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Monday, June 16, 2008

Petronas Accounts - Who is the External Auditor

Recently, news were made about "baring all" of Petronas Accounts next week. E.g. see the Malaysia Today article here, where Second Finance Minister Tan Sri Nor Mohamed Yakcop said "Petronas will explain its accounts next week".


But I find this personally very, very puzzling.

You see, accounts are only as good and trustworthy if they are audited. Or put another way - if the accounts are not audited, then, one cannot trust that the accounts give a true and fair view of the state of affairs of the company.

Make sense?

So, it is critical to find out first, who is Petronas External Auditor.

Do they have one?

If so, who is the Auditor?

If any of you knows the answer, I would be grateful to know. Thanks-in advance.


As I mentioned in my chatbox last week. I googled "Petronas Annual Report" and managed to find the online Annual Report from this site which appears to belong and maintained by Petronas - http://www.petronas.com.my/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open

I downloaded both 2007 and 2006 Annual Report, like a young boy expecting to get free candy!

I then read the Report.

And to my horror, it was a MOST DISSAPPOINTING report.

In more ways than one!

And to keep this article short, I will just highlight 2 Problems I have with this 2007 Annual Report.

1. The 2007 Report only goes up to Page 80 and is incomplete. Page 81 onwards are Missing! Unfortunately, they are the meat of the Report since they contain the important Financial Statements.

Can you imagine my dissappointment?

An Annual Report without the Financial Pages is just like a Marketing Leaflet.

They can say all sorts of things, make all sorts of claims.

But without the numbers, it is meaningless.

So, where are the Financial Pages??

2. There is no mention WHO is the External Auditor for Petronas.

The 100% accurate PDF search yields nothing!

I even use my own eye searching for this word. "Audit". It can be in any case - lower case or upper case or combination - it doesn't matter. It can be full word or partial word - doesn't matter. But Zilch!

So, I don't know if Petronas have or don't have an External Auditor!

In short, a MOST DISSAPPOINTING 2007 Annual Report that I have ever downloaded online.

I have never seen such a lousy quality Annual Report in my entire life!

Despite the glossy photos, the smiling Board of Director faces, etc.

In my book, it is a TERRIBLE quality Annual Report!


A third issue.

Those of you who followed my cbox last week knows that I am pissed off at a statement made by the President and CEO of Petronas - Tan Sri Hassan Marican - which in my opinion, is not only inaccurate, but misleading and does not inspire trust.

Here is what he is reported to have said in the Star, with over 1 million readership.


His actual statement is this: "Asked about criticisms that Petronas' accounts and profits were not transparent, Hassan said the corporation published a very detailed annual report which was deposited in the Parliament library."

For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standard and Poors, and Moody. We do not hide anything,” he added.

Now, I find his statement really, really strange.


1. It is a self-proclaimation.

If I say my blog is the best investing blog in Bursa Malaysia, would you believe me?

Anyone can say anything they like.

So, forgive me if I don't believe you.

2. Here's a suggestion for you. If it is for all intent and purposes Petronas is a listed company, then why don't you list Petronas in Bursa? Then, I guarantee you, you will have no critics whatsoever.

Ok. Perhaps you can quote technical reasons why you cannot list. Such as you want Petronas to remain 100% owned by Malaysia government.

Yes, technical reasons are the best excuse.

After all, it shows that you are just following the law, like everyone else.

So, let's close one eye on this point shall we?

That the fact is Petronas is not listed in Bursa at all.

After all, Malaysia Boleh!

3. Ok. Here's a second suggestion for you.

How about getting the 2nd best thing?

Why not get Bursa Malaysia to certify your statement, that for all intent and purposes, Petronas Reporting is like a listed company?

How's that?

Shouldn't be too hard right?

After all, the CEO of Bursa Malaysia is Datuk Yusli and he is such a nice person.

I'm sure he would find a way to certify this.

Or still cannot?

Why not?

Never thought of it?

Oh, okay. Perhaps, one day, you will think of it. That's right. Malaysia Boleh!

4. Since you can't do either #2 and #3, perhaps I should inform you of some salient differences.

Do you know that in the Bursa website, it is not allowed for Companies to hide their Financial Statement pages in their Annual Reports?

5. Yet you say you don't hide anything. To quote you "We do not hide anything".

So, you called that Not Hiding is it?

How do you seriously expect anyone who knows the truth to trust you?

Oh, of course. Silly Me! Just make sure others don't know the truth!

6. Furthermore, do you know that all Bursa listed Annual Reports must state the name of the external auditor, together with an Independent Auditor's Report. Yet, I can't find the name of the External Auditor in Petronas 2007 Annual Report. Worse, I can't even find the Independent Auditor's Report. So, I question whether there exist even an Independent Auditor.

If you say there is an Independent Auditor, why can't I find the Independent Auditor's Report in your 2007 Annual Report?

Is there really an Independent Auditor?

If there isn't an Independent Auditor, is it true to say that "for all intent and purposes", Petronas is a Public Listed Company?

7. You mentioned you keep it in the Parliament Library.

I ass-u-me this is the full hard-copy report without the missing pages?

Why do you not make the full report available online, where Rakyat like me who don't live next door to the Parliament can access it easily?

Why make the access so difficult?

You think it's easy for 25 million Rakyat to access the Parliament Library?

8. Bottom line - I will tell you Tan Sri - with all due respect - that your statement is a grave insult to Bursa, and all Bursa listed companies.

The frequency, level and degree of reporting which listed companies must provide is much, much higher than Petronas.

It is - in my opinion - an insult to say that "for all intent and purposes, Petronas is a public listed company" when it is not - in either actual form or substance or anything that could come close to resembling that.

And where is Datuk Yusli - the defender of Bursa and all listed Bursa companies - in all this?

Oh, I forget! No one - not even a journalist - sends him the article for his comment! And of course, he doesn't have to read every single article in the Star does he?

How silly me!

To contradict the highly esteemed Tan Sri is not a good thing for one's career.

Some call it "CLB" - Career Limiting Behaviour.

Others probably call it clearer - Suicidal.

So, my conclusion is that in this country, any Tom, Dick and Harry can say that they are "for all intent and purposes" a public listed company!

Sigh! I would really like to see the first journalist and the first Opposition MP to grill Yakcop with these questions as well as Petronas CEO!

That would really make my day!

Happy Reading!

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