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| The journey in life is never a straight line (PART 7) Posted: 29 Nov 2012 06:57 PM PST
Ibak had been watching this mafia for quite some time and had decided that enough is enough. He opened up the meter business to the non-cartel members and we managed to squeeze in. Within three years we walked away with RM40 million in business. But I was the most hated supplier because I ignored the mafia and refused to join the cartel in the price rigging. NO HOLDS BARRED Raja Petra Kamarudin When I reflect on my corporate life, I can probably summarise it as 20 years of the 62 years that I have been walking the face of this earth. I became a businessman at age 24 and 'retired' at age 44. Considering that my father and mother died at ages 46 and 47 respectively, I regarded myself as almost reaching the end of my life. Hence, maybe, a change of career was in order. However, I have to admit that my retirement was not actually my choice but the point of frustration that I had reached. When I first started my business in 1974, you could make it with sheer hard work, ingenuity, and plenty of guts to venture into areas where angels fear to tread. However, by 1994, it was no longer about know-how but about know-who. If you were not aligned to those who walk in the corridors of power then the doors would be closed to you. And mere 'alignment' was not enough. There were also the contributions you had to make to various political funds, all to be made in cash and not with traceable cheques. I, too, was not exempted from having to 'buy' contracts. In the beginning it was not too bad. A RM500,000 donation to Umno for a RM30 million contract where you earn at least 8% or RM2.4 million was affordable. You still had some money left in your pocket. But when margins dropped to less than 5% and the commissions (or kickbacks) increased to 10%, it was pointless to continue with that type of business. My wife, Marina, was actually the one who 'pulled the plug', so to speak. As I wrote in the earlier parts of this series, we became 'Born Again' Muslims in the late 1970s and by the early 1980s I was practically a radical Muslim who believed in the Iranian Islamic Revolution and dreamed of such a revolution in Malaysia. I also became closer to PAS, although still very much a 'closet' supporter because of my business activities. I so very much wanted to come out into the open but I would first have to get out of business to do that. Hence it would have been just a matter of time before I made this switch. One day, Marina asked me how we could consider ourselves as true Muslims and at the same time indulge in haram activities. When she said haram activities she meant indulging in bribes and giving money to Umno, the enemy of Islam. What she said made sense but I needed a 'trigger' to spur me into doing the right thing. And that 'right thing' offered itself in the early 1990s. And that story goes as follows. By 1990, I felt that a change of course was required. For the past 16 years we had been acting as a mere dealer, distributor or agent. No doubt not all our businesses were government business -- maybe about 20% or so -- but we were just selling 'other people's products' and, therefore, were at their mercy. We needed a product of our own. I spoke to a friend in TNB and, interestingly enough, he told me that a certain 'mafia' monopolised the electricity meter business and they had formed a cartel and was rigging the price. TNB, therefore, was at their mercy. I then spoke to someone in GE Singapore who gave me a list of all the electricity meter manufacturers in the world. I found that one manufacturer, Schlumberger from France, was not marketing their meters in Malaysia. (There were many others, of course, but Schlumberger was the best amongst them). I flew to Paris and met up with a man named Arman Carlier. I proposed a partnership with Schlumberger to manufacture their meters in Malaysia and to try to break into the TNB market. Arman did not think it was viable. Even 'strong' companies like George Kent (M) Bhd (a company linked to Prime Minister Najib Tun Razak) failed to break into the TNB market. And their meters are actually very good -- Landis and Gyr. So what makes me think we can succeed where others have failed? I told Arman that our meters must be fully manufactured in ASEAN, with maybe 30% of the components locally manufactured in Malaysia -- and the local content to be increased as we go along. We must then 'dive' at least 20% below the prices of the cartel (they all tender at almost the same price with a couple of Sen price difference). I was confident we could demolish the cartel and beat the 'mafia' that was merely importing their meters and doing a 'bolt-and-nut' operation. But Arman was still not sure. He knows the TBN market, as Schlumberger had done other business with them, so he knows the mafia has a strong hold on the meter business. I told Arman that if Schlumberger agrees to set up a factory in Malaysia and they fail to get any business, I was prepared to underwrite the entire operation and reimburse them for all their expenses. Arman finally agreed and said that he will give the Malaysian operation one year to get the business and that if we fail he will then close the factory down. We sealed the deal and then went to 'Le Crazy Horse' (SEE HERE) to celebrate our new partnership. The factory was set up but after one year we got nothing. So much time and money spent with nothing to show for it. Arman told me it was time to close shop unless I could assure him we would be able to get at least some business. I asked him for an extension of three months and he agreed. But that was it. Another three months and then they were going to close shop. The mafia was determined to keep us out. In the meantime, the cartel was laughing all the way to the bank. I was bracing myself for bad news at the end of that three-month extension. As I said earlier, a drowning man can come up only three times before he goes down for good. I had gone down twice so far, once in 1975 and again in 1985-1987. It looks like this time I was going to go down for good. Then, suddenly, the unexpected happened. The General Manager, who was not supposed to retire yet, retired. He got a 'golden handshake' involving a large coal supply contract to prompt him to retire. His deputy, Datuk Ibak Abu Hussein, took over as the new number one. Ibak had been watching this mafia for quite some time and had decided that enough is enough. He opened up the meter business to the non-cartel members and we managed to squeeze in. Within three years we walked away with RM40 million in business. But I was the most hated supplier because I ignored the mafia and refused to join the cartel in the price rigging. What a stroke of luck! Schlumberger was just days away from closing down the operation. And that would have meant I would have lost my pants, for the third time. But fate decided it was not yet time for me to die. Unfortunately, Ibak did not last long as the head honcho of TNB (the mafia hated him as well). He was 'pushed' into retirement and Ani Arope, a Tun Dr Mahathir Mohamad-Anwar Ibrahim man, took over (the first time in history an 'outsider' was appointed as the head of TNB). And that allowed the mafia to bounce back and go for me with a vengeance. We soon began to lose tender after tender even though our price was the cheapest by far. By the third tender we lost, the TNB mafia approached Schlumberger and told them that as long as Raja Petra Kamarudin is their partner they are never going to get any business from TNB. We also lost the fourth tender and this convinced Schlumberger that the mafia was serious about it. The second unfortunate thing was that Arman Carlier had been transferred to another division and was no longer heading the meter business in France. The new chap had no 'history' with me so there was no sentimental attachment. Hence he made the decision to 'file for a divorce'. Schlumberger took on a new Malaysian partner who was 'highly recommended' by the TNB mafia. I found out later that his new partner was linked to Anwar Ibrahim. So it was an 'inside job' after all. I was so furious I decided to get out of this whole 'rat race' once and for all. This was getting very stressful. Fighting your competitors is one thing. But when your 'own people' stab you in the back and grab what you painfully built up with a lot of risks involved, there was just no point in continuing. I never forgave Anwar's people for taking away my last shot at making it in the business world. Anwar was the Finance Minister and TNB reported to him. But I never once walked into his office to ask for any help all that time he was Finance Minister (Anwar actually complained about this to one ABIM chap). But for his people to take away what I felt belonged to me was something so intolerable that I decided to throw in the towel and go for a career change. And this new career change was to become a political activist and political writer. I was part of the corrupt system. I worked within that system that eventually 'ate' me up as well. Now I was going to fight that very system I had operated in. That was 18 years ago in 1994. Today, I am still doing what I started 18 years ago back in 1994. I now have very low tolerance for abuse of power and corruption, even when committed by those from Pakatan Rakyat. And trust me, it does happen in Pakatan Rakyat as well. After all, many of those Pakatan Rakyat people are the same people who 'makan' me back in the 1990s. TO BE CONTINUED |
| The journey in life is never a straight line (PART 6) Posted: 29 Nov 2012 03:49 PM PST
Actually, I blame the banks for all this. Back in the 1980s, around ten years after starting my business, bank managers were coming to see me to invite me to lunch. They would practically beg me to 'give them some business'. Over lunch they would confirm RM2 million or RM3 million without even asking me what I would do with the money. NO HOLDS BARRED Raja Petra Kamarudin People assume that since I am Malay therefore all my business must have come from government contracts. That is stereotyping and as 'fair' as assuming that since you are Indian you are a drunkard who beats his wife or since you are a Chinese you are dishonest because you worship money. I do not deny that I did do some government business. Even Chinese and Indians do government business whenever they can. So this is not really a crime. Nevertheless, over 20 years from 1974-1994, my companies did about RM300-350 million in turnover with maybe about 20% of that in government contracts. And government contracts are really not that profitable, mind you. Sometimes we get away with a profit of only 2.5%. To make 10% or more from a government (supply) job was a rare thing indeed, especially in those 'early days'. Government jobs are good when you need to go to the bank to raise funds. If you won, say, a RM30 million government contract, this would allow you to borrow RM6 million or even RM10 million. In those days, even when I did not need the money (since the supplier gave us credit of 60-90 days anyway), I would still go to the bank to borrow. I would use the funds and then pay back what I used within the same month. This would impress the bank like hell -- although they are not too happy with this since they would earn very little when you pay back almost immediately. The reason I did this was so that, next time, when you really do need funding, you can go back to the bank and get a loan. In the beginning I borrowed RM2 million. By the time I decided to call it a day, I was rolling with RM20 million, all borrowed funds. Actually, I blame the banks for all this. Back in the 1980s, around ten years after starting my business, bank managers were coming to see me to invite me to lunch. They would practically beg me to 'give them some business'. Over lunch they would confirm RM2 million or RM3 million without even asking me what I would do with the money. You see, branch managers had a quota to fill and they were trying to use me to fill their quota. So they would offer me facilities in the millions even though I did not need the money and would not have known what to do with it anyway. Once I was even invited for lunch in the executive suite of HSBC in Kuala Lumpur. The Kwailo then asked whether his bank 'could be off assistance' to me. He then offered me RM3 million and instructed his Chinese officer to follow up on this 'application'. The Chinese officer followed me back to my office and sat down with me to work out the details. But we had one problem. We could not justify the facilities. In other words, we could not show that I needed the money. After cracking our heads for an hour, I told the officer to just forget it. Actually I don't need the money. I felt good to be able to tell HSBC that I don't need their money. That boosted my image and even more bank managers came a courting when they found out that I told the Kwailo from a Kwalio bank that I don't need their money. Yes, bank managers get an orgasm when you tell a bank you don't need their money. It came to a stage that all I needed to do was to phone the MD or GM of the bank and over the phone I could raise a million or two with no questions asked. Of course, I was not the only one enjoying this VIP treatment. All over town banks were throwing money our way. Then, in mid-1980, the folly of this attitude hit us. Many of us were over-geared. No doubt our loans were 'backed by assets'. But these so-called assets were 'paper assets'. They were stocks and shares trading at ten or twenty times their value -- or worse. No one cared about PE ratios. In the UK, you may be looking at PE ratios in the single digit. In Malaysia (plus Singapore and Hong Kong) the PE ratios of the 'darlings' of the stock market were sometimes in the triple digits. That was crazy. Banks should not have touched such company shares with a ten-foot pole. But who thought that the bubble was going to burst? We were on a roller coaster ride and it was going up, up and up. Then, in 1985, it went down, down and down. It was then that I understood the meaning of 'fair weather bankers'. They invite you to lunch and beg you to borrow from them when you do not need their money. However, when the market turns, they become your 'wakeup call' early in the morning when they phone you to inform you of the 'margin call'. If you do not 'top up' by the time the market opens for the day, expect them to 'force-sell' your shares. And the more they force-sell the more depressed the market gets and the more depressed the market gets the lower your shares go and the lower your shares go the more margin you need to top up -- and so on and so forth. It basically becomes a vicious cycle. Now that you need the money the banks no longer want to deal with you. The banks do not want to give you money because you need the money. They only want to give you money when you do not need it. I was only 35 then and about ten years in business. But I was very rapidly finding out that another word for 'banker' is 'shark'. When they smell blood they go into a feeding frenzy. And when you are floundering in the water trying to keep your head up so that you do not drown, these sharks come up from behind you and bite off your balls. Yes, we were greedy. I admit that. We may even have been inexperienced and were taking too many risks. But when you are still quite young and new to business, you tend to be like this. That is what being young is all about. But the banks were also greedy. These banks that have been around for a long time and have seen many recessions come and go should have practiced prudent banking. They should have known that bubbles eventually burst. And they should not have been the ones to inflate the bubble and then, as soon as it shows sign of deflation, they prick the bubble by pulling the rug from under our feet. Many suffered. Almost everyone, regardless of race, collapsed. Many saw their companies change hands. Some were even unfortunate enough to end up in jail. As I said, at 35 I could afford to pick up the pieces and start all over again. Those who no longer had the luxury of time chose the easy way out by ending their life. We would have imagined that by 1985-1987 the banks would have learned their lesson. Apparently they did not -- as 1997 and now, 2012, have proven. Banks will still be banks and risk-takers will still be risk-takers. I am just glad I am no longer in the game where we live day-to-day with the anxiety that when we wake up the following morning we are going to find out that the bottom has fallen out of the market. As they say: let the borrower beware. TO BE CONTINUED |
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