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Why should Petronas be the exception to the rule?

I refer to the letter Why Petronas should not report to parliament .

I must preface my comments on the issue of Petronas and accountability with the notation that Hassan Merican, as acting chairperson, president and CEO, has a sterling world-wide reputation as a no-nonsense CEO who has transformed Petronas into an international success story all Malaysians can be proud of. And in that process, he has built a team of performers (staff) who have, over the years, served the nation extremely well.

Having said that, on the one hand, the writer compares Petronas with a sendirian berhad (private limited company) with its board of directors and shareholders. On the other, she laments that: ‘Imagine a company with 222 directors on its board of directors. The phrase 'too many cooks spoil the broth' comes to mind. By the time the management is finished presenting to the directors, it would have no time to make any money!’

This, of course, doesn’t work. The writer makes that classic error in equating the directors of a company with its shareholders. The 222 MPs in parliament are in the writer’s analogy, directors, not the shareholders who ultimately own the company and have the power to 'hire and fire' the entire board, if it comes to that.

Having got the analogy wrong, the writer then makes that quantum leap of an assertion, that 'paradigm shifting' way of out-of-the-box thinking promoted by a former leader, that public (read shareholders') interest and welfare would be better served by the CEO of Petronas reporting to one man, in this case the PM, as provided for by legislation that came into effect in 1974 in the corporatisation of Petronas.

The writer seems completely ignorant of the due process by which the government is held accountable for its financial performance. All government departments, ministries, statutory bodies and state governments ultimately report to their CEO, the PM. Their accounts and financial statements are audited by the auditor-general whose report is then submitted to the Public Accounts Committee (PAC) for action against recalcitrants and eventually to Parliament.

These are all reports and documents that are available to any member of the public, the shareholders. Then pray tell us, why should Petronas be the exception to the general rule?

In the wake of the mega-billion fraud and embezzlements at Enron, Global Crossings, Tyco, Bank of Paris, Barrings and relatively smaller but nonetheless significant shenanigans at Transmile, and one or two more companies at home in the last year, the call for greater transparency and accountability of Petronas' could neither have come at a more appropriate moment in Malaysia's corporate history, nor should its urgency be underplayed.

Without exception, the debacles at some of the largest corporations in the world and at home have resulted from criminal acts committed by management at the highest levels, despite the presence of legions of 'demon' internal and external auditors and top management reporting to '222 directors.'

So how then are the twin aims of transparency and accountability achieved in the case of Petronas by reporting to one person, thereby surely guaranteeing that the entire matter will definitely be politicised? No?

Were the past bailouts of Bank Bumi, UEM, MAS, MISC etc, the setting up of Prasarna and allocations for Putrajaya, Cyberjaya, Twin Towers, KLIA, KLCC, KL Tower and contracts awarded by direct negotiations subject to parliamentary approval first?

Clearly, by the extreme practice of politicisation, the spending of billions of ringgit of public funds bypassed the purview our '222 directors'. Who made these decisions, Petronas or the government? We have no idea as to who to hold accountable for these billion ringgit decisions. Why is one person holding all top three positions at Petronas?

It is very clear from conflicting views expressed by ministers, MPs and self-appointed 'experts' and commentators that none have a clear understanding of how much oil reserves we have, how oil subsidies work or about the pricing mechanism for diesel and petrol.

This is largely because few have access to the information which I would suggest is of paramount importance in managing our economy. Most Malaysians are shooting in the dark.

I, for one, do not blame Petronas for the recent 40% hike in petrol pump price. Clearly, it was a government decision implemented hastily without consideration for the adverse effects and suffering it would visit on the majority of our populace. Clearly too, it would be ridiculously to expect Petronas, as a profit-maximising corporation, to stand firm against the removal of subsidies, which would boost its bottom-line.

We must hold the government accountable for decisions that impinge on the economy, given also that 65% of Petronas' profits find their way to the government's coffers through tax and dividends.

Equally, leaving the matter of Petronas' accountability in the hands of one person is surely courting disaster. While we do not question the integrity of Petronas' management, from a long-term perspective, it would not be in our, the shareholders, interest, to leave the matter of Petronas' audit, management review, reports and financial statements out of the hands of the auditor-general and that of parliament.

And if the government pays no heed to our fears and concerns? Why, we'll look forward to the next general elections for sure.

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