In my
previous blog, I shared several chapters from my unpublished – and perhaps
unpublishable – book. Those stories revolved around one particular “great.”
The
following pieces are drawn from other chapters of the same manuscript and
feature several more such “greats.” For ethical reasons, it would not be
appropriate for me to identify some of them by name. I have therefore used only
their initials in the stories.
The numbers
accompanying each title correspond to the sequence of the chapters in the book.
Cheers!
8
When You Have a Board of Chairmen, Nothing Moves
This was exactly what happened to Highlands & Lowlands Berhad in the
early 1980s. High & Low, as it was known to its fans,[1] must have been one of the
most loved companies by investors at the time. It had a paid-up capital of
about RM150 million, which was pretty big in those days. But what made High
& Low exceptional was its formidable cash hordes and its highly visible
landbank in the Klang Valley. RM250 million of its shareholders’ funds of RM500
million were operationally superfluous. It was in the form of cash and mostly
placed with banks as fixed deposits to earn interest. When the prices of rubber
and palm oil were low, High & Low could still hand out good dividends all
the same, thanks to its interest incomes.
Ten of High & Low’s twenty estates were
in Selangor. Some of these were right in the Klang Valley and became the
obvious target of authorities when they wanted land for ‘public’ purposes. Shah
Alam was in fact carved out from three of its Klang Valley estates: Sungai
Renggam, Bukit Jelutong/Rasak and Midlands. So were the Subang Airport, the
adjacent Malaysian Air Force Headquarters and Selangor’s State Sports Complex
(Kelab Golf Sultan Abdul Aziz Shah is a spin-off of this acquisition exercise).
High & Low sold some
land parcels also. An example is the roughly 1,500-acre property at the
junction of Jalan Damansara and Jalan Kepong, once known as Edinburgh Estate.
Today, two townships have taken shape there, Taman Maluri and the very upmarket
Desa ParkCity (I understand several more have since been sold or converted for
township development, Kota Kemuning might be one, and Elmina is ongoing).
You do not see High &
Low’s signboards anymore because the company was absorbed by the Guthrie Group,
which in turn became a part of the Sime Darby Group. In its heyday, it had the
most coveted parcels of land with township development potential in the Klang
Valley.
With its resources, High
& Low could have taken over a bank or two if it wanted. There were no
ownership restrictions then, and you could count with your fingers the number
of local banks that had bigger net worth than High & Low. There were indeed
many takeover opportunities: many listed companies were on the block, prime
properties across the Causeway were not expensive, and many estates were being
sold cheaply because of depressed commodity prices, etc. But all High & Low
could manage was the acquisition of a small 1,000-acre oil palm estate in a
very remote corner of Perak before the company was taken over by Guthrie in
1985.
How come? High & Low
had a board of chairmen, not directors!
* * * * *
I was High & Low’s manager for corporate
planning. It was essentially a one-man show, discounting my secretary and
driver. The first task I set for myself was the preparation of a corporate
diversification plan. Thinking that property development would be an obvious
starting point, I mapped out a framework with which High & Low could
systematically realise the real estate potential of its vast landbank in the
Klang Valley. The executive committee and the board duly accepted the
recommendation. But after that it was paper after paper, review after review.
Nothing moved.
I also approached merchant
bankers, stockbrokers, investment authorities, venture capital companies,
overseas manufacturers and friends for business leads and possible joint
ventures. Initially we were deluged with offers, but soon people saw through
us. We were just wasting their time.
Decision-making in High
& Low was a mind-boggling process. The board comprised Dato Seri Dr Syed
Mahmood Syed Hussain, the chairman, Tun Ismail Mohd Ali, Tun Tan Siew Sin, Raja
Tan Sri (now Tun) M Alias, Tan Sri Lee Loy Seng, Tunku Tan Sri Shariman Tunku
Sulaiman, Tan Sri Syed Kechik Syed Mohamed Al-Bukhary, Charles Letts, Tengku
Robert Hamzah and the late Datuk Yeoh Chin Hin. Every one of them was a company
chairman in his own right. (Most of them have passed on).
On day-to-day operational
matters, there were two general managers—one looking after plantations and the
other finance and administration. There was no chief executive. The general
managers had little authority, and most matters were referred to the directors.
But few at that level had time for High & Low. What the board did was to
entrust the authority to an executive committee made up of Dr Syed Mahmood, Tun
Ismail Mohamed Ali, Tan Sri Lee and Raja Tan Sri M Alias who would meet once in
about two months. All proposals and decisions required of the executive
committee had to be formally prepared in a prescribed format and submitted to
the company secretary a week or so before the committee met. It was the
prerogative of the executive committee either to make a decision or to refer
the recommendation to the board. A proposal could win approval one day and had
it withdrawn the following day. Very frustrating indeed!
When you have a board of
chairmen, meetings were usually a free-for-all affair. At their level, it was
natural that everybody had a big ego. Some were quite petty also. I should not
forget to mention their prejudices too – you have to believe me!
I had the opportunity to
‘defend’ my papers in the executive committee meetings. I was, however, rarely
given a chance to do so at the board level. Our kind Puan Halimatus,
High & Low’s company secretary, would come to see me after each board
meeting. “Hard work down the drain, I suppose?” I would ask. If there was good
news, she would give me a big smile. Otherwise, she would always console me by
saying, “Mr Lim, I don’t know why they are always like that…” The reason could
be anything, ranging from patronising reservations voiced by one of the
directors out of his personal prejudices to a typographical error in your
paper, or to outright proxy intrigues between the different interest groups in
the boardroom.
None of High & Low’s
big shareholders, namely Permodalan Nasional Berhad (PNB), the Federal Land
Development Authority (Felda), Kuala Lumpur-Kepong, and Perbadanan Nasional
Berhad (Pernas) were in a position to exercise full control of the board. Or it
could be the Tun Ismail, who was really the first amongst equals there, being
in an unfavourable mood. But what was particularly frustrating was the fact
that one had to live with the type of ignorance displayed by some of the
leading captains of the corporate world of the day.
Maybe I was naive; the
stakes were too high for me to understand. Maybe they were just play-acting?
* * * * *
Coke, please!
It was sometime in 1984. There was this big dinner to raise funds for
the Tun Hussein Onn Eye Hospital at the Kuala Lumpur Hilton. Being one of the
top ten companies in the KLSE, High & Low was expected to be generous for a
worthy cause. It ‘bought’ a RM25,000 table.
Dr Syed Mahmood was to be
the host of the table, since he was the chairman of the company. It was
supposed to be an ‘all-directors’ function. Once it was confirmed that the late
Tun Ismail and his wife Toh Puan Maimunah Abdul Latiffwould be able to make it,
the other directors began to send their RSVP regrets to Dr Syed Mahmood,
although they earlier indicated their willingness to grace the occasion. An
excuse? Last-minute urgent matters to attend to lah! All very
coincidental!
You cannot leave the table
half-empty, can you? The two general managers naturally had to oblige. They
should bring along their spouses too. There were two more places to be filled.
The ‘privilege’ fell on yours faithfully and his madam.
* * * * *
The dinner was a grand event, a who’s who of
everyone big in town. But the mood of our table was subdued. Except for a few
occasions when the witty Toh Puan Maimunah would take aim at Tun Ismail and
make the rest of us misbehave in front of him, it was just food, food, and
food.
When Tun Ismail was at your table, you could
be sure few would bother to approach you. I
remember a Datuk Somebody that night. When he spotted Sayed Mohamed, one of
High & Low’s two general managers, he decided to waltz through the crowd to
greet an old friend he saw across the room. As soon as the familiar bald patch
surfaced before him, he froze and stammered, “Tun…”, did a 180-degree turn and
marched back. I cannot recall if he even said hello to his old friend Sayed
Mohamed.
* * * *
*
“Sir,
may I have your order please?” After the waiter had completed taking the
ladies’ orders, I was the first to be given the honour.
“Vodka lime.” I suddenly realised everyone
was looking at me scornfully. How indiscreet of me. “The Korean 747 has just
been shot down over the Sakhalin Peninsula. Don’t you know that we should
boycott everything Russian?”
Next was the other High
& Low general manager, the late Aziz. “Coke,” he said. What? Coke for this occasion? I thought he liked
something else.
Tuan Sayed, how about you? Can’t be Coke I
suppose. “Coke, please.” Coming from Sayed’s mouth, it was
unbelievable.
Had I committed an
unforgivable sin in front of Tun Ismail and Dr Syed Mahmood? Everyone
knew Dr Syed Mahmood did not drink. It did not surprise me when he asked for
water. When it was the Tun Ismail’s turn, he asked for what he desired, no
more, no less. And I know it was not
fruit juice.
* * * * *
I was comparing notes on the late Tun Ismail with someone the
other day. He updated me with this story. There
was this board meeting. Tun Ismail had excused himself to go to the loo. Without
him, no major decision could be made. Everybody was happy as they could stretch
themselves a little. Soon the boardroom was full of life.
Ten minutes passed, and no
sign of Tun Ismail. Good! We could continue talking or do some catching up.
Half an hour later, still no sign of Tun Ismail. Maybe he had a bad stomach.
One hour later, how come ah? Something must be wrong. A search and
rescue team were promptly dispatched to the executive restroom. No trace of Tun
Ismail either. Quick, call the house.
“Yes, Tun is in.”
Apparently, after easing
himself, Tun Ismail headed straight for home. He had forgotten that the board
meeting had yet to be adjourned!
* * * * *
Netted a small potato at
last
One morning in 1985,
three bloodthirsty looking men barged in High & Low’s office at Wisma
Budiman.
“Where is Lam-san?” they demanded loudly at
the reception.
The receptionist was
Eurasian, and there was only one senior Chinese manager in the office.
‘Lam-san’ must be me. They were led to my room. The whole office was disturbed;
colleagues were wondering what was going on.
“You walloped the RM200,000
that was meant for my client – the party who arranged for the sale of Yew Lian
Estate to your company! He wants the money. It is due to him!”
A few weeks prior, we just
concluded the acquisition of a 1,000-acre oil palm estate in Perak, near Hutan
Melintang. We paid RM4 million for the estate. It was full of peat soil and
flood-prone, nonetheless, its yield profile satisfied our ‘specs’, so the board
agreed to allow us to make the acquisition.
Being the corporate planner
of the company, I naturally assumed the role of the overall coordinator.
Negotiations and handover nitty-gritty was left very much to me. The vendor was
represented by their managing director, a certain Mr Lee, if I remember correctly.
He was all-facilitating – until the day of the takeover. He appeared difficult
but I did not take it to heart, since most vendors tended to act a little
sentimental when their asset was being taken over because of cash flow issues,
which apparently was the case with them then.
* * * * *
Back to the scene in my
office at High & Low...
I received them calmly and told them straight
to their faces:
“We dealt with Mr Lee, who
is the managing director of the Yew Lian. There was no broker involved. You go
and ask him who has he paid the money to.”
“If indeed he has told you
that I have taken the money, ask him to come with you to claim the money from
me. You know where I am now, do you?”
I never heard of them
again. And that added some prestige to my status in High & Low.
* * * * *
More on peanuts
When you work for a cash-rich company, you do not
have to crack your head hunting for new business opportunities or leads. People come to see you in
droves. That was my good fortune in High & Low.
One day, a broker dropped
by. Datuk Low Gaik Poh was looking for buyers for some of his cocoa and oil
palm holdings in Sabah. Would High & Low be interested? The late Tan Sri Lee
Loy Seng had just bought some from Datuk Low. The transacted price was quite
reasonable.
“What is the asking price?”
“About RM4,000 per acre.”
“Sounds reasonable, when
can we visit them?”
“Let me arrange.”
Permission was duly obtained from the bosses for Lee King Wat and I to visit
Sabah.
Arriving at the Tawau
airport, we were pleasantly surprised to be received by George Yap, one of
Datuk Low’s right-hand men. He loaded us into his Mercedes 280 and headed for
the hotel. We felt quite at ease with each other, as we were all from the Peninsula.
After a good meal and some unwinding, business began.
“Can we talk about your
estates…?”
“Sorry, we should have told
you this. M-Purpose has already made a good offer to us. Its Dunlop Estate will
pick them up at RMxxxx per acre.”
RMxxxx was a much
higher figure than RM4,000.
“I thought you were asking
for RM4,000 per acre…?”
The smile on his face told
me that I should not pursue the line of questioning anymore. Enjoy your food!
* * * * *
Doesn’t the word "accounting" sound like ‘I-count-ten’ and no more?
High & Low owned 26,400 shares in H&C Latex, a very small
holding compared to Harrisons Malaysia’s (now Golden Hope) millions of shares. Harrisons
wrote to enquire if High & Low would be prepared to part with its shares in
H&C Latex. Harrisons wanted 100 percent ownership. It was prepared to offer
a price of RM63.71 per share.
Why so good a price? Wasn’t
the investment on High & Low’s books just RM29,370.35 or RM1.11 per share?
I went back to the records. The answer was there.
When High & Low was
‘Malaysianised’, values in pound sterling had to be converted into ringgit.
Someone in the accountant’s office forgot to multiply the figure by 7.5, which
was the exchange rate then. But it meant a difference of RM1,652,573.65. Peanuts
to High & Low, but it was hell of a substantial oversight by any standard.
9
Wizard or Lizard?
TKS’s companies were for
sale! And High & Low was approached. Being the corporate planner, it was
naturally my duty to evaluate and recommend purchases to the board. Papers were
still holding TKS sky high, but I knew his personal companies were already in
trouble.
I joined Genting after TKS
had left the company. He was fondly missed by many of his former colleagues
there. There were many anecdotes about his generosity and kindness. Before I
knew him, I had always wished I could have the chance to work with him. He was
a larger-than-life corporate genius to me. Towards the end of the 1970s, the
Chinese community was rediscovering itself. M-Purpose became the rallying point
of the Chinese. The name TKS was synonymous with M-Purpose, which was in the
headlines every other day.
I attended one of his
luncheon talks one day. He was a very confident speaker, but not a particularly
eloquent one. His command of English was average. The circumstances leading to
some of the prized acquisitions, he admitted himself, were more situational
than anything else.
However, my admiration for
him continued unabated until sometime in 1983, when I had the opportunity to
know him in person. Things were already not going quite right for him in the S group
he controlled. High & Low was invited to take a look into two of its
subsidiaries – S-Refinery and S-Chemical. Their balance sheets were atrocious.
You really had to pay one to take over the companies; they had net liabilities!
Nevertheless, we were more interested in their businesses than their assets.
The state of the affairs at
S-Chemical was pathetic. We thought we should not waste anybody’s time. S-Refinery
was more presentable. The plant manager, a pleasant-looking lady in her
thirties, received me. “Why were the losses so huge?” The answer was in the
management accounts! There were obviously some margins to be had in the
business, but the company had lost millions in doing hedging. Did the big boss
know about it?
* * * * *
I could not help relating this observation to
friends: The steps in the staircases or the bridges in refineries were usually
the see-through type. And ladies beware! If you have to visit one, make sure
you wear pants. On this particular day, the pretty plant manager was wearing a
not-too-long skirt. Could you really blame her colleagues for exercising their
neck each time we made a climb?
When I discussed the two companies with the Yang
Berhormat, the honorific to which he was entitled then, he said he did not seem
to have good fengshui apart from
finance and properties. In my audacity, I wrote him a small note: “Yang
Berhormat, you have to go beyond good looks in management.”
There was no way bosses in
High & Low would pick up these two companies, I had to tell him. He was a
gentleman. Over the telephone, he said, “Yu Bok, it is alright.”
* * * * *
Through a broker, we came to know that a 5,500-acre
palm oil estate in Paloh, Johor was for sale. “Whose estate is that?”
The answer: “TKS’s.” That
was in 1984. Not a bad estate, our plantation controller Lee King Wat
concluded. Since High & Low was also anxious to pick something to show the shareholders,
the deal was soon closed. The consideration: RM46 million for everything therein and thereon,
including the palm oil mill in the middle of the estate. The assets had to be
checked against the records.
“How come some two to three
million ringgit worth of equipment is not on the books?”
“They were acquired under
leased financing from XXX.”
A legal point arose. The
assets acquired under lease financing did not strictly belong to the estate.
Under the circumstances, could High & Low demand TKS to surrender them? Or
should High & Low redeem them from the leasing company?
TKS called me from the
Subang Airport. He said he was on his way to Europe. “Could we come to a
compromise?”
“Very difficult, Yang
Berhormat. The High & Low board have already made the decision. And you
have agreed on a therein and thereon basis, haven’t you?”
“Alright, let’s conclude it
early.”
He gave up so easily! I
could not believe it. If TKS had kept a Mercedes 500 there and we had also
insisted that it should be High & Low’s, possibly TKS might also say,
“Okay, it is all yours.” After all, we were talking about therein and thereon,
and TKS was a man of principle.
* * * * *
The physical takeover was a three-day affair. The
personnel department had to issue letters of continued employment to those who
wanted to stay behind, the accounts and audit people had to take stock of the
assets, and plantations had to comb through the statistics. I, as the corporate
planner, had only to follow up with the legalities. But everyone had a good
outing in the midst of the jungles of Johor, where cobras sunbathe themselves
right in the middle of the estate roads.
“How come there are seven mini tractors when
the book says there are four?”
It is a fact!
* * * * *
Chinese are worshippers of heroes. TKS was certainly a hero to many. He
had a very pleasant personality. He could make his guests, no matter how
ordinary they are, feel at ease. A great student of management, he knew all the
SWOT[2]
stuff at his fingertips.
Tan Sri Lim Goh Tong told
me this one morning over tea at Genting. TKS was first introduced to him when
Tan Sri was having some difficulty with his tax returns. He had certainly
contributed a great deal to the growth of Genting. Essentially a doer, TKS was
able to help convert Tan Sri Lim’s dreams into reality. But with or without TKS,
Genting would always be formidable under Tan Sri Lim.
The exposure TKS had in
Harvard must have been a watershed in his career. Famous for its case study
method of imparting entrepreneurship into bright-eyed mavericks, Harvard
Business School, among other things, teaches the use of high-sounding jargon
and the art of “getting things done.”
TKS saw business as a big
jigsaw puzzle – you must have all the pieces to form a picture. He had had big
visions for the Chinese community. But what happened to M-Purpose? And what
about Matang, Aik Hua and P’ng Hua? He was billed as the financial wizard of
the time. But having interacted with him before, I came off very unsure of the
depth of his wizardry.
* * * * *
‘R’ and ‘L’ are used interchangeably by some
Chinese when pronouncing English words. Wizard and lizard also
sound quite alike. Maybe it was a lizard they had in mind when they said
“wizard.” Was the Singapore Airlines disaster in Taipei’s Chiang Kai-shek
airport a result of this interchangeability – R- or L-Runway?
* * * *
*
I had the opportunity to meet up with TKS a few
times during the last couple of years, thanks to a university mate, who is now
a golf kaki of TKS. He is as charming as ever!
End
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