How should we judge a government?

In Malaysia, if you don't watch television or read newspapers, you are uninformed; but if you do, you are misinformed!

"If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing." - Malcolm X

Never argue with stupid people, they will drag you down to their level and then beat you with experience - Mark Twain
Never argue with an idiot, otherwise people won't know which one of you is the idiot.
Since light travels faster than sound, some people appears bright - until you hear them speak.

Why we should be against censorship in a court of law: Publicity is the very soul of justice … it keeps the judge himself, while trying, under trial. - Jeremy Bentham

"Our government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other. " - Ronald Reagan


Government fed by the people

Government fed by the people

Career options

Career options
I suggest government... because nobody has ever been caught.

Corruption so prevalent it affects English language?

Corruption so prevalent it affects English language?

When there's too much dirt...

When there's too much dirt...
We need better tools... to cover up mega corruptions.

Prevent bullying now!

Prevent bullying now!
If you're not going to speak up, how is the world supposed to know you exist? “Orang boleh pandai setinggi langit, tapi selama ia tidak menulis, ia akan hilang di dalam masyarakat dan dari sejarah.” - Ananta Prameodya Toer (Your intellect may soar to the sky but if you do not write, you will be lost from society and to history.)

Saturday, May 30, 2015

Having more assets in value over liabilities does not necessarily mean a company is solvent

PM and Finance Minister Najib seems proud to state that 1MDB has assets worth over Rm51 billion while liabilities total only Rm49 billion, and it follows that the company should have no problem as a going concern.

It is unlikely that after many years as a senior political leader as well as current PM and Finance Minister, he has yet to understand basic accounting statements. It is more likely to fool the public that 1MDB can still meet its financial obligations arising from its huge loans.

To use a simple but kind analogy, it is like living in a valuable house with no income to pay for daily food and drinks. But with the humongous loans, it is more like living with constant fear of loan sharks coming for their dues.

A company is considered technically insolvent when its current assets are less than its current liabilities, because it will fail to pay all liabilities due within a year. Unless it has fixed or other assets which can be sold to meet the shortfall, it cannot be a going concern for long.

1MDB is basically in such a situation or even worse. That it has to rely on selling prized assets to settle loan obligations due, shows its desperate situation despite all the brave fronts put up by its CEO, our PM (who created this big financial mess), and his sycophantic ministers and party leaders.

To know that the assets were practically given by the government and were revalued again and again to cover up shortfalls in earnings, again shows their vain attempts to temporarily fool the public, until the situation cannot be contained and some lands had to be sold.

In the first place, the government should have sold the lands to the highest bidders from the private sectors, instead of trying to create a high profile sovereign wealth fund, and having to face severe criticisms in trying to solve the mess, with likely abuses of powers in doing so. The sale proceeds, had those lands been sold to the private sector, could have been used for building hospitals and schools, instead of paying off huge loans created dubiously. Now, it looks like 1MDB was created with intent to defraud, because of the unsatisfactory explanations given on some missing funds.

Under intense pressure due to loan interest and repayment obligations, PM and his aides will have to spend precious time in trying to help out, using whatever necessary power and influence to save his personal pride and position as PM.

According to E.S. Shankar, who blogs under 'donplayuks' (using thinly disguised pseudonyms but leaving no doubt who and what he was referring to):

'To put it simply, as at 31st March 2014, 1GDB had RM51.4 billion in assets - cash and "investments" - AND RM49 billion of liabilities in bonds, bank borrowings, derivative debts and trade and other creditors. The surplus of net assets audited and reported were therefore RM2.4 billion (51.4 - 49), represented by RM2.4 billion of capital and reserves.

However, the RM2.4 billion in capital and reserves is inflated by RM3.6 billion of paper profits from revaluation of 1GDB's land bank. If we remove this window dressing, 1GDB's assets would be reduced to RM47.80 billion, i.e. by matching original cost of assets with current liabilities. In other words, its liabilities would exceed its assets by RM1.2 billion (49 - 47.8).

More than that, there is a huge probability that a significant portion of 1GDB's "investments" financed by the RM46 billion borrowings, are showing huge permanent loss in values that cannot be salvaged.

So, the real net asset value of 1MDB, due to gross mismanagement, CBT, fraud and looting, may be negative RM30 billion!!'

More:
http://donplaypuks.blogspot.com/2015/05/pm-grossmajib-1gdb-rm51-billion-in.html
Link

No comments: