Bizarre, ludicrous, stupid, creative. None of these even begin to adequately describe the latest ‘genius’ of Bank Negara (BN). They have created a new violation of the law so that BN can act to prevent that violation and protect the public because nothing else negative appears to have surfaced.
So create a new violation: If a company is not profitable, it is a “serious crime” and therefore “we the BN must rush in and seize all the assets so that the public is protected and thus make sure that the directors cannot abscond with the assets.”
This appears to be the logic and substance of the latest press statement issued by BN on 3rd December 2012 - http://on.fb.me/TFFe6R
By this definition, all public listed companies who are losing money (and therefore not profitable) can be raided, assets frozen and stopped from carrying on business.
In the rare of-chance that this piece may reach the inviolate and sacred shores of BN, perhaps they may consider the following:
1. Buying and selling gold is like the buying and selling of any other commodity, It is the sum total of all transactions that make up the business of Genneva Malaysia Sdn Bhd (GM). One cannot judge every single transaction as a stand alone deal. All transactions over a period of time must be evaluated, to ascertain viability (sustainability). Only then will a broad picture emerge, as to whether the cash flow will result in a long term sustainable business.
If you looked at GM’s business activities for the last 24 months, it has been not only sustainable, but spectacularly so. It was a business model that was working well until the “well-intentioned” disruption of the business by the elite of BN.
If any ongoing business is completely and suddenly halted for two months with recurring cost and liabilities spiralling but without any corresponding sales, it takes no genius to state that this will result in a loss.
2. This explanation has been repeatedly hurled to BN, but for some inexplicable reason, this elementary fundamental of an “operating business” has failed to penetrate the bright minds of the elite at BN. It is this inability to grasp a simple business knowledge that keeps them yelping the same slogan over and over again that “GM’s business is not sustainable”.
3. To add insult to injury, the alleged losses have been greatly and grossly exaggerated. Does anyone at BN not know that 4,000 KG at about RM 200 per gram is RM 800,000,000? In all the months of operation prior to the raid, GM has never exceeded RM 200,000,000 in sales in a given month. Now where on earth did this RM 800,000,000 figure spring from? Is this loss for the present two months of non-operation or is this from forever? Is this yet another stroke of creative genius?
4. Delay in gold delivery far, far too serious, and therefore BN must act. It is irrelevant that supply of gold in the open market is not something that can be dictated by GM. If BN is truly convinced that such delays pose a great threat to the safety of public funds, why has no similar action been taken against Habib Jewellers for delivery of gold one month after receiving payment, and Poh Kong more than a month for delivery of silver? Why no raid here?
5. In truth, GM has not failed any client in the delivery of gold – late, yes, but failure, no. That is, until now, directly caused because BN stopped all the activities of GM.
6. In the gold business, profit or loss is dependent on price fluctuations. Only on realization can the profit or loss be determined. Moving average buying price is almost always lesser than the moving average selling price. This was Cleary demonstrated for some months in 2012 because of continued falling gold price for a few months. So paper losses began accumulating, but this did not stop the company from operating. It was BN that stopped GM from operating.
7. The money paid by buyers of gold is secured as they have physical gold, receive hibah, and have the ability to resell the gold if prices have fallen, to GM at the same price they bought it. The only possible risk is if the physical gold is not given to them after the purchase or payment is not made for a sell-back, during which interim the company can go bust. It is in this gap then there is a real danger of a loss. But so far, this has not happened.
8. If BN continues this sluggish rate of investigation, ironically described as speedy, then they will be the real cause of loss to GM’s customers and not GM. One wonders if everyone is aware of the legal consequences of such actions.
Now it turns out that there were no valid or acceptable reasons for the raid. So now they created a new crime - Lose money in your business and we will raid you and close you down.
And the latest twist to this drama is UMNO Youth charging in like a white knight ostensibly to protect the public and aid them. Sue the company is their mantra now. Sue GM for what when the real culprit is BN. (http://on.fb.me/WJB23o)
This is a strategy to cover up the error in raiding a well operated business and having realised the mistake perhaps UMNO Youth is the vehicle to divert attention from the real cause of the problem and direct anger to gm This is so obvious strategy to turn the customers against GM. They have so far been faithful to GM because the Company has delivered without fail. It is BN that spoiled all this.
– By Savana Sim, Genneva Malaysia Supporters
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