Will we ever learn from rough seas and sunk costs?

Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime – Chinese proverb

TUNA doesn’t often get caught in the crossfire of criticism against the government and its agencies, but that’s exactly what’s happening. This week, politicians and bloggers brought the glare of scrutiny on two government-linked companies (GLCs), both set up several years ago to grab a slice of the lucrative global tuna market.

In their blogs, Tun Dr Mahathir Mohamad and businessman Syed Akbar Ali targeted Langkawi Tuna Corp Bhd, a wholly-owned subsidiary of Khazanah Nasional Bhd.

Langkawi Tuna was meant to undertake tuna farming in Bukit Malut, Langkawi. The business model was to catch yellowfin tuna in the Indian Ocean, transfer the fish to cages and tow the live haul back to Langkawi, where they would be fattened up over a few months before they were sold. It is understood that about RM50mil was injected into the company as paid-up capital and advances.

In a deal reportedly worth A$4.3mil (RM12mil), it bought four vessels from Australia, including a 30-year-old tuna purse seine boat. However, insiders say the project was a non-starter mainly because Langkawi was too far from the fishing grounds and its waters were not optimal for tuna farming.

There’s no mention of Langkawi Tuna on the Khazanah website, and it’s not among the three key holdings and initiatives in the agriculture sector that were listed in Khazanah’s annual review 2010. It’s understood that the company has ceased operations. Dr Mahathir called it a “failed venture” and a “failed experiment”.

The other GLC is Malaysian International Tuna Port Sdn Bhd (MITP), which was awarded a 32-year concession to manage, operate and develop a tuna port at Batu Maung in Penang. It’s a 60:40 joint venture between Bindforce Sdn Bhd (controlled by Sabah businessman Datuk Annuar Zaini Binyamin) and the Fisheries Development Authority of Malaysia (LKIM), a statutory body under the Agriculture and Agro-based Industry Ministry (MOA).

MITP’s woes have largely stemmed from delays in the port’s final phase of construction, leading to huge cost overruns and a strain on the company’s cash flow. Last November, it failed to pay a profit payment on its RM240mil Islamic bonds.

The bond issuance was backed by a letter of support from the MOA, and this has raised the question whether the Government will now have to bear MITP’s obligations to the bondholders.

Since misery loves company and in keeping with the fisheries theme, let’s bring in a third initiative that has run aground – Konsortium Perikanan Nasional Bhd (KPNB). As the name suggests, the company was formed to spearhead the development of the local fisheries industry.

Says the MOA website: “The mandate of KPNB is to implement effective measures towards the modernisation of fishing fleet, improvements in fish processing, and efficient marketing and distribution activities. In turn, KPNB is expected to act as a catalyst to the growth in investment opportunities of fisheries industry activities.”

It appears that KPNB has debt problems as well. On March 4, it defaulted on a credit facility of RM7.56mil taken from Bank Pertanian Malaysia Bhd.

In addition, one of its indirect shareholders, Oilcorp Bhd, are in financial trouble too and was classified a PN17 company last September.

According to an April 29 announcement to Bursa Malaysia, Oilcorp’s 70% subsidiary, Layar Visi Sdn Bhd, has a 51% stake in KPNB. Oilcorp’s latest audited accounts indicate that the auditors’ report on Layar Visi’s financial statements contained “a disclaimer of opinion on material uncertainties on its ability to continue as a going concern”. Layar Visi has invested RM17.85mil in KPNB.

A common thread with these three fisheries-related projects is that they were part of a wave of enthusiasm for the so-called new agriculture, which involves large-scale farming, the broader use of modern technology (particularly biotechnology and information and communications technology), and the participation of entrepreneurial farmers and skilled workforce.

The Ninth Malaysia Plan embraces new agriculture as a way to boost the sector’s contribution to the Malaysian economy via improved productivity, more emphasis on food production, greater innovation, a deeper capacity to generate wealth and higher exports. The idea was to make agriculture the country’s third engine of economic growth, after manufacturing and services.

These days, it’s hard to hear anybody promoting agriculture with the same gusto and optimism. That in itself is not necessarily a bad thing. Different times and circumstances often call for different strategies and emphases. But the tragedy with Langkawi Tuna, MITP and KPNB is that so much has been spent and yet, there’s so little to show for it. What started out as noble policies have ended up as expensive flops.

There are certainly lessons of a lifetime to be learnt here. Hopefully, we’re not too busy fishing for short-term opportunities to pay attention.

OPTIMISTICALLY CAUTIOUS
By ERROL OH

 Deputy executive editor Errol Oh has no patience for fishing... and ill-conceived and poorly executed businesses.

Google misses profit forecast as costs surge

SAN FRANCISCO: Google Inc missed Wall Street’s quarterly profit estimates for the first time in two years after a spike in expenses offset a 24% revenue jump, but it vowed to keep investing in new businesses to drive long-term growth.

Shares of the Internet search engine leader fell almost 4% on worries about rising costs as it spent heavily on research and development (R&D) and hired aggressively to expand into new products and markets in hopes of maintaining the growth momentum Wall Street looks for.

Google eased worries that lingering economic uncertainty from the European debt crisis could take a toll on its business, and stressed that it planned to continue to aggressively invest in new growth opportunities.

A file picture shows a Google worker riding past the company’s headquarters in Mountain View, California. — AP

“They’re throwing more money into R&D than people were expecting and a little bit less into sales and marketing,” said BGC Partners analyst Colin Gillis.

“Google has been pretty clear that it’s going back into investment mode. They added 1,200 people in the quarter, which means more expenses are going to kick in in September.”

Google said the spending was concentrated on a handful of initiatives it believed could grow into billion-dollar businesses, providing diversification from the search advertising that now accounted for the lion’s share of revenue.

Finance chief Patrick Pichette cited Internet display advertising and the nascent smartphone advertising market as some of the key areas for investment, and defended the spending amid the economic uncertainty.
“It’s while everybody is cautious that you need to pounce,” Pichette said in an interview with Reuters on Thursday.

Pichette added that Google, which generated 52% of its second-quarter revenue outside the United States, had not suffered any ill effects amid investors fear that an economic slowdown could crimp advertising spending.

Thursday’s results were a rare outright earnings miss – Google’s first since the second quarter of 2008. The company posted net income of US$1.84bil, or $5.71 a share, in the second quarter – up from US$1.48bil, or US$4.66 a share, in the year-earlier period.

Excluding items, Google’s EPS was US$6.45, below the average estimate of US$6.52, according to Thomson Reuters. Net revenue, which excludes costs that Google shares with website partners, was US$5.09bil, above the US$4.98bil expected by analysts polled by Thomson Reuters. — Reuters

Bankrupt? Your personal details will be on the involvency register for all to see

Whether you are Neil Morrissey or Jo Bloggs, if you have been declared bankrupt or have an IVA, your name, address and birthdate will become public knowledge

 

If you're bankrupt and the bailiff is after you, the neighbours just need log on to find your personal details. Photograph: Andy Hall for the Guardian

You suspect one of your neighbours has fallen on hard times. The expensive car that once stood in his drive has disappeared, and he may even have gone bankrupt – but can you be sure?

Or perhaps you are thinking of hiring a local builder. He comes well-recommended, but you heard a rumour that he has got into financial difficulties.

Or maybe you're in the process of renting out a property, and want to be completely sure that the tenant you have provisionally chosen doesn't have any financial skeletons hiding in his closet.

There is an official website that may provide an answer to all three scenarios – and many others - but most people probably don't know it exists.

The free-to-use individual insolvency register (insolvency.gov.uk/eiir/) allows anyone to check, quickly and easily, if someone is bankrupt or has taken out an "individual voluntary arrangement" (IVA) – a less drastic alternative to bankruptcy that allows a struggling borrower to restructure their debts.

The website is run by the Insolvency Service, which is required by law to maintain a public register of bankruptcy and related information. A spokesman says the website allows anyone to check the status of someone they might be thinking of doing business with, or are planning to offer credit to. Naturally, the website is manna from heaven for nosy neighbours and curtain twitchers.

All you need to search the database is someone's surname, or even part of their surname. The search can cover the whole of England and Wales, or the area covered by a particular Insolvency Service office.

Once you have keyed in the details, the site immediately throws up a list of people with that name. If it's a more common name, it will be several pages long. As well as their full name, you are provided with their full address, date of birth, the category of case (eg bankruptcy, IVA or debt relief order) and, if relevant, the court dealing with their case.

"We are a country of busybodies, and we like to check up on who we think might be bankrupt," says Mark Sands, national head of bankruptcy at business advisers RSM Tenon.

RSM Tenon has analysed the register's data and found that when it comes to who is going bankrupt, the fastest-growing age groups are the youngest (the under-25s) and the oldest (the over-65s). Equally intriguingly, in 2009, the most common first name for a man going bust was David, and for a woman it was Susan.

Arguably, one of the reasons why it is important to have an easily accessible online register is that, as part of recent changes to the law, details of people who are declared bankrupt are no longer automatically advertised in the local newspaper. Experts say that in most cases, these details will now not appear in the local press unless there are particular circumstances.

The famous don't receive any special protection. A search of the register shows that Neil Morrissey of Men Behaving Badly fame entered into an IVA in September 4, 2009, while EastEnders and I'm a Celebrity star Joe Swash is listed as bankrupt since October 20, 2009. In each case, the entry lists their date of birth and home address.

In reports last September, Neil Morrissey said that he went into debt after a property company he invested in collapsed owing millions, while Swash told the Daily Mail his bankruptcy was a mix-up over a tax bill.

What goes on the online register?

It contains details of bankruptcies that are either current or have ended in the past three months; current individual voluntary arrangements and "fast track" voluntary arrangements; debt relief orders; and current bankruptcy restrictions orders and undertakings. It doesn't include details of disqualified directors, company insolvencies, or insolvencies in Scotland or Northern Ireland.

How much does it cost to search the register? Nothing – it's free to use.

How long do people's details remain there? In the case of bankruptcy, for three months after the date of the individual's discharge from bankruptcy. They are removed earlier if the bankruptcy is annulled. IVAs remain "until completion, revocation or the failure of the arrangement".

Why are my personal details being made available – that's an invasion of my privacy? The Insolvency Service says that, by law, it has to keep a public register of such information. It adds that this is used for purposes such as debt recovery, screening for employment and checking people's creditworthiness.

But why should my full home address be shown? "The personal details regarding date of birth and address are there so inquirers can be more certain that the information they seek relates to the correct person," says the Insolvency Service. It adds that this is especially important if someone is looking for an individual with a common surname, such as Smith or Jones.

There are instances where someone's address might be withheld – for example, if they have a violent ex-partner. But they would have to seek permission from the courts for their address details to be kept off the register.

Where can I get details of bankruptcies in Scotland and Northern Ireland?
In the case of Scotland, contact: The Accountant in Bankruptcy, George House, 126 George Street, Edinburgh EH2 4HH. Tel: 0131 473 4600.

For Northern Ireland, contact: The Insolvency Service, Fermanagh House, Ormeau Avenue, Belfast BT2 8HY. Tel: 02890 251441.

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