See: Government must give full disclosure on Sacofa sale
Posted on April 25, 2015, Saturday
KUCHING: Full disclosure on the rationale to dispose of the controlling interests in Sacofa Sdn Bhd (Sacofa) to Cahya Mata Sarawak Berhad (CMS) and justification of the purchase consideration was requested by See Chee How (DAP-Batu Lintang) during his debate on the Yang di-Pertua Negeri address yesterday.
See opined CMS’s acquisition, although primarily a commercial deal, had actually touched on the qualities of integrity of the government and public officials because the transaction involved the selling of a prized public asset.
“The selling of public assets, particularly strategic assets, is a politically fraught endeavour,” said See.
In view of the fact that Safoca has, in its record, deployed affordable high speed broadband connectivity to many rural and under-served areas in the State, See posed three questions to ensure the deal was for the good of the public besides the price consideration.
Firstly, whether after the acquisition, the performance of government policy priorities in the state would continue to be taken care of by the company.
The second question was how the government could assure that Sacofa would continue to provide affordable high speed broadband connectivity to the rural and under-served areas.
And finally, the state had to assure there would be no price hike and without compromising on the continuous expansion of the telecommunication services.
He said Sacofa is vested with various powers detrimental to the telecommunication operations including regulatory power over the communication infrastructure and determined the charges and charging principles.
“By disposing the controlling interests in Sacofa to a private entity, it will be strange, even bizarre, that the company continues to exercise such regulatory power in Sarawak, in the industry. Even if the state allows it, will the federal ministry and MCMC allow it?” See questioned.
He added the deal should not be a “willing seller willing buyer” transaction only as the chief minister, the government and relevant public officers, including assemblymen, would be accused of failing their obligations to practise honesty and integrity towards the state and the people whom they were accountable to and responsible.
See also hoped the state government would seek the assistance of the National Audit Department to audit and prepare an acquisition analysis on the proposed acquisition to be tabled and reported in the august House for its approval of CMS’ proposed acquisition of Sacofa.
“I have noted the advice of Speaker Datuk Amar Asfia Awang Nassar that the Second Minister of Finance (Dato Sri Wong Soon Koh) will answer questions and address matters related to the sale of Sacofa,” said See.
He hoped Wong would be transparent with the process of the acquisition and clarify in the DUN the discussions, negotiations and decisions made from the time the idea of this acquisition.
“We are certainly hopeful and await the Honourable Minister’s (Wong) answer that the purchase consideration was not based solely on price-earning ratio consideration.”
He also questioned whether due diligence was undertaken by the state government before the conditional agreement on the sale of Sacofa was signed, and who was commissioned to conduct and complete the study.
According to him, in other countries that genuinely practised parliamentary and legislative supremacy, the legislative instituted committee would have required the officers, including the State Financial Secretary, who is also the chairman of the board of directors in Sacofa, to appear and explain the proposed acquisition.
Sacofa Sdn Bhd, incorporated in 2001, is a `one-stop centre’ that provides telecommunication infrastructure to telecommunication service providers in Sarawak.
Sacofa, said See, is substantially owned by the state.
Besides the 70.5 per cent shareholdings held through the State Financial Secretary Incorporated, state vehicles Sarawak Information Systems Sdn Bhd has a 7.6 per cent equity and Yayasan Sarawak 6.8 per cent equity in the company.
Celcom Axiata Berhad is the only private entity that holds 15.1 per cent shareholding in Sacofa.
For the financial year ending 2011, 2012 and 2013, Sacofa’s revenue were respectively RM140.8 million, RM155.3 million and 153.4 million, while the company’s pre-tax profits for the three years were RM69.4 million, RM84.6 million and RM66.9 million.
Sacofa has also registered post-tax profits of RM66.93 and RM51.64 million for the financial years ending 2012 and 2013. The net profit is at 33 per cent of its revenue each year.
“More than RM150 million net profit in 3 years and 85 per cent of that belong to the state. Imagine what we can do with that RM43 million each year for rural development projects, scholarship for our children and care for the needy,” added See.
He also said with the purchase consideration for 50 per cent shareholding in Sacofa fixed at RM186.79 million, the figure was only 7.23 times the price-earning ratio, which he said was to too low in comparison to the valuation of other comparable companies.