FACEBOOK - NOT A DISASTER, JUST A TALE OF OLD FASHIONED GREED

Globalist Analysis > Global Markets
Facebook — Not a Disaster, Just a Tale of Old-Fashioned Greed  

By Beat J. Guldimann | Friday, May 25, 2012

A week ago, Facebook became a publicly traded company on the NASDAQ stock exchange — putting a valuation of $17 billion on its founder's ownership stake. Since then, Facebook's stock price has been sinking, leading Beat Guldimann to question why it was ever so high in the first place. Could old-fashioned greed have been a factor?

Photo credit: Lev Radin/Shutterstock.com

Mark Zuckerberg has finally done it. Facebook went public in an initial public offering (IPO) that valued the company at over one hundred times earnings at an initial offering price that was hiked in the last hours of the deal going live. This allowed Zuckerberg and other key shareholders of Facebook Inc. to squeeze a few more dollars out of an eager public thirsty for new issues in a dry market.

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  Companies don't go public in order to make those

who buy their stock rich. IPOs happen for a lot of

reasons, none of which are altruistic.

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Only a few days after the stock traded for the first time, the party seems to be over. Instead of rising and allowing some lucky speculators to make a quick buck, Facebook lost a quarter of its value.

Everybody is up in arms. There are the scandalized who are crying fraud and the told-you-so's basking in schadenfreude. Meanwhile, the media is labeling the Facebook IPO an epic failure — even a disaster.

Nobody can deny that the Facebook IPO is a bit of a failure. The stock was supposed to soar in the first few days of trading so that a lot of early investors could get paid for taking the risk. At least, that's what the investment bankers' playbook says.

However, the 25% pullback out of the gates is no disaster. To the contrary, it demonstrates that markets will see things for what they are. In the case of Facebook, markets were quick to recognize that the company was simply too expensive. And they did what markets are supposed to do — correct inefficient pricing.

The story of Facebook going to town is a tale of greed, nothing more and nothing less. Companies don't go public with the objective of making those who buy their stock rich. IPOs happen for all sorts of reasons, none of which are altruistic. Let's look at a few:

First off, there is Mark Zuckerberg, Facebook's founder and its controlling force. Ever since he took Facebook outside of Harvard, his story has been an amazing success. He became one of the wealthiest twenty-somethings on the planet by transforming the way people use social media.

His problem, however, was that the lion's share of the billions he created in personal wealth was tied up in the company. Zuckerberg's motivation for the IPO was to create liquidity and take some money off the table. Selling shares to the public gives him a lot of cash and allows him to reduce the concentration of investment risk associated with his brainchild.

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shareholders are watching the value of their

investment drop, while Zuckerberg counts his coins

like Scrooge.

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There is nothing wrong with this motivation per se. The problem is in setting the issuing price at an unreasonably high level, which hurt the buying public that paid Zuckerberg too much for his stock. Shareholders are watching the value of their investment drop, while Zuckerberg counts his coins like Scrooge.

Yes, we understand that Zuckerberg is still a shareholder in Facebook. As such, he too suffers from the decline in market value. The difference, however, is that he did not have to pay an arbitrarily high price for being part of the ride. Even if Facebook were to lose half its value, he would still be ahead.

Landing the elusive blockbuster deal

Second, we need to look at the investment banks. Morgan Stanley, Goldman Sachs and JPMorgan Chase led the syndicate that allowed Zuckerberg to transform his privately-held company into liquid money.

Their motivation was simple. Contrary to what Goldman CEO Lloyd Blankfein famously said in November 2009, investment banks are not doing God's work. They exist to create profits for their firms and opportunities for their bankers to earn a living and get paid bonuses.

Adding value to the economy or making future Facebook shareholders happy did not drive the Facebook syndicate. The main driving force for them was to land the elusive blockbuster deal in a dried-up new issues environment and bring in millions in fees that could be generously shared with a few lucky investment bankers in the form of outsized bonuses. It really is that simple.

Again, there would be nothing intrinsically wrong with any of this, had the syndicate not enabled the IPO to be priced at an unsustainable level. Arguably, if the investment bankers had done their job properly, they would have recognized that the issuing price was beyond reason and advised Facebook to go public at a more modest valuation.

They should also have disclosed their earnings warnings in a much more timely manner, possibly delaying the IPO altogether, as they realized that their assumptions were not supported by the reality of Facebook's latest numbers and forecasts.

_________________________________________________

Whether or not IPOs enable future growth of the

company now owned by the public is,

for the most part, just a side benefit.

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The problem is that doing so would likely have meant lower revenues for the banks, or at least delayed gratification for those working on the deal. But moderation is not an area in which Wall Street bankers traditionally show too much strength. After all, Tom Wolfe refers to them as self-declared "masters of the universe" in his 1987 novel The Bonfire of the Vanities.

And let's not forget the brokerage community. Investment advisors (or should we just call them stockbrokers?) have been waiting for a deal like this one for a long time. They always have a number of key clients that are hungry for an IPO in the hopes of doubling their money quickly.

The benefit for the brokers lies in the elevated commissions that are typically associated with initial offerings. Is it any wonder then that they try to sell Facebook to their clients even at an unreasonable price?

What this short analysis leaves us with is the realization that IPOs such as the one we have just witnessed here have one driver. They satisfy the greed of company owners, investment bankers and stockbrokers first and foremost. Whether or not they enable future growth of the company now owned by the public is, for the most part, just a side benefit.

The single most important thing that the investing public needs to recognize in all deals like this one is that their interests and expectations are not usually aligned with the interests of those involved in bringing the stock to market and selling the IPO. Which really just brings us back to the tried and tested principle of "buyers beware."

Europe's New Normal - It's Here, It's Unclear, Get Used to It

An article by R. DANIEL KELEMEN

The eurozone's troubles no longer qualify as a crisis, an unstable situation that could either quickly improve or take a dramatic turn for the worse. They are, instead, a new normal -- a painful situation, to be sure, but one that will last for years to come. Citizens, investors, and policymakers should let go of the idea that there is some magic bullet that could quickly kill off Europe's ailments. By the same token, despite the real possibility of Greek exit, the eurozone is not on the brink of collapse. The European Union and its common currency will hold together, but the road to recovery will be long.

It has been nearly two and a half years since the incoming socialist government in Greece revealed the extent to which its predecessor had accumulated debt, precipitating an economic storm that has left slashed budgets, collapsed governments, and record unemployment in its wake. With each dramatic turn, observers have anticipated the story's denouement. But again and again, a definitive resolution -- either a policy fix or a total collapse -- has failed to emerge.

The truth is that there are no quick escapes from the eurozone's predicament. Divorce is no solution. Although some economists suggest that struggling countries on the periphery could leave the euro and return to a national currency in order to regain competitiveness and restore growth, no country would willingly leave the eurozone; doing so would amount to economic suicide. Its financial system would collapse, and ensuing bank runs and riots would make today's social unrest seem quaint by comparison. What is more, even after a partial default, the country's government and financial firms would still be burdened by debt denominated largely in euros. As the value of the new national currency plummeted, the debt would become unbearable, and the government, now outside the club, would not be able to turn to the eurozone for help.

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The eurozone has, at least in practice, done away with its founding documents

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Some economists go further and argue that countries on Europe's periphery could thrive outside the euro straitjacket. This is equally unconvincing. Southern European countries' economies suffer from deep structural problems that predate the euro.  Spanish unemployment rates fluctuated between 15 and 22 percent throughout most of the 1990s; Greece has been in default for nearly half of its history as an independent state. These countries are far more likely to tackle their underlying problems and thrive inside the eurozone than outside it.

Others have suggested that Germany and other core countries -- weary of funding endless bailouts -- might abandon the euro. That is even less plausible. Germany has been the greatest beneficiary of European integration and the common currency. Forty percent of German exports go to eurozone countries, and the common currency has reduced transaction costs and boosted German growth. An unraveling of the eurozone would devastate German banks, and any new German currency would appreciate rapidly, damaging the country's export-led economic model.

A number of policy reforms may improve economic conditions in the eurozone, but none offers a panacea. Eurobonds, increased investment in struggling economies through the European Investment Bank and other funds, stricter regulations of banks, a common deposit insurance system, a shift from budget cuts to structural reforms that enhance productivity and encourage private-sector job creation -- all of these could improve Europe's economic situation and should be implemented.

But none of these measures would quickly restore growth or bring employment back to pre-crisis levels. That is because they do not address Europe's central economic problem: the massive debt accumulated by the periphery countries during last decade's credit boom. The 2000s saw a tremendous amount of capital flow from the northern European countries to private- and public-sector borrowers in Greece, Ireland, Portugal, and Spain. Germany and other countries with current account surpluses flooded the periphery with easy credit, and the periphery gobbled it up. This boosted domestic demand and generated growth in the periphery but also encouraged wage inflation that undermined competitiveness and left massive debt behind. As the economists Carmen Reinhart and Kenneth Rogoff have pointed out, when countries suffer a recession caused by a financial crisis and debt overhang, they take many years to recover.

With both breakup and immediate solutions off the table, then, the eurozone is settling into a new normal. As the union slowly digs itself out of the economic pit, it is important to recognize that its system of economic governance has already been fundamentally transformed over the past two years.

First, the eurozone has, at least in practice, done away with its founding documents. In any monetary union in which states retain the autonomy to tax, spend, and borrow, there is a risk that some countries' excessive borrowing could threaten the value of the common currency. Recognizing this, the euro's creators drafted the Stability and Growth Pact and the "no bailout" clause in the Maastricht Treaty. The SGP placed legal restrictions on member-state deficit and debt levels, and the no-bailout clause forbade the European Union or individual member states from bailing out over-indebted states to avoid moral hazard.

The Maastricht governance regime is dead. The SGP was never strictly enforced, and when the crisis hit, the European Union tossed aside the no-bailout clause. Fearing contagion, it extended emergency loans to Greece, Ireland, and Portugal and set up a permanent bailout fund -- the European Stability Mechanism (ESM) -- which will be up and running this summer.

Having broken the taboo on bailouts, Europe had to find a way to limit the moral hazard of states turning again and again to the European Union for aid. EU lawmakers introduced the so-called six-pack legislation, which strengthened the European Commission's ability to monitor member states' fiscal policies and enforce debt limits. Twenty-five EU member states signed a fiscal compact treaty, which committed them to enshrining deficit limits into national law. Only those states that eventually ratify the treaty will be eligible for loans from the ESM.

Such legal provisions alone will not overcome the moral hazard, but they have been accompanied by evolution in bond markets, which now distinguish between the debt of healthy governments in the core and weak ones on the periphery. For the first decade of the euro's young life, bond markets priced the risk associated with the peripheral economies' bonds nearly the same as that associated with German ones. Today, the yield spreads are substantial and increase at the first sign of heightened risk. And by forcing private investors to take a nearly 75 percent loss on Greek bonds in conjunction with the second Greek bailout in February 2012, European leaders made clear that private bondholders should not expect bailouts to cover their losses, too. Now, more vigilant bond markets will police governments that run up unsustainable deficits or whose banking sectors grow fragile.

The second major structural change is that the European Central Bank -- legally prohibited from purchasing any member state's debt -- has thrown its rules aside and directly purchased billions in Greek, Irish, Italian, Portuguese, and Spanish bonds. Moreover, the ECB has indirectly financed billions more loans through its long-term refinancing operation, which extended over a trillion euros in low-interest loans to commercial banks.

ECB President Mario Draghi has repeatedly insisted that the bank is not engaging in "monetary financing" of member-state debts. If I were an Italian president of a central bank located in Frankfurt with a mandate designed by German inflation hawks, I would say that, too. But in practice, the ECB has shown itself to be far more flexible than many had anticipated. It has revealed, quite simply, that it will not oversee the demise of the currency that justifies its existence.

This new system of eurozone governance is more sustainable than the pre-crisis regime set in place by the Maastricht Treaty. It will withstand a Greek exit, for example. If Greece refuses to adhere to the terms of its bailout package and is forced out of the eurozone in the coming weeks, the ECB will likely scramble to stop contagion, but it will not be faced with the entire system's collapse. Meanwhile, by standing firm on Greece, the European Union will have further demonstrated that the conditions attached to its bailouts are serious, motivating other states to stick to their reform programs.

Greece's exit from the eurozone would be a catastrophe for Greece and a trauma for Europe, but it would not change the fundamentals of the post-2008 eurozone governance regime, which will still be based on stronger fiscal surveillance, more robust enforcement procedures, more vigilant bond markets, and a more activist central bank. With such a system in place, and with their commitment to fiscal discipline established, EU leaders will now face the slow, difficult tasks of adjustment and structural reform. And those burdens must be shared by all. It is understandable that Germany and the ECB initially demanded austerity as the condition for bailouts, but this one-sided approach has driven peripheral economies deeper into recession. Moving forward, austerity, wage reductions, and structural reform on the periphery must be comupled with public spending and wage increases in Germany, which will boost demand. There will be no quick fix, but the eurozone will recover, slowly but surely.

Ruangan Korporat - 08/11/2011

Bakal cipta sejarah baharu
Oleh SARAH NADLIN ROHIM
bisnes@utusan.com.my

KUALA LUMPUR 7 Nov. - Permodalan Nasional Bhd. (PNB) dipercayai bakal menjadi pengeluar kolagen dan gelatin halal pertama dunia apabila menjadi pemegang ekuiti terbesar bagi sebuah syarikat yang baharu ditubuhkan.

PNB dikatakan bakal memegang 70 peratus kepentingan dalam syarikat itu.

Menurut sumber, kedua-dua pihak sedang melakukan perbincangan dan keputusan mengenainya bakal diketahui menjelang akhir tahun ini.

''Lebihan pegangan kepentingan pula adalah kepada pemilik kepakaran pengeluaran produk kolagen dan gelatin.

''PNB merupakan calon pilihan untuk memegang kepentingan terbesar itu, tetapi keputusan akhir akan hanya diketahui menjelang akhir tahun ini,'' katanya kepada Utusan Malaysia di sini.



Tambah sumber itu, melalui pemilikan itu, bakal menjadikan Malaysia sebagai negara Islam pertama yang mengeluarkan kolagen dan gelatin dengan pensijilan halal.

''Setakat ini, hanya 0.7 peratus gelatin di pasaran dibuat menggunakan sumber halal dan tiada lagi negara Islam meneroka untuk pasaran tersebut.

''Malaysia akan menjadi negara Islam pertama yang berbuat demikian, ia sejajar dengan matlamat negara untuk menjadi hab halal global,'' jelasnya.

Pada masa ini, pengeluaran gelatin global adalah sekitar 400,000 tan yang bernilai AS$2.2 bilion (RM6.82 bilion).

Gelatin merupakan bahan penting yang banyak digunakan dalam pembuatan makanan, perubatan, kosmetik dan sebagainya.

Potensi pasaran bagi produk itu terutama di Timur Tengah adalah sangat besar dan ia baik untuk perdagangan negara.

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Tujuan saya memaparkan artikel ini ialah kerana ada beberapa perkara yang saya rasa perlukan penjelasan.

a. Berita ini menggunakan perkataan 'sumber', 'dipercayai', 'dikatakan' dsb. seolah-olah perkara ini belum dipastikan.

b. Tidak diberitahu 'sumber' berkenaan.

c. Selalunya kenyataan akhbar seperti ini akan dikeluarkan oleh pegawai rasmi (spt. Ahli Lembaga Pengarah) daripada PNB

d. Biasanya sasaran perniagaan sebesar ini akan menjadi sebahagian dari KPI PNB.

e. Seolah-olah ada pihak lain yang ingin mencadangkan penglibatan PNB dalam industri & kolagen gelatin halal.

Walaubagaimanapun, jika berita ini benar, maka banyak manfaat akan diperolehi. Cuma saya berharap ada kenyataan rasmi dari PNB mengenai perkara ini.

PRIVATE PLACEMENT BUSINESS - BEWARE OF SCAMS! - (A little research by Nik Zafri)

UPDATE : AUGUST 2011 (BETWEEN SCAM AND THE REAL THING)

I can almost recall the early 90s; those good old days; genuine entrepreneurs now reaping lots of benefits and profits due to the great progress in private placement business. Their businesses grow from small timer to big timer. Many of these companies become large corporations today even turned themselves into bluechips listed in the Main Board of Bursa Malaysia. Despite some appear not to be so successful, but they are always bullish to make a comeback - even indulge themselves fully into corporate debt restructuring programs.

Today; when talking about private placement business in Malaysia, many people approached me (to do business plans) and say they have some good projects needed to be funded. Some of them even go to the extend of telling me that some VVIPs are indirectly involved in such projects. (What a joke...take a hike!!)

Based on their papers; on first impression; I was almost fooled as it appears that they do have what it takes. Great looking business plans with all the mission, vision, objective and goals, marketing, viability, gearing/financial ration, projected P & L etc., But as I delve further, I saw layers of brokers hiding behind the business plan. There are many places considered hotspots for brokers.

The normal ones, I did see a few of them in the only 'kampung' in Kuala Lumpur - mostly their brokerage 'network' are associated together with politics (so they claimed) - "Yes, I know this guy like the back of my head, I can bring you to him but I need a million ringgit upfront".

While, the 'higher class' are relaxing comfortably either at the lounge or coffee house; with laptops and gadget phones; in 4 stars hotels but the funniest part is that, I notice that they are taking only plain water (not even Evian) - and never offer you if you like to have something to eat or drink, being snobbish, displaying some dilapidated construction drawings, agreements, letters etc. Sometimes they talked boastfully about Fractal & Fractional Reserve Banking with many times leverage of deposits, cost of fund etc. Don't make they feel comfortable, don't pay for their drinks and food. Trust me - you'll be doing yourself a great favour.

The smart 'scam' brokers will seek ways to capitalize on entrepreneurs demand - mostly at the cost of entrepreneurs. Be careful businessmen and entrepreneurs, learn to smell elements of scam. New 'funding schemes' in private placement are one of them.

The most popular one today that is attacking the Malaysian PP market is the good old trick known as "leasing using Standby LC. Sounds good huh? The broker are smart enough to say that they know people in the banking and financial sector that you only need to pay an upfront of 10% out of the total value issued by the bank. This is a SCAM!

Standby Letter of Credit is an instrument alright but it's NOT discountable. Just walk into any bank and ask! If you need a 20 million SBLC, you need to pay 20 million! So, the scam brokers will convince you that upon issuance of SBLC by the bank, it can be used as a warranty or some sort of collateral to get more money from other projects (usually they will whisper to you that it's 'money laundering') There is no way you can use a leased SBLC to do business.

Another alternative, a smaller amount for big money (small PP), another scam. Behind small money, there is big money awaiting to be robbed from your pocket. Who would give big money for small money? Then; they say to you; you have assets to be liquidated? Yeah..that's where big money comes in. Although there is some logic in it, but wait till you see the levels of overriding commissions the broker will ask from time to time.

So, what else - leasing of bank instrument - is much the same as the SBLC. You have a leased property and trying to make money out of it when the property is not even yours. I don't think the bank will be convinced to take leased property as collateral. The brokers tell you that you can make money is because they want an upfront - that's all.

Another back-end scam is through JV funding which has little to no recourse to you. The scam brokers will ask an upfront (with some more profits from PP) once the so-called 'partner' lease an instrument. They use 'technical words' such as high yields and you're duped into spending so much money by not even bothered to look into the leased instrument.

So, it's all about upfronts. Many people has been tricked and I told them to make proper reports to the authorities - at least to stop others from being duped.

My advise, if you have so much money, go to the bank and ask for true professional advise. Private Placement Business do exist and can be of great assistance to you but try to avoid 'unlicensed and unqualified' brokers.
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Here's a good article

Swift MT 760 and MT 799, the Real Story

Submitted by InsideTrade Staff on Friday, 4 December 2009

If you have been in the private placement business for a while, you probably know that there are plenty of acronyms associated with trade programs. As someone new to the business, you may hear phrases like: “MTN”, “BG”, “SBLC”, “PPP”, “DTC”, “CIS”, “POF”, and say, “what the heck are they talking about”? Well, though it is good to know private placement lingo, cool sounding terms do NOT close deals. If you want to protect yourself and succeed in private placement, you MUST understand the 2 most important acronyms of all, the “MT 760” and “MT 799”.

Whether you are a client, broker, consultant, or even just a beginner, the MT 760 and MT 799 are two terms that are critical to learn inside and out!. Many times, if you speak to brokers who claim to have trade programs, you can tell if their investment is real by asking just one question, “Explain the MT 760 and MT 799, what are the risks and fees?” If you get an answer that sounds similar to the explanation we give below, then you may want to dig a little deeper! If you don’t, recognize that these people are less educated than they claim, and may not be the best option. First things first, let’s explain the definition and application of these terms in the modern day private placement business.

The MT 799 is a swift message used between banks to communicate in written form, and is usually referred to as “pre-advice”. For example, Bank “A” may send a MT 799 to Bank “B” stating: “We confirm “XXX” amount on deposit and are ready to block this amount via MT 760 in favor of account “XXX” at your bank. Please confirm readiness and receipt.” Typically, the MT 799 will be needed directly before the MT 760 is issued, and there may be small fees. Despite what most brokers may claim, the MT 799 is NOT used as collateral,and can NOT be used to enter a private placement program. Now that we know about the MT 799, let’s take a look at it’s cousin, the Swift MT 760.

The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it. For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank. Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760. Now that you do know the definitions and applications, let’s cover the key points no one ever brings up about the MT 760: the FEES, and the RISKS…

First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service. For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank. You may say to yourself, “Wow, that is a lot to spend on fees for something I’m not sure will work”! Well, even more importantly, let’s take a look at the risks if you did move forward.

If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on. Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours. At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement. You may say, “Why do I need to watch this process so closely?” Well, here is the part that most brokers don’t tell their clients…

When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it. This means, if the loan to the “trader” was defaulted on, the bank would seize the collateral and you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons… In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand. Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.

In summary, the MT 760 can be safe, or it can blow up in your face. As always, the key is having a real trader and most importantly, getting your payments as scheduled. If the trader makes a statement about yields and a time line, they must ALWAYS keep in line with their promises. Over the THOUSANDS of transactions we have been involved in, the only ones that have closed have been smooth from the start, with NO hiccups.

Remember, both RISK and FEES are a part of blocking funds via MT 760!!!! In addition, by understanding the MT 760 and MT 799, you can clear out the TIME WASTING brokers from your network, and work MORE EFFICIENTLY towards your goals.

Let’s face it, very few people know as much as you do after reading this article. Use it to your advantage to qualify the private placement investments you come across, and it will make life a lot easier. Ask yourself, if someone can’t explain the MT 760 and MT 799 in thorough detail, do you think they have ever closed a deal? Then ask yourself, do I want to risk Millions with someone that has NEVER been successful? It’s not hard to see, education is the key!

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SAMPLE- S.W.I.F.T. MT760 – WIRE FORMAT EXAMPLE

NOTIFICATION :

DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

-----------MESSAGE HEADER----------------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS

SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :
IN FAVOR OF :

-----------SWIFT MESSAGE TEXT----------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

------------------MESSAGE TRAILER-----------------------

NOTIFICATION :
DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

-----------------MESSAGE HEADER--------------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS

SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :

IN FAVOR OF :

--------------SWIFT MESSAGE TEXT------------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

---------------MESSAGE TRAILER--------------------

S.W.I.F.T. MT760 – WIRE FORMAT EXAMPLE

NOTIFICATION :
DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

---------------MESSAGE HEADER----------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS

SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :
IN FAVOR OF :

-------------SWIFT MESSAGE TEXT--------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

----------------MESSAGE TRAILER----------------------

Sample BANK GUARANTEE

[Illustration only]

TO: The Principal {"Principal"}

In consideration of the Principal at the request of Contractor ("Customer") and [name of bank] ("bank") agreeing to accept this undertaking in connection with a contract between Principal and Customer for Customer to provide Services to Principal, (Contract") the bank unconditionally undertakes to pay the Principal on demand in writing any sum or sums which may from time to time be demanded in writing by the Principal to an amount not exceeding ………. THOUSAND DOLLARS ($…,000.00) )("agreed sum") in total.

Payment of the agreed sum or any parts of it will be made by the bank to the Principal without reference by the bank to the Customer and notwithstanding any notice to the bank by the Customer not to pay to the Principal any monies payable under this undertaking and irrespective of the performance by the Customer or the Principal of the terms of the Contract.

The bank’s liability will not be affected or discharged in any way by any alterations which may be made to the terms of the Contract or by any extension of time or other forbearance on the part of the Principal or the Customer to the other.

This undertaking will continue in force until either notification in writing has been received by the bank from the Principal that this undertaking is no longer required by the Principal or until payment to the Principal by the bank of the whole of the agreed sum or the balance of it remaining after any part payment or payments which ever first occurs.

The bank will be entitled to terminate this under at any time on payment to the Principal of the agreed sum or the balance of it remaining after any part payments or any lesser amount which the Principal requires.

[Execution by Bank]
--------------------------------------------------------
SAMPLE LETTER OF CREDIT

(note that Malaysia is not yet a member of ICC)

TO: { BUYER} PROFORMA INVOICE:

YOUR REF.:
YOUR REF. DATE:

We have indicated below those terms and conditions that we would find acceptable in a letter of credit issued by your bank. Your efforts to gain compliance with these terms and conditions in the issuance of this letter of credit will ensure prompt dispatch of your order. If your bank is unable to issue the credit within the following guidelines, please contact us providing information on those areas that must be altered. This will eliminate needless delay and costs involved with amendments after the credit has been opened. Only those items marked with an "X" will apply.

1. [ ] The letter of credit is to be irrevocable and subject to the Uniform Customs and practice for Documentary Credits, as published and updated from time to time by the International Chamber of Commerce.

2. [ ] The letter of credit is to be [ ] Advised [ ] Confirmed by our bank:

X bank

Telex No.:
SWIFT No.:
ABA.:

3. [ ] The beneficiary is to be shown as:

4. [ ] The letter of credit is to be payable upon presentation of drafts drawn at:

A. [ ] At sight
B. [ ] ___ days after the date of the transport document (i.e., 90 days after date of B/L)
C. [ ] ___ days after sight (i.e., 90 days after sight)
D. [ ] Other: ____________________________

5. [ ] The letter of credit is to be available by negotiation with any bank.

6. [ ] The letter of credit is to be payable in:

[ ] U.S. dollars
[ ] Other: _______________________________

7. [ ] The amount of the letter of credit is to be specific as:

[ ] "Not to exceed “_____________ [ ] "About “_______________

8. [ ] The following documents are normally provided if required in the letter of credit. Please avoid the requirement for any other documents without prior agreement on our part.

A. [ ] Signed Commercial Invoice, one original and ______ copies.
B. [ ] Packing List in ______ copies.
C. [ ] Negotiable Marine/Air Insurance policy or certificate in duplicate for 110% of invoice value covering all risks and war risks and ____________________________

D. [ ] Full set of clean on board ocean bills of lading

issued to order of : __________________________

E. [ ] Clean air waybill consigned to:

__________________________________________

F. [ ] Other documents:


9. [ ] The letter of credit is to specify shipment of:

____________________________________________

____________________________________________

____________________________________________


10. [ ] Shipment is to be:



[ ] FOB ___________ From: __________________
[ ] CFR ___________ To: ____________________
[ ] CIF___________
[ ] EXW__________
[ ] Other __________ (i.e.: FCA, FAS, CIP, etc.)


11. [ ] The Bill of Lading is to be marked:

[ ] Freight Prepaid
[ ] Freight Collect

12. [ ] Transshipments:

[ ] Are permitted
[ ] Are not permitted


13. [ ] Partial shipments:

[ ] Are permitted
[ ] Are not permitted


14. [ ] Latest Shipment Date __________________

15. [ ] Latest Presentation Date of Documents to the Negotiating bank to be ____ days after each shipment date.

16. [ ] Expiration Date of letter of credit to be __________________

17. [ ] The letter of credit should specify that all banking charges outside the country of the applicant are for the account of the [ ] applicant [ ] beneficiary.

18. [ ] letter of credit to be transferable.

19. [ ] Other special instructions.

2. Complying with Documentary Requirements

Exporters and freight forwarders who frequently assist the exporter is preparing documents for shipment are aware that terms and conditions in letters of credit are to be fulfilled exactly as stated. The opening bank has set forth terms as requested by the applicant, or buyer, and neither the opening bank, negotiating bank or designated paying bank will honor documents other than those specified. Furthermore, some documents required under a letter of credit are specifically described as to the information which must be contained in the specified document.

----------------------------------------

SAMPLE - BUYER'S MANDATE

To be issued on Buyer’s Letterhead

Letter of Intent / Irrevocable Corporate Purchase Order

Date of Issue : ... . 2008 Buyer's Reference: ................
Valid Till: ... ..... 2008

To:

Seller Mandate :
Company
Address
Country

We the undersigned Name of Signatory of End Buyer's Company Name hereby state and confirm that we are ready, willing and able to purchase HMS (Grade.....) in the quantity and for the price as specified in the terms and conditions as stated below. This representation is made with full corporate authority and also responsibility of the above stated buyer.

Commodity HMS 1 & 2 (80:20)
Specifications ISRI 200 to 206
Loading Port XXXXX (Seller's Choice)
Packing Bulk / Container
Destination Port Destination Port Name
Shipment Terms CIF /CNF, (Buyers destination Port)
Total Contract Qty ...............MT (in xxx months /days)
Quantity per Shipment .............. MT (+- 5%)
No.of Shipments per Month ----Shipment per Month
Length of Contract ___Months / One time Spot deal
Delivery Period Within 60 Days after Opening of DLC/LD.SBLC

Yard Visit Seller’s Choice
Inspection SGS or CCIC or Equivalent at Seller's Cost Procedure Seller’s Choice
Price CNF / CIF / FOB............USD .... / MT
Mode of Payment Irrevocable, Confirmed, Non-Transferable,
100% payable at sight DLC. Activated by Sellers’s 2% PBG
Performance bond: 2% Operative PB from the seller.
End Buyer's Information

Company Name
Address
Country
Zip
Telephone No.
Fax No.
E-Mail

End Buyer's Bank Details (From Which LC Will be Issued)

Bank Name
Address
Zip and Country
Telephone No. and Fax No.
Account Name
Account No.

Bank Swift Code

Bank Officer's Name

Designation, Direct Phone and Fax No.

LC Confirming Bank's Details (can be same as above)

Bank Name
Address
Zip and Country

This exclusive LOI with the specific LOI reference number is the only current LOI. It takes precedence over any other LOI with the above-mentioned specific LOI reference number currently in circulation for this quantity and product. The Buyer is of the understanding that any and all offers are subject to final agreement on the details of sales contracts.

Signature .................
Printed Name .................

(Corporate Seal)

Title .................

INTERNATIONAL CHAMBER OF COMMERCE ( I.C.C 400 / 500 / 600 )
NON-CIRCUMVENTION, NON DISCLOSURE & WORKING AGREEMENT

WHEREAS the undersigned wish to enter into this Agreement to define certain parameters of the future legal obligations, are bound by a duty of Confidentiality with respect to their sources and contacts. This duty is in accordance with the International Chamber of Commerce.

WHEREAS the undersigned desire to enter a working business relationship to the mutual and common benefit of the parties hereto, including their affiliates, subsidiaries, stockholders, partners, co-ventures, trading partners, and other associated organizations (hereinafter referred to as “Affiliates”).

NOW THEREFORE in consideration of the mutual promises, assertions and covenants herein and other good and valuable considerations, the receipts of which is acknowledged hereby, the parties hereby agree as follows:

1. TERMS AND CONDITIONS

A. The parties will not in any manner solicit, nor accept any business in any manner from sources or their affiliates, which sources were made available through this agreement, without the express permission of the party who made available the source and,

B. The parties will maintain complete confidentiality regarding each other business sources and/or their Affiliates and will disclose such business sources only to the named parties pursuant to the express written permission of this party who made available the source, and,

C. That they will not in any of the transactions the parties are desirous of entering into and do, to the best of their abilities assure the other that the transaction codes established will not be affected.

D. That they will not disclose names, addresses, e-mail address, telephone and tele-fax or telex numbers to any contacts by either party to third parties and that they each recognize such contracts as the exclusive property of the respective parties and they will not enter into any direct negotiations or transactions with such contracts revealed by the other party and

E. That they further undertake not to enter into business transaction with banks, investors, sources of funds or other bodies, the names of which have been provided by one of the

F. Parties to this agreement, unless written permission has been obtained from the other party (ies) to do so. For the sale of this agreement, it does not matter whether information obtained from a natural or a legal person. The parties also undertake not to make use of a third party to circumvent this clause.

G. That in the event of circumvention of this Agreement by either party, directly or indirectly, the circumvented party shall be entitled to a legal monetary penalty equal to the maximum service it should realize from such a transaction plus any and all expenses, including but not limited to all legal costs and expenses incurred to recover the lost revenue.

H. All considerations, benefits, bonuses, participation fees and/or commissions received as a result of the contributions of the parties in the Agreement, relating to any and all transactions will be allocated as mutually agreed.

I. This Agreement is valid for any and all transaction between the parties herein and shall be governed by the enforceable law in All Commonwealth Country’s, European Union Country’s, USA Courts, or under Swiss Law in Zurich, in the event of dispute, the arbitration laws of states will apply.

J. The signing parties hereby accept such selected jurisdiction as the exclusive venue. The duration of the Agreement shall perpetuate for (__) years from last date of signing.

2. AGREEMENT TO TERMS

A. Signatures on this Agreement received by the way of Facsimile, Mail and/or E-mail shall be an executed contract. Agreement enforceable and admissible for all purposes as may be necessary under the terms of the Agreement.

B. All signatories hereto acknowledge that they have read the foregoing Agreement and by their initials and signature that they have full and complete authority to execute the document for and in the name of the party for which they have given their signature.

3. ACCEPTED AND AGREED WITHOUT CHANGE

Party # 1 (Seller/Seller Mandate) Party # 2 (Buyer/Buyer Mandate)

Name : Name :
Passport No : Passport No :
Nationality : Nationality :
Company : Company :
Business Registered No. Business Registered No.

Address : Address :


Tel : Tel :
Fax : Fax :
Mobile : Mobile :
E-Mail : E-Mail :
Designation : Designation :
Date and Time : Date and Time :
Sign & Seal : Sign & Seal :


EDT ( Electronic document transmissions )
EDT (Electronic document transmissions) shall be deemed valid and enforceable in respect of any provisions of this Contract. As applicable, this agreement shall be:-

1- Incorporate U.S. Public Law 106-229, ‘‘Electronic Signatures in Global and National Commerce Act’’ or such other applicable law conforming to the UNCITRAL Model Law on Electronic Signatures (2001) and

2- ELECTRONIC COMMERCE AGREEMENT (ECE/TRADE/257, Geneva, May 2000) adopted by the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT).

3- EDT documents shall be subject to European Community Directive No. 95/46/EEC, as applicable. Either Party may request hard copy of any document that has been previously transmitted by electronic means provided however, that any such request shall in no manner delay the parties from performing their respective obligations and duties under EDT nstruments.

----------------------------------------

SAMPLE MANDATE - FULL CORPORATE OFFER (FCO)

Date:

XXXXXXXX
XXXXXXXX
XXXXXXXX

Dear SELLER’S REPRESENTATIVE NAME

In an effort to reach a successful resolution, we, MANDATE representing BUYER, have the pleasure of submitting, for SELLER, our Full Corporate Offer for supply of PRODUCT AMOUNT per month of PRODUCT for a period of XX months based on the following terms and conditions:

Product:
Origin:
Quantity:
Specification:
Delivery Terms:

DESCRIPTION
COUNTRY
QUANTITY/PER (MONTH,YR ETC)
As per Specification Sheet annexed herewith
CIF(OR FOB) ASWP
PRICE:

Price in US Dollar per barrel to be invoiced against three-day average, the day before, the day on, the day after (pricing days) of the COUNTRY .... published by .... Crude Oil Market.

PROCEDURE (Non-Negotiable):

1. Seller/Seller's mandate forward Full Corporate Offer (F.C.O) along with formats of bank capability and format of payment Guarantee for the payment of commission to the royality and to the Buyer Mandate.

2. Buyer returns the FCO and formats duly signed and accepted along with an ICPO having full bank details (TOP 20) and major AAA Bank, which acceptable from the Seller. ICPO to be addressed to XYZ, C.C.S.Z. ANYONE (aka AW), W.SMITH, XXX and must confirm financial capability as well as include details of the refinery, refinery codes processing and storage capacity.

3. Seller Mandate response with draft of Sale/Purchase Copy of Contract for the Buyer to sign.

4. Seller Mandate arranges for exchange document as below:

a. Buyer's bank capability as per specified format, duly issued by TOP20 major AAA Bank, which is acceptable from the Seller.

b. Buyer's bank letter informing Seller Mandate that it will issue the bank guarantee as per specified format on a specified date in their bank after checking and verifying the codes with SELLER.

Against the above, same day and same time:

i) Seller Mandate will provide "Authority to Sell" document duly endorsed by the Chamber of Commerce, Saudi Arabia in original.

ii) Seller Mandate will provide "Mandatory Letter" in original issued by the Allocation Holder authorizing to sign the copy of contract on their behalf.

5. After successful completion of (4) above, Seller Mandate and Buyer sign the copy of Contract, agreeing in principal of all the articles.

6. After the Soft Copy of Contract has been signed and completed, Seller Mandate shall send the Soft Copy of Contract to the Allocation Holder, who in turn, shall have the contract registered in the name of Buyer with SELLER, within the maximum period of 15 banking days.

7. After the Hard Copy is registered in the name of the Buyer, the Seller/Seller's Mandate shall provide to the Buyer's/End User's Bank with genuine codes for verification from SELLER , the Buyer's bank shall be permitted a maximum of 24 hours from receipt to confirm and verify from SELLER.

8. Allocation Holder after registration of the Contract in the name of the Buyer with SELLER shall have the original contract having Seller Code, Contract Number, Allocation Number, Seller Bank Details, send to the Seller mandate through courier.

9. Immediately after receipt of the Contract in Original, Seller Mandate coordinate with Buyer/End User for Verification with SELLER and to be followed by signing of the hard copy by the Buyer.

10. After signing the hard copies in Buyer's Bank, simultaneously the Buyer's/End User's bank officer shall hand over to the Seller Mandate the Pay Order Guarantee as attached for the payment of commission to the royalty and to the Seller Mandate.

Splitting of discount is as follows:

Gross: US $XXX.00 per (barrel OR gallon OR metric ton)
Net: UD $YYY.00 per (same as above) (Maximum Market Rate)
Buyer Mandate & Intermediaries: US $ZZZ.00 per (same as above)
Royality: US $MMM.00 per (same as above) (Closed)
Seller Mandate: US $NNN.00 (same as above) (Closed)

The above discount could change on every Monday (London Time) based on the global crude market price fluctuation.

ONCE the Contract is signed then the Gross/Net Discount figures REMAIN CONSTANT during Contracts Term for XX DURATION PERIODS

11. Sellers bank sends to Buyer's bank a 2% non-operative performance bond that guarantees revolving six shipments in favor of Buyer L/C opener.

12. Immediately upon receipt of Non-Operative Performance Bond, the Buyer shall open a IRREVOCABLE, CONFIRMED, REVOLVING AND ONCE TRANSFERABLE (to SELLER) OPERATIVE DOCUMENTARY LETTER OF CREDIT TO BE OPENED TO SHOW AMOUNT FOR THE XX MONTHS QUANTITIES OF THE CONTRACT. THIS LETTER OF CREDIT WILL HAVE VALUE EQUIVALENT TO ONE MONTH'S QUANTITIES BUT REVOLVING FOR THE ENTRY XX MONTHS PERIOD OF THE CONTRACT, FROM A TOP 20 PRIME BANK, PAYABLE BENEFICIARY'S BANK AS SPECIFIED UNDER APPENDIX.

13. The 2% non-operative performance bond submitted by the Seller will be operative immediately after the letter of credit as mentioned in clause 12 above has reached and attached and accepted at Seller's Bank

14. The bellow mentioned document will be sent by the Seller immediately after receipt of Letter of Credit from the Buyer:

a. Certificate of Authority to Sell
b. Certificate of Availability of products
c. Delivery Schedule.

15. At the time of each lifting of delivery, the Buyer / End User (Letter of Credit Opener) must provide the port authority at port of loading, the following documents:

a. A copy of nominated vessels charter party under the name of LC opener (the Buyer must be end user).

b. Proof of Refinery or processing Agreement under the name of Opener (the Buyer must be end user).

16. The Parties to the contract enter into this cycle and shall proceed with the execution of mutually agreed schedule to its full implementation.

17. The validity of this document is only for FIVE (5) days from today (XXX Time).

Note: Only the Original copy with original signatures and seal shall be considered as acceptable document.

Sincerely,
XXXXXXXX

TITLE
XXXXXXXX

---------------------------
SAMPLE BCL

(Note that some of the details have been altered, the following serves only as an example)




----------------------------

Here's the most classical oil scam article :

http://www.gulfoiltrading.com/Fake%20companies.htm

Other Links:

http://sites.google.com/site/blacklistscammersoilandother/file-manager
http://www.docstoc.com/docs/6545072/The-list-of-some-FAKEs-companies-in-Russia-The/
http://www.alees.com/Black_list.aspx

Career Path, Challenges & Preparation for Future Accountants - Lecture in UNITAR - by Nik Zafri

13 July, 2011 - I was invited to become a guest speaker for UNITAR (also known as UniRazak and soon UNTEC) - Smart/Pintar Campus situated at Leisure Commerce Square PJ-Bandar Sunway for a group of students of Bachelor in Accountacy (Hons) at Block B1 L 10 to deliver a 3 hours lecture on Career Path, Challenges and Preparation for Future Accountants to face the current employment, corporate and business world.

(I was also feeling a little nostalgic as I was employed with SunCon (Sunway Group of Companies) in the early 2000 and used to have a good lunch at Jaring and Mentari Business Park)

I wouldn't really want to call it a lecture but rather a crash course or workshop geared towards seeking solutions that can be utilized in years to come. Although the event is not as 'big' as it sounds but I feel honoured to be invited to share my 2 1/2 decade experience, knowledge and skills.

This is the 4th University/Institution of Higher Learning that has called me up to deliver nothing academic but more towards competency. The first one was UITM Shah Alam.

I must say that I was impressed by the quality of students and the lecturers as well.

The questions being highlighted by the students and based on my discussion with the lecturer serves as a living proof that most leading universities and institutions of higher learning are seriously changing their modules to cope up with the real world.

The climax of the lecture are the real life domestic case studies and the applicability of accounting, audit, taxation,corporate governance, fraud detection, due dilligence and finance in different types of industry - namely construction, manufacturing and service industry. Some of the most interesting topics such as identifying intangible cost, cost of quality, safety and environment, contigency etc. - proving how these costs affect the industry greatly

i.e. Prevention and Appraisal Costs are actually INVESTMENT and without investment, the probability is very high that the organization will end up in bearing internal failure and external failure costs. Even safeguarding safety and health is now too important for an organization to ignore.

From what I have gathered, it is clear to me now that the local case studies need to be enhanced further. While foreign case studies are allowable in most accounting modules, still they are not as interesting as the domestic issues.

This is clear during my lecture where students are extremely attentive and participative. In a way, they feel the 'ownership' feeling (patriotic) towards 'local companies' - and the spirit of wanting to help has been unleashed.

Another topic that gained interest was the use of ICT application and system such as CRM and ERP, use of simulated projections vs actual etc.

I have also told the students of the significance of registering with institution of accountacy and/or being registered as a CPA. Furthermore :

"There is no law stopping you (students) to participate in national accounting conferences or the like despite your status as a student. There is also no law stopping you from learning the accounting standard. Effective now. You need to mingle round and network with professionals attending the conference. Do not be afraid to ask questions to the paper presenter. There are great challenges lie ahead for accountants. "

"Accountants nowadays are interelated to all departments and units - business development, R & D, procurement, logistics, operation, QA/QC, Safety, Environment etc. Accountants are no longer narrowed towards Accounting Department only"

To the lecturer :

"Thank you for trusting experienced professionals to come and update you what is there in the real world, trends that has changed which the academic modules need to keep up with. I hope that I can come again here to share my views and experience to all the students"

--------------------------

The Star – Business – Home: Business : News

Saturday July 16, 2011
Bank Negara, corporate sector in graduate training scheme
By JOHN LOH - johnloh@thestar.com.my

KUALA LUMPUR: Bank Negara and the corporate sector have joined hands in a corporate social responsibility (CSR) project to improve human capital and enhance graduate employability.

The Graduates Programme, now in its second phase, will involve the training of 200 unemployed graduates, particularly from low-income families, over a 12-month period comprising two months of intensive classes and 10 months of industrial attachment at one of 48 participating companies.

The participating companies include Dell Malaysia, Unilever Malaysia, Perusahaan Otomobil Nasional Bhd (Proton), Albukhary University and Top Glove Corp Bhd.
Bank Negara assistant governor Marzunisham Omar told a media briefing that the central bank had allocated RM20mil for the programme but had spent not more than half of that amount.

The move is part of a raft of short-term measures announced by the Government to reduce unemployment rate among graduates. It involves various government and government-related entities such as Khazanah, the Higher Education Ministry and Bank Negara.

Marzunisham said results from both batches of the programme had so far been positive.

“Ninety-eight percent of participants in the inaugural batch have secured jobs with their attached companies as well as other companies.

“Seven percent in the second batch secured permanent jobs one month into their attachment,” he said.

A Proton representative said the programme was a chance for companies to test graduates that would have otherwise been bypassed.

“Companies tend to take experienced hires, hence the thousands of unemployed graduates. Their strategy is usually to get a trained army to fight, rather than train the army to fight,” he said.

--------------------------

The Star : News : Home > News > Nation

Sunday July 17, 2011
The problem with fresh grads
By P. ARUNA - aruna@thestar.com.my

PETALING JAYA: Poor attitude -including asking for too much money - is the chief reason why employers shy away from hiring fresh graduates. Another common complaint is that many graduates are poor in English.

A survey by online recruitment agency Jobstreet.com showed that 55% of employers cited unrealistic expectations of salaries while 48% of them said poor English was the main reason why Malaysian fresh graduates from both public and private institutions remain unemployed.

“While previous surveys named poor English as the main cause for unemployment, bad attitude has now topped the list,” said its chief operating officer Suresh Thiru.

He said their attitudes were so bad that some did not even bother to inform the companies if they were running late or unable to attend scheduled interviews.

It was announced that the number of jobless graduates had increased from 65,500 to 71,600 although the overall unemployment rate had dropped from 3.4% last year to 3.1% during the first quarter of this year.

Another study by recruitment agency Kelly Services showed that fresh graduates asked for flexible working hours and expected their work to accommodate their personal life, not vice versa.

Its marketing director Jeannie Khoo said employers were also turned off by the lackadaisical attitude and lack of drive to improve among many of them.

“They have the misconception that they can earn high salaries at entry-level. They enter the banking industry expecting to earn RM3,000 while the market rate is only RM2,200,” she said.

PricewaterhouseCoopers Malaysia head of recruitment Salika Suksuwan said some candidates had many offers in hand but acted unprofessionally in rejecting job offers - by not turning up for interviews or the first day at work.

“We sometimes have to call them and remind them about a scheduled interview when they didn't turn up,” she said.

Talent Corp CEO Johan Mahmood Merican urged fresh graduates not to make demands on their salary.

“It is more important to join a company that can develop your skills and prepare you for future opportunities,” he said.

In a related development, Human Resource Deputy Minister Datuk Maznah Mazlan said half of the applicants who registered with the JobsMalaysia portal (www.jobsmalaysia.gov.my) had found employment.

Speaking when launching the Graduan Aspire 2011 employment fair yesterday, she said about 300,000 job applicants were currently registered with the website.

PENGUBAHAN WANG HARAM/MONEY LAUNDERING

Kajian : Nik Zafri (Januari, 2006)


Artikel berikut adalah kajian bebas pengarang dan bukanlah bertujuan untuk memberikan khidmat nasihat kepada pembaca. Pembaca digalakkan menghubungi pihak yang berwajib seperti institusi perbankan dan kewangan.

Mungkin ramai yang pernah mendengar frasa 'money laundering' atau 'pengubahan wang haram'. Aktiviti money laundering ini telah mengakibatkan kerugian jutaan ringgit kepada sesebuah negara. Setakat ini Malaysia mengamalkan dasar yang agak ketat bagi menangani masalah ini.

Money laundering dikatakan amat popular di peringkat antarabangsa terutamanya golongan pengedar-pengedar dadah, kongsi gelap, bookie, pemain judi dan kumpulan pengganas. Walaupun terdapat pelbagai undang-undang telah digubal di seluruh dunia, namun money laundering, amat sukar di kawal.

Dikatakan money laundering berasal daripada satu kumpulan kongsi gelap/penjenayah antarabangsa yang menggunakan duit hasil kegiatan jenayah untuk 'dilaburkan' atau 'dibersihkan' dengan menggunakan jalan-jalan yang berlandaskan undang-undang seperti menerusi aktiviti pembelian saham, stok, derivatif, futures, FOREX, insurans, pembiayaan industri/projek yang besar, terlibat dalam sektor hartanah dan sebagainya. Malah 'penjenayah' menggunakan wang berkenaan bagi 'membiayai' dan 'membeli' bank-bank tertentu (yang bermasalah) untuk diniagakan menerusi pelbagai skim pinjaman berfaedah termasuk segala potongan cukai bagi 'membersihkan' wang berkenaan dan mengikut 'lunas undang-undang' serta dianggap sebagai 'revenue'/hasil. - ('doing the wrong thing the right way' - pengarang)

Suatu laporan antarabangsa pernah dikeluarkan yang menyatakan bahawa kewujudan Money Laundering juga menandakan wujudnya operasi jenayah terancang (organised crime) dan transnasional. Money Laundering juga amat cepat evolusinya di mana penjenayah amat bijak menyesuaikan teknik 'pelaburan' agar sukar dikesan tambahan pula dengan adanya teknologi ICT yang mempermudah dan mempercepatkan lagi urusan 'perniagaan'. Apabila banyak keuntungan diperolehi dari 'pelaburan' money laundering, maka dengan sendirinya kekemungkinan 'keuntungan' ini digunakan pula untuk membiayai aktiviti jenayah adalah tinggi.

Antara cara-cara money laundering dilakukan ialah :

1) Pelaburan
Memandangkan money laundering melibatkan perniagaan 'tunai' yang besar, wang ini akan dilaburkan menerusi sistem kewangan atau ekonomi retail atau diseludup keluar dari sesebuah negara. Matlamat mereka ialah untuk 'melarikan' wang berkenaan daripada 'sumber asal' bagi mengelakkan dikesan oleh pihak berkuasa. Kemudian ianya akan ditukar dalam bentuk cek kembara atau wang pos dan sebagainya.

2) Pelapisan

'Pelapisan' merupakan konsep menjadikan wang haram menerusi proses pusingan pelbagai tingkat yang kompleks termasuk menyerap ke dalam sistem pengauditan. Tujuan utama 'pelapisan' dilakukan ialah untuk 'menidakkaitkan sejauh mungkin' wang berkenaan daripada 'sumber asalnya'. Pelapisan biasanya dilakukan dengan aktiviti simpanan dan pengeluaran secara berulang kali menerusi akaun di bank-bank offshore di mana akaun-akaun ini melibatkan syarikat-syarikat 'kosong' yang menggunakan kaedah Electronic Funds Transfer (EFT). Aktiviti ini amat sukar dikesan kerana wang berkenaan dibahagi-bahagikan kepada terlalu ramai individu dan 'syarikat-syarikat' dan lebih menyulitkan lagi, 'penjenayah' mengetahui bahawa apabila berlaku terlalu banyak transaksi harian di pihak bank-bank offshore, maka mereka akan mudah 'menyelinap masuk' tanpa dikesan. Selain itu, mereka juga membuat pembelian stok, komoditi, FOREX dan lain-lain yang juga sukar dikesan kerana transaksi harian yang terlalu tinggi.

3) Integrasi dan Penyerapan

Wang haram diintegrasikan atau diserap ke dalam sistem kewangan dan ekonomi yang sah dan menjadikan wang ini akhirnya seolah-olah 'dimiliki secara sah' oleh 'penjenayah'.

Contohnya :

a. Dengan menubuhkan syarikat di negara-negara tertentu di mana 'transaksinya terjamin dirahsiakan'. Kemudian, mereka akan kononnya 'diluluskan' pinjaman yang berasal daripada 'wang haram'. Cara ini juga memberikan ruang untuk mendapatkan 'potongan cukai' dan 'pembayaran kembali' wang berkenaan dengan 'faedah'nya sekali.

b. Cara yang lain ialah menghantar invois yang bersabit dengan perniagaan impot/ekspot yang memudahkan penjenayah ini memindahkan wang berkenaan dari satu syarikat ke satu syarikat yang lain atau dari satu negara ke satu negara yang lain.

c. Menggunakan kaedah EFT menerusi bank-bank yang 'dikuasai' oleh 'penjenayah' ini - (melalui pembelian, pelaburan, pembiayaan wang yang tinggi)

d. Membuka/menjalankan perniagaan menerusi syarikat-syarikat (berlesen) pemberi pinjam wang atau pembiayaan secara geran, pengurusan dana - malah pengurup wang.

Walaupun terdapat banyak undang-undang Anti-Laundering digubal di seluruh dunia seperti peruntukan menghadkan jumlah simpanan pada sesuatu masa, tempoh bertenang untuk pemeriksaan, tetapi penjenayah-penjenayah ini tetap pandai mengaburi mata pihak insitusi perbankan dan kewangan dengan hanya menerusi kaedah-kaedah menggunakan nama ramai individu, syarikat-syarikat yang menjalankan berbagai jenis perniagaan. Kita perlu menentang dengan apa juga cara untuk membasmi kegiatan ini kerana ianya mampu melumpuhkan ekonomi negara dalam masa yang sangat pantas.

DERIVATIVES CLEARINGHOUSES

This note is not representing the official views and regulations set by by the authorities related to the bourse or the like. It serves merely as a personal research and quick guide. The interested parties are advised to contact Bursa Malaysia Derivatives Clearing

May 25, 2011
by : Dr. Ben Steil

Thank you for the opportunity to present to you this morning my views on the important subject of derivatives clearing.

The collapse of Lehman Brothers and AIG in September of 2008 highlighted the importance of regulatory reforms that go beyond trying to prevent individual financial institutions from failing. We need reforms that act to make our markets more resilient in the face of such failures – what engineers and risk managers call “safe-fail” approaches to risk management. Well capitalized and regulated central derivatives clearinghouses to track exposures, to net trades and to novate them, to collect proper margin on a timely basis, and to absorb default risk have historically provided the best example of successful “safe-fail” risk management in the derivatives industry.

Compare the collapse of the large hedge fund Amaranth in 2006 with the collapse of AIG in 2008. Both were laid low by derivatives exposures. Yet whereas the failure of Amaranth caused barely a ripple in the markets, owing to its exposures having been in centrally cleared exchange-traded natural gas futures contracts, the failure of AIG precipitated justifiable concerns of widespread market contagion that ultimately required a massive and enormously controversial government intervention and bailout to contain. Had AIG been building derivatives exposures on-exchange rather than in the OTC markets, its reckless speculation would have been brought to a halt much earlier owing to minute-by-minute exposure-tracking in the clearinghouse and unambiguous mark-to-market and margining rules. The long, drawn-out wrangling between AIG and Goldman Sachs over the collateral required to cover AIG’s deteriorating derivatives positions would never have been possible had a clearinghouse stood between the two.

Furthermore, AIG’s net exposures in the marketplace would not have been the subject of rumor or surmise, but a simple matter of record at the clearinghouse.

Encouraging a shift in derivatives trading from OTC markets without central clearing to organized, government-regulated markets with central clearing is challenging, however, for two major reasons.

First, the dealers that dominate the OTC derivatives business have no incentive to accommodate such a shift. Dealers earn approximately $55 billion in annual revenues from OTC derivatives trading. Some of the largest earn up to 16% of their revenues from such trading. The movement of such trading onto exchanges and central clearinghouses has the potential to widen market participation significantly, to increase the transparency of prices, to reduce trading costs through the netting of transactions, and in consequence to reduce the trading profits of the largest dealers materially. It is natural, therefore, that dealers should resist a movement in trading activity onto exchanges and clearinghouses. Where compelled by regulation to accommodate it, dealers can also be expected to take measures to control the structure of, and limit direct access to, the clearing operations. The use of measures such as unnecessarily high capital requirements in order to keep smaller competitors or buy-side institutions from participating directly as clearinghouse members are to be expected.

Indeed, trading infrastructure providers organized as exclusive mutual societies of major banks or dealers have a long history of restricting market access. For example, in the foreign exchange markets, the bank-controlled CLS settlement system has long resisted initiatives by exchanges and other trading service providers to pre-net trades through a third-party clearing system prior to settlement. Such netting would significantly reduce FX trading costs for many market participants, but would also reduce the settlement revenues generated by CLS and reduce the trade intermediation profits of the largest FX dealing banks. Other settlement service providers such as DTCC have no incentive to offer competition to CLS, as they are owned by the very same banks. There are therefore solid grounds for regulators to apply basic antitrust principles to the clearing and settlement businesses in order to ensure that market access is not being unduly restricted by membership or ownership limitations that cannot be justified on safety and soundness grounds.

Second, some types of derivatives contracts do not lend themselves to centralized clearing as well as others. Customized contracts, or contracts which are functionally equivalent to insurance contracts on rare events, are examples. Since it can be difficult for policymakers or regulators to determine definitively whether given contracts - new types of which are being created all the time - are well suited for central clearing, it is appropriate to put in place certain basic trading regulations in the OTC markets that will serve both to make such trading less likely to produce another AIG disaster and to encourage the movement of trading in suitable products onto central clearinghouses. Two such measures would be to apply higher regulatory capital requirements for non-cleared trades, in consequence of the higher counterparty risk implied by such trades, and to mandate trade registration and collateral management by a regulated third party, such as an exchange.

In establishing the regulatory standards for the clearing of derivatives transactions, it is imperative for lawmakers and regulators to be fully conscious of the fact that the derivatives market is effectively international, rather than national, and that it is exceptionally easy for market participants to change the legal domicile of their trading activities with a keystroke or a simple change of trading algorithm. In this regard, I would highlight two important areas of concern.

First, the three major world authorities controlling the structure of the derivatives clearing business – the SEC, the CFTC, and the European Commission – each take a very different view of the matter. Historically, the SEC has applied what I would term the “utility” model to the industry, the CFTC has applied what I would term the “silo” model, and the European Commission has applied what I would term the “spaghetti” model. The broad benefits of each are depicted in the matrix below.



The SEC’s utility model favors institutions operated outside the individual exchanges; in particular the DTCC in the equity markets and the OCC in the options markets. This approach has generally performed well in terms of safety and soundness, and in encouraging competition among exchanges. It performs poorly, however, in terms of encouraging innovation in clearing and settlement services.

The CFTC’s silo model allows the individual exchanges to control their own clearinghouses. This approach has also performed well in terms of safety and soundness. The recent decision of the CME to raise margin requirements on silver trading is evidence of the model working well, in terms of the exchange placing a premium on the integrity and solvency of its clearing operations rather than trying to maximize short-term speculative trading volumes. The CFTC’s model also encourages innovation in product development in a way in which the SEC’s model does not. This is because CFTC-regulated futures exchanges can capture the benefits of product innovation in terms of generating trading volumes, whereas SEC-regulated options exchanges risk seeing trading volumes in new products migrate to other exchanges, all of which use clearing services provided by the OCC. The CFTC model, in consequence, does not promote competition from new trading venues in the same way that the SEC model does. It does, however, promote wider direct market participation in clearing systems, as demutualized exchanges have a commercial interest in expanding such access to buy-side institutions that dealers normally want to exclude. This reduces trading costs and expands market liquidity.

The European Commission’s spaghetti model, enshrined in its so-called “Code of Conduct” for the industry, compels the EU’s clearinghouses to interoperate with each other. It also encourages both exchanges and clearinghouses to compete against each other. Like the SEC’s model, however, it can be expected to dampen incentives for product innovation, as clearing competition makes it more difficult for exchanges that own clearinghouses to maximize their trading and clearing revenue returns on new product development. More importantly, this model, I believe, is not conducive to ensuring safety and soundness, as it encourages clearinghouses to cut margin requirements and other prudential measures as a way to attract business from, or prevent business from moving to, other clearinghouses. It also injects a major element of operational risk into the business, in consequence of each clearinghouse being vulnerable to failures of technology or risk management in others.

On balance, I believe that the CFTC’s model is the most appropriate for the derivatives industry, and I believe that the unworkability of the European Commission’s spaghetti approach will ultimately oblige it to move back in the CFTC’s direction. Although the CFTC’s approach does not promote inter-exchange competition as directly as the SEC’s model, it is important to note that new competitors are, in fact, entering into the futures business. ELX, founded in 2009, and NYPC , a recent joint venture between the NYSE and the DTCC which facilitates cross-margining of multiple products, are now competing with the CME in the financial futures space.

The second point I would like to make regarding the global nature of the derivatives trading industry is that certain measures to curb speculative activity being debated here in Washington are highly likely to push trading activity “off exchange” – precisely the opposite of Congress’s intent. For example, a so-called Tobin Tax on futures transactions at the level being discussed last year, 2 basis points (0.02%), would be equivalent to over 400 times the CME transaction fee on Eurodollar futures. It should go without saying that a tax this large, relative to the current transaction fee on the underlying contract, would push all of this trading off the CME and into alternative jurisdictions.

Likewise, commodity market position limits, if not harmonized with UK and other national authorities, will merely push such trading outside the CFTC’s jurisdiction. There is already an active regulatory arbitrage on oil and natural gas futures between the CME’s Nymex exchange, which trades such contracts under CFTC regulation, and the Intercontinental Exchange (ICE), which trades such contracts under FSA regulation in London. We have seen indications of movement in trading from Nymex to ICE in line with market perceptions of the likelihood of such limits being imposed in the United States. In short, we must be extraordinarily cautious not to undermine Congress’s worthy goal of bringing more derivatives trading under the purview of US-regulated exchanges and clearinghouses by inadvertently providing major market participants incentives to do precisely the opposite.

Thank you for the opportunity to present my views today on this important issue.