Sime Darby sacks CFO
Wednesday June 11, 2008
By HANIM ADNAN
KUALA LUMPUR: Sime Darby Bhd on Monday sacked its chief financial officer (CFO) and another senior executive following an in-depth inquiry into RM120mil losses from crude palm oil (CPO) futures trading.
The services of group CFO Razidan Ghazalli and group vice-president (1) of downstream and biofuel Muhamad Mohan Kittu Abdullah were terminated with immediate effect.
In a statement yesterday, Sime Darby said the trading losses at Golden Jomalina Food Industries Bhd, a subsidiary of Golden Hope Plantations Bhd (GHope), were discovered in August 2007, several months before the merger of GHope, Kumpulan Guthrie Bhd and Sime Darby.
Shortly after the losses were discovered, KPMG Forensic was engaged to conduct an investigative review of the futures trading operations at Golden Jomalina.
The forensic accountants completed their report and handed it to Sime Darby this year. The issue was deliberated by the group’s board of directors at a meeting on May 28.
After having reviewed the forensic accountant's report and findings by a panel of independent directors set up by the audit committee, Sime Darby’s board determined that the persons concerned had failed to discharge their functions to the standard of care that were reasonably expected of them.
Razidan was GHope’s finance director while Muhammad Mohan was Jomalina’s general manager when the losses were racked up through futures trading between October 2006 and August 2007.
According to a Sime Darby spokesman, appropriate provisions had been made and the group would not have its future profitability affected by the past losses.
He added that measures had been taken to strengthen processes and trading parameters.
“The decision to terminate the services of the two staff members was taken after an extensive process of investigation and deliberation. While it is never a pleasant task to dismiss any personnel, the board felt that the move was necessary in the interest of accountability and to protect stakeholders of Sime Darby,” said the spokesman.
Meanwhile, industry analysts contacted by StarBiz said the RM120mil trading losses would not have an impact on their earnings forecasts on Sime Darby as the group confirmed that it already made ample provisions to account for the losses.
A plantation analyst with a bank-backed brokerage said while the revelation (of the losses) might raise concerns among investors, Sime Darby had made the right decision to make its top staff accountable for the glaring irregularities within the group’s highly diversified operations.
“The group is advocating transparency and issuing a stern warning that irrespective of the rank, none of its staff will be spared from the consequences of irregularities which can keep on cropping up in any big organisation,” the analyst said.
Another analyst concurred that it was a positive move by Sime Darby to reveal the losses rather than to cover up.
“I believe that some plantation analysts since last year have already sensed the irregularities, particularly the losses in the group’s downstream operations, attributing it to the unfeasible biodiesel operation.
“This losses were somewhat overlooked, given the good performance in the upstream plantation operation due to the higher CPO prices,” he added.
By HANIM ADNAN
KUALA LUMPUR: Sime Darby Bhd on Monday sacked its chief financial officer (CFO) and another senior executive following an in-depth inquiry into RM120mil losses from crude palm oil (CPO) futures trading.
The services of group CFO Razidan Ghazalli and group vice-president (1) of downstream and biofuel Muhamad Mohan Kittu Abdullah were terminated with immediate effect.
In a statement yesterday, Sime Darby said the trading losses at Golden Jomalina Food Industries Bhd, a subsidiary of Golden Hope Plantations Bhd (GHope), were discovered in August 2007, several months before the merger of GHope, Kumpulan Guthrie Bhd and Sime Darby.
Shortly after the losses were discovered, KPMG Forensic was engaged to conduct an investigative review of the futures trading operations at Golden Jomalina.
The forensic accountants completed their report and handed it to Sime Darby this year. The issue was deliberated by the group’s board of directors at a meeting on May 28.
After having reviewed the forensic accountant's report and findings by a panel of independent directors set up by the audit committee, Sime Darby’s board determined that the persons concerned had failed to discharge their functions to the standard of care that were reasonably expected of them.
Razidan was GHope’s finance director while Muhammad Mohan was Jomalina’s general manager when the losses were racked up through futures trading between October 2006 and August 2007.
According to a Sime Darby spokesman, appropriate provisions had been made and the group would not have its future profitability affected by the past losses.
He added that measures had been taken to strengthen processes and trading parameters.
“The decision to terminate the services of the two staff members was taken after an extensive process of investigation and deliberation. While it is never a pleasant task to dismiss any personnel, the board felt that the move was necessary in the interest of accountability and to protect stakeholders of Sime Darby,” said the spokesman.
Meanwhile, industry analysts contacted by StarBiz said the RM120mil trading losses would not have an impact on their earnings forecasts on Sime Darby as the group confirmed that it already made ample provisions to account for the losses.
A plantation analyst with a bank-backed brokerage said while the revelation (of the losses) might raise concerns among investors, Sime Darby had made the right decision to make its top staff accountable for the glaring irregularities within the group’s highly diversified operations.
“The group is advocating transparency and issuing a stern warning that irrespective of the rank, none of its staff will be spared from the consequences of irregularities which can keep on cropping up in any big organisation,” the analyst said.
Another analyst concurred that it was a positive move by Sime Darby to reveal the losses rather than to cover up.
“I believe that some plantation analysts since last year have already sensed the irregularities, particularly the losses in the group’s downstream operations, attributing it to the unfeasible biodiesel operation.
“This losses were somewhat overlooked, given the good performance in the upstream plantation operation due to the higher CPO prices,” he added.
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10:38 PM
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