARE, .....
Can someone from from the group or know something leave a comment?....the whole country is wondering what is going on here...
With some searching and a few hints, there is speculation that AWARE has been taken over by anti-gay conservative religious group [Link] because some of AWARE members express support changes to 377A....AWARE leaders have also spoken about changes to 375 & 376. I think it is a step backwards when people who don't care about gender equality takes over AWARE and tries to promote its own religious agenda - they are already free to do that at their religious institutions why take over an organisation whose pro-rights agenda they do not share? AWARE's activities have benefitted many women and it will be beneficial for our society for them to do more and not less. Lets put this way, as a non-religious person, it is wrong for me to gather a group of people to take over a faith based organisation to advance my 'non-religious' agenda. This whole thing is not constructive for anyone and serve only to spread deepen the suspicions that already exists.
Our society will always have people with different points of views ....we should let others express theirs as much as they let us express ours. If this takeover is to further advance the rights of women consistent with the goals of AWARE it would have been highly beneficial...but this whole thing is a disappointment and a step backwards for tolerance, living together and respecting each other's beliefs.
A*STAR scholar, Swede charged with appearing nude in public
By Zul Othman, TODAY Posted: 10 April 2009 0630 hrs [Link]
SINGAPORE: She is a PhD scholar with A*STAR, the Agency for Science, Technology and Research, who is studying at the Karolinksa Institute in Sweden, and he, a Swedish student on an exchange programme. The young couple who caused a stir when they walked down Holland Village in the buff on January 24, were charged in court on Thursday with appearing nude in public. Jan Philip, a 21-year-old Swede, and 24-year-old Eng Kai Er, a Singaporean, remained silent when they appeared before District Judge Shaiffudin Saruwan. It is not known why it took so long before the duo was hauled before the judge. However, their long-awaited court date went by quickly after their lawyer, Mr William Chan, asked for an adjournment to write in to the Attorney-General's Chambers......
I have to applaud A*Star for selecting people who will challenge the status quo....but I think this A*Star scholar has chosen the wrong law to challenge. She is too far ahead of her time ...but it shows that sending scholars to Sweden really has a big cultural impact on them and this case is sufficiently spectacular to remove all doubts of the usefulness of sending scholars overseas to assimilate foreign culture. In Sweden nudity in public is a lot more acceptable.The law she should have challenged is the one that disallows people walking around naked in their own house in Singapore[Link]. She would have received plenty of sympathy if she had broken that law instead and was hauled to court.
Do I think she should be jail? Hell no. Jail in Singapore is for people who speak in public without a permit[Link] but if you walk around naked in public without a permit, you should be okay.