Liong Sik should explain how he going to assume responsibility for the Enron-type of RM530 million corporate accounting fraud in Transmile which he heads as Chairman

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Media Statement (2)     
by Lim Kit Siang  
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(Petaling Jaya, Saturday) : Former MCA President and Cabinet Minister, Tun Dr. Ling Liong Sik was quite active in the past month, as a search with The Star archives would produce eight news items featuring him, including one today at the ceremony at the Universiti Tunku Abdul Rahman (Utar) campus in Kampar yesterday planting a Blue Pine tree. 

But he has been very reticent on what has been described as the biggest accounting and corporate scandal in recent times in Malaysia, even likened to the accounting fiasco of Enron and Woldcom, although Ling is the Chairman of Transmile Group Bhd – the company which had overstated its revenue by RM530 million. 

According to a special audit carried out by Moores Rowland Risk Management Sdn. Bhd, Transmile  made pre-tax losses of RM126 million and RM77 million for FY 2006 and FY 2005 , respectively, instead of pre-tax profits of RM207 million and RM120 million as originally reported. 

This means that Transmile had overstated its revenue by RM197 million in 2005 and by RM333 million in 2006 – a total of RM530 million. 

Pos Malaysia & Services Holdings Bhd has warned that its earnings for the financial year ended Dec. 31 may be affected by the reported overstatement of Transmile’s sales revenue as the postal group owns 15.3% of Transmile. 

I am surprised that Pos Malaysia & Services Holdings Bhd has not admitted that its earings for the financial year 2005 could also be affected. Pos Malaysia reported a net profit of RM160.2 million for 2006 and RM145.3 million for 2005. 

As former senior Cabinet Minister, Malaysians expect Liong Sik to be a model of a responsible corporate player.   

For this reason, Liong Sik should be more forthcoming and make a clean breast of his responsibilities and remunerations including all forms of allowances which he had drawn from Transmile in his capacity as Transmile Chairman. 

Transmile closed 32% lower at RM6 yesterday from its RM8.90 pre-suspension level last Monday, causing massive losses to small-time investors. 

Liong Sik should explain how he is going to assume responsibility for such a Enron-type of corporate fraud in the company which he heads as Chairman. 

DAP MPs will be raising the Transmile fraud in the next Parliamentary meeting beginning on June 18, demanding to know (i) how the government is protecting the innocent investors from the Enron-type of corporate accounting fraud in Transmile; and (ii) the lessons learnt from the Transmile scandal.

(2/6/2007)