And Dr Mahathir is still grumbling

By MT Webmaster Last updated Jan 11, 2016

Now that is what a rationalisation and debt-reduction program or a turn-around exercise is all about. So what is it that 1MDB did that is not normally done by all turn-around managers? I did the same thing 30 years ago. Lee Iacocca did it in 1979 when he turned Chrysler around. And this is still being done today, in case Dr Mahathir does not know.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

“The Attorney General (AG) will ignore the findings of the Malaysian Anti-Corruption Commission (MACC) on the RM2.6 billion political donation and SRC International’s RM42 million,” said Tun Dr Mahathir Mohamad. Dr Mahathir then added that what 1MDB has just announced cannot be called ‘rationalisation’.

The rationalisation plan introduced by 1Malaysia Development Bhd (1MDB) President Arul Kanda Kandasamy in settling the firm’s debt is not really a plan, Dr Mahathir said in an interview with Free Malaysia Today yesterday.

He said the measures presented were merely a method of debt repayment and added, “There is no rationalisation. If they think rationalisation means just the repayment of debt that is not rationalisation. It is the loss of money that we must rationalise.”

It looks like Dr Mahathir is pre-empting what is going to happen. He knows that the allegations he made were totally off the mark and he wants to cover his back by saying that the AG is going to ‘ignore’ the ‘findings’ of the MACC.

The truth is the MACC is going to come out with its report that no crime has been committed and that the allegations against 1MDB and Prime Minister Najib Tun Razak are not true after all. And based on this report the AG will definitely close its file on the matter.

So, to pre-empt this and to not look silly, Dr Mahathir is ‘forecasting’ that the AG is not going to take action on the report by the MACC. It will, therefore, appear like Dr Mahathir was correct all along (that a crime had been committed) but that the AG is ignoring this ‘crime’ and is not taking action.

When that happens Dr Mahathir can then turn around and say, “I told you so! I knew this would happen.”

Yes, Dr Mahathir knows this is going to happen. But it is going to happen for other reasons and not for the reason being suggested by Dr Mahathir. Dr Mahathir has also pooh-poohed 1MDB’s rationalisation plan. This is because he does not understand finance and that is why there were so many failed projects during his 22 years as Prime Minister.

In June 2015, 1MDB presented its rationalisation and debt-reduction plans to the Cabinet and announced that it would be completed by December. And 1MDB has done that. The only thing is Dr Mahathir does not understand what ‘rationalisation and debt-reduction’ means.

Definition of ‘Rationalisation’ — Rationalisation means to reorganise a company in order to increase its efficiency. This reorganisation could either be an expansion or a reduction of the company’s size, a change of policy, or an alteration/modification of its strategy.

The Cambridge dictionary defines rationalisation as meaning to make a company, its way of working, its plans and strategy, etc., more effective. This can also be achieved by combining or terminating certain activities/businesses or by cutting its loses instead of sending good money after bad.

In that sense 1MDB has met its rationalisation and debt-reduction plans, although Dr Mahathir says otherwise. Those who understand what ‘rationalisation and debt-reduction’ means, though, would understand this. Cutting your loses and to stop sending good money after bad is a common strategy in a rationalisation and debt-reduction program.

Some call this ‘turning around’ a company. You stop the slide or stop it from ‘bleeding’. Once the slide has been arrested and the company is no longer bleeding you then launch phase two of the program, which is to bring it to break-even and then to profitability.

I was once put in charge of turning around a company. The company’s accumulated losses had exceeded its paid-up capital so technically it was a bankrupt company.

I looked at the top three ‘loss centres’, which represented 70% of the problem. It took one year to attack these three areas and to reduce the company’s losses down to a manageable level. We closed down loss making divisions and retrenched surplus staff. We recruited ‘young blood’ at lower salaries and who were far more productive than the lazy ‘old dogs’.

I then looked at the company’s fixed assets, which had been purchased 30 years before that and which had never been re-valued and were still listed in the books at purchase price. I then sold off these assets at market value and wrote back the profit into the books. So the company was no longer technically bankrupt because the profit from the sale of the assets wiped out the accumulated losses.

We then sold off that company and the profit we made more or less covered the cost of the purchase of its listed parent company. In short, after the rationalisation and debt-reduction exercise had been completed — which included ‘asset stripping’ and the sale of its ‘turned around’ subsidiary — we got the listed parent company free-of-charge.

Anyway, Tony Pua and Rafizi Ramli are still barking and are beginning to sound like Muhyiddin Yassin’s echo. It looks like Tony and Rafizi have replaced Khairuddin Abu Hassan as Muhyiddin’s barking dog. Apparently they are not too happy that 1MDB has proven them wrong. And that is why they are still foaming at the mouth and are barking away.

What pathetic creatures these people are. They should accept the fact that they lost and move on. Or is it that these two also do not understand what a rationalisation and debt-reduction program or a turn-around exercise means, just like Dr Mahathir and Muhyiddin?

Raja Petra Kamarudin RPK