Tuesday, August 7, 2012

UNISEL - Talam Debt Recovery Revisited Part 2 Tony Pua's Magic Figures

This is a follow up to my previous post.

The Sundaily reported Selangor "MB: Unisel has insufficient funds to pay hostel management" is reproduced verbatim -
SHAH ALAM (Aug 6, 2012): Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim today admitted that Universiti Selangor (Unisel) owes Jana Niaga Sdn Bhd (JNSB), which builds and manages the university's hostels, almost RM15 million, Berita Harian reports.

Abdul Khalid, who is also chairman of the university's board of directors, said earnings by the university were only enough to cover the salaries for its professors and lecturers as well as administrative costs.

"Unisel does not have enough money to finance the costs of running the hostels which amount to RM200 million.

"The state government will deal with the debts," Abdul Khalid said, adding that the accommodation fees paid by students were not enough to cover all the costs.

"The state government has already instructed the auditors to complete Unisel's financial report," he said, adding that contents of the report will be made known after it is examined.

Meanwhile, JNSB residents division head Noor Ashikeen Mohd Nor said the hostel management office was closed during registration because the staff have not been receiving their pay in a long time.

"We have no intention to cause any trouble, and appeal to everyone to understand the company's burden of failing to pay its staff, especially when it's only a few weeks away from the Aidilfitri," said Noor Ashikeen.

Selangor Umno deputy chairman Datuk Seri Noh Omar had previously accused Unisel of owing JNSB close to RM15 million. The Malay daily had earlier reported that hundreds of Unisel students were forbidden from entering hostels managed by JNSB and forced to sleep in the surau or bunk in with friends.

Tony Pua in defending the Selangor State Government and denying that the debt recovery was not a bailout of Talam Corp had this kind of statements, the kind you would find in the DAP member of parliament as Chairman of his failed business annual reports -
This means that MBI will do the collection for the above debts amounting to RM392 million directly from Talam.
Then he goes on to say -
By adding RM379.2 million to RM12.7 million, Talam would have settled in full its debts of RM392 million.This means that MBI had collected RM392 million worth of additional cash and assets as part of the exercise.

I am sure you too must be puzzled.

But do you see the spin? I won't explain if you don't. Okay, I will explain with my basic accounting knowledge.

In the MBI books the amount owed by Talam Corp would be RM392 million as current asset. Assuming MBI has the RM266.2 million and RM30 million cash in bank (payment to free encumberences), it means MBI has cash in bank totalling RM296.2 million. MBI therefore will have a total of RM688.2 million cash in bank and current assets in it's books.

Talam pays cash RM12.7 million to MBI. This means the current asset is reduced to RM379.3 million but cash in bank increases to RM308.9 million. The total remains the same at RM688.2 million in MBI books.

Now when Talam Corp sells land (termed disposal) RM676 million to MBI, the MBI book will show no more owing by Talam Corp, meaning current asset is RM0. MBI pays Talam Corp bankers the RM296.2 million (to free encumberences) which means cash in bank is now reduced to RM12.7 million but MBI has asset in the form of land worth RM676 million. Therefore the MBI books will now show cash in bank and assets worth RM688.7 million a net increase of - RM500 thousand (Ringgit Malaysia Lima Ratus Ribu sahaja).

So where is the "RM392 million worth of additional cash and assets" that YB Tony Pua is talking about?

Brilliant Tony Pua also says -
In fact I’m completely stunned because surely he could have worked out that even though Talam managed to “settle” the RM266 million outstanding with their bankers for the loans they took for the properties, Talam gave up RM676 million worth of assets to MBI in return?  And based on the Mathematics we learnt in school, I believe RM676 million is far larger than RM266 million.
As for Talam Corp and the issue of bailout, did Talam Corp actually lose out? RM676 million worth of land, for what it's worth pun intended? Well, you own some land and you need a loan from a bank, to buat business or jolly katak, just take it from there.

Is it any wonder the Mentri Besar of Selangor has a problem to settle UNSEL's debt to Jana Niaga Sdn Bhd, he must have misunderstood Tony Pua when he said they had "RM392 million worth of additional cash".

Today the Star reported "Question RM1bil Talam deals, PR voters urged" and quotes Barisan Nasional coordinator, Datuk Seri Mohd Zin Mohamed. -
Tan Sri Khalid Ibrahim has only to answer whether the RM392mil owed to the three GLCs Universiti Selangor, Permodalan Negeri Selangor and SAP Holdings Bhd by Talam has been repaid, it's as simple as that,” he said.
and alluding to the DAP,
He said while the mentri besar and PKR leaders had chosen to remain silent, “it was ironic that DAP leaders are making a fool of themselves with statements that showed their ignorance.”
Exactly my sentiments where YB Tony Pua is concerned.

As for Datuk Seri Mohd Zin's query, it could be that he knows something we do not. The Selangor MB Tan Sri "Khalid: MBI recovered RM302m from Talam" had confirmed "The PKR-led Selangor government, through Menteri Besar Incorporated (MBI), has recovered RM302,711,391 in debts from Talam Corporation"

But it begets the question since according to DAP MP Tony Pua "Menteri Besar Incorporated (MBI) legislated to takeover the debts Talam owed to UNISEL RM255 million" and "through Menteri Besar Incorporated (MBI), has recovered RM302,711,391 in debts from Talam Corporation", why can't RM15 milion which is a very, very small fraction of the amount recovered from Talam Corp that was owed to UNISEL, be settled immediately?

After all, the Selangor state government, this according to another DAP MP YB Hannah Yeoh, Selangor cash reserves hit RM1.9 Billion.

Or YB Tony Pua can come out with more magic figures and hey presto no more UNISEL debt.

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