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Saturday, August 20, 2011

Esso's fire sale: Are Dr M's sons shuffling national assets, asks Anwar

Sulaiman Kamal | 5:35 PM | | | | Best Blogger Tips

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The recent acquisition of Esso’s downstream assets in the country by Phillipines’ San Miguel Corp should catch the public’s attention on a few accounts.
The disclosed total consideration of USD610 million that is below Esso Malaysia’s current market value has sent its shares tumbling by 18% yesterday. While the sum may have been a bona fide amount decided on commercial grounds, the interest of minority shareholders took a beating when the deal prompted such a huge drop in share price.

I urge that the relevant parties including Securities Commission and Minority Shareholder Watch Group to look closely at the deal to ensure the interest of minority shareholders was not trampled.
More importantly however is the transfer of nationally strategic assets such as a refinery complex and petrol station network to an entity with hardly any experience or presence in Malaysia previously.
Back room deals
San Miguel Corp’s most famous connection to Malaysia previously is through Mirzan Mahathir, who was appointed as a director of the Philippines conglomerate after he acquired a 19.9% share in the corporation for RM2.9 billion through an investment vehicle.
Although Mirzan Mahathir had resigned from the board of San Miguel Corp in April 2010, he remains as a director of Petron Corporation, an associated company of San Miguel Corp that owns a network of refineries and petrol dealership in Philippines.
Therefore, it is only natural that questions are raised whether the acquisition of Esso’s downstream assets was completed at such a price on his behalf?
This is even more pertinent as his brother Mokhzani Mahathir had already benefitted greatly from the upstream sector of the oil and gas industry through Kenchana Petroelum; especially when their father is conveniently the advisor of PETRONAS.
The deal brings forth a series of questions on the present administration’s commitment to cultivate a culture of stringent corporate governance in the country. The corporate Malaysia must break free from the practices of back room deals at the expense of the public that characterise the patronage system of Umno/Barisan Nasional all this while.

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