Monday, November 10, 2008

ECM Libra – Versi BI

Accusation 1:

ECM Libra merging with Avenue right after you bought stocks in them. Who approved this merger?

ECM Libra was working on several merger options long before I exercised my executive option scheme to buy a stake in the company. This was in line with the Government's push to consolidate the financial advisory and stockbroking industry by allowing for the creation of universal brokers and, later, investment banks. From what I know, ECM Libra and Avenue Capital Resources Berhad (Avenue) had informal, non-binding discussions before I became a shareholder of the former. I was not part of the formal negotiations which took place later between the two companies prior to the 'merger'.

As far as approvals are concerned, ultimately any proposal to merge two corporate entities would require the consent of shareholders. The Government, via the Ministry of Finance and Bank Simpanan Nasional, held a 29.5% stake in Avenue. On its own, the Government could not have approved the 'merger' since the consent of the other shareholders was also needed. On 18 May, 2006, Avenue held an extraordinary general meeting (EGM) of shareholders to discuss the proposal. The 'merger' was approved by 98% of shareholders present and voting at the EGM.

Had the deal been questionable and something that the Government wanted to push through, surely minority shareholders including established international institutional investors, who were shareholders of Avenue, would not have given such an emphatic endorsement of the deal at the EGM.

Accusation 2:

You claim that the RM 13 million that you used to purchase shares in ECM Libra was borrowed Question: Who lent those funds to you? What were the criteria for borrowing? As far as everyone knows, you were unemployed, and you're unemployed currently. Who would lend 13 million to an unemployed? So basically, pray tell, who lent 13 million to an unemployed and at what terms? You may point to a technicality and refuse to answer this. Denial tak cukup, let's go to the facts. My source tells me the RM13m came from another shady deal, i.e. commission from the sale of some core government assets to Singapore. Is that true?

I have explained this countless times before but since you either missed my earlier explanations (e.g. The Edge, 16 JANUARY, 2006) or have chosen not to accept them, I shall do so once again. First, let me correct some of your facts. The ECM Libra shares that I bought were valued at RM9.2 million - at the prevailing market price of 71 sen per share - and not RM13 million. Therefore, the loan that I obtained was also for RM9.2 million and not RM13 million. At the time I received the loan, I was Director for Corporate Advisory at ECM Libra and, hence, not unemployed. These facts are publicly available information. It puzzles me how someone who wants to make serious allegations against someone else can't even get basic facts correct. This alone demonstrates your careless research suggesting you are someone who indulges in rumour and innuendo without even bothering to do undertake independent and in-depth analysis of your own.

As far as the loan is concerned, it was not only available to me but to other senior executives of the firm in order to buy shares in ECM Libra and grow with the company. The shares that we were given options to purchase came from the original partners of the firm, Lim Kian Onn, Dato' Seri Kalimullah Hassan and David Chua. They also provided loans to senior executives of ECM Libra for us to exercise this share option. In other words, I borrowed money from the partners of the firm to buy shares that they own. I pledged the shares that I bought as security for the repayment of the loan.

All of the above transactions were documented and stamped by lawyers. The purchase resulted in me acquiring 3% of ECM Libra. Regulators only require a shareholder with more than 5% of a company's shares to declare their interest publicly. Yet, I chose to declare my purchase via an announcement to Bursa Malaysia, even though I was below the 5% threshold, because I wanted to be above board in my decision. I could have withheld the announcement or concluded the transaction through a nominee. Instead, I declared my interest.

I sold all my shares in ECM Libra on 11 August, 2006 for 65 sen per share, incurring a loss of 6 sen per share.