PricewaterhouseCoopers Report on
Mismanagement of Proton Holdings should be tabled without censorship
together with government response in Parliament allowing for full
parliamentary debate on August 21
by Lim Kit Siang
Report(PwC) on Mismanagement of Proton Holdings for the past 10 years from
1996-2005, which was the scoop of The Edge magazine on Saturday, should be
tabled without censorship, together with government response, in Parliament
allowing for full parliamentary debate on August 21 when MPs reconvene for
the long budget meeting.
As stated by
The Edge exclusive report entitled, “Proton’s CAN OF WORMS”, PwC report gave
a litany of mismanagement running into billions of ringgit – with some
controversial projects implemented without proper consultation or consent,
billions in expenditure spent without indepth discussion, while the board
was not even aware of legal problems.
instances of poor corporate governance in Proton, when major policy matters
were decided by the Proton’s management or by the boards of the various
subsidiaries and not brought up to the board or it was notified late,
- The deal
to buy UK-based car maker Lotus, acquiring a 63.7% stake in Lotus Group
International Ltd (LGIL), was signed on October 16, 1996. It was only
presented to Proton board a month later, on November 27, 1996.
- Not clear
if budget of Tanjung Malim plant was tabled to board for approval between
1996 to 1998.
- Board not
informed of material legal cases. Example is a claim by Proton Automobile
Deutschland for RM162 million. A RM34.4 million settlement was reached by
former CEO of Proton without informing the Board.
tied up with Tracoma Holdings Bhd to assemble cars in Indonesia. Proton
financed Tracoma’s 49 per cent investment in the venture. Proton’s board
was asked to ratify the financing agreement after the loan was drawn
down. Currently, there is no legal agreement for the loan and the
recoverability of the financing (about RM1.4 million) is still uncertain.
suggests that management misrepresented potential of Italian
motorcycle-maker MV Agusta, saying it would generate positive cashflow
from 2004 onwards. But Agusta had needed almost RM90 million in financing
states that from April 1, 2002 to July 31, 2005, Proton’s plants in Shah
Alam and Tanjung Malim experienced a total of 41,965 minutes of shutdown
caused by vendors. The vendor responsible is required to pay RM3,800 for
every minute of shutdown – working out to RM205.76 million liable by
vendors assuming they were responsible for all the shutdowns. No evidence
Proton ever imposed fines on vendors. The main reason given was that the
vendors would be crippled financially. Termination of a vendor’s contract
would result in more severe downtime, as it would take time to find a
- PwC also
found that the total amount owed to Proton Edar by its dealers and Edaran
Otomobil Nasional (EON) amounted to RM709 million as at end-July 2005. A
substantial number of Proton Edar dealers, who together owe RM409 million
to Proton Edar, had exceeded their credit limit. STB Auto, a Proton Edar
dealer, sold the most cars in FY2005 (2,451 units). However it is also the
largest debtor with debts of RM12.7 million, which is more than its
granted credit limit of RM9 million.
investments in China via Goldstar Proton Automobile Company (GPA) and
Proton Automobile China Ltd (PACL) involving problematic expenditures
running into tens of millions of ringgit.
It would appear that the PwC
investigation and report had been drawn up without seeking the
co-operation of the Proton CEO during the operative period,
Tan Sri Tengku Mahaleel Tengku Ariff and the
Proton Adviser in the last two years of the probe, former Prime Minister Tun
Dr. Mahathir Mohamed.
If this is the
case, then a full and comprehensive inquiry should be held to get to the
bottom of the Proton finances and mismanagement mega-scandal, warranting the
establishment of a Royal Commission of Inquiry with powers to summon,
without fear or favour, everyone who had been involved with the sorry
history of Proton right from the very first day – whether Mahathir, Mahaleel
or the previous Proton Board members and management personnel..
Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic
Planning Commission Chairman