Updated on April 14
By Mak Yuen Teen
I refer to “Datapulse responds to Mak Yuen Teen” in the April 16, 2018 of The Edge Singapore. This was in response to my article “Nothing good-looking about Datapulse’s diversification plan” in the same issue.
On the issue of who actually owns the trademarks which I raised, the company said that “there is no change to the company’s understanding of the ownership of the trademarks…Nevertheless, the board will continue to review and monitor whether there may be material risk or exposure or otherwise material adverse findings relating to Wayco’s business that if not satisfactorily rectified may trigger the buy-back option to the company.”. The company evaded the question as to why it first disclosed a list of 19 trademarks in response to SGX’s query without disclosing that 15 out of 19 were not in use, which means they were not contributing to the profits of Wayco. It also clearly does not know for sure who actually owns the trademarks. In my article, I had pointed out that the “Goodlook Leaf” trademark that the company said is owned by Wayco is a registered trademark of a dormant £100 UK company owned by Ang Kong Meng and his sister, while the “Glorin” trademark said to be owned by Way Trading (which Datapulse is considering acquiring) is a registered trademark of another dormant £100 UK company also owned by Ang’ Kong Meng and his sister. This again shows the lack of proper due diligence when Wayco was acquired and again raises the question as to why the board was in such a hurry to buy Wayco.
On my comments on the proposed diversification into the investment business, it said my comments are lop-sided. I serve and have served on various investment or finance committees and interact regularly with fund managers, including reviewing their performance. Reputable academic journals and business newspapers such as Financial Times regularly publish articles which show that active investment strategies do not consistently outperform market benchmarks (active fund managers of course often try to convince you otherwise). The board should not be delusional about any superior investment expertise. The company should also not use “paltry returns from keeping cash in the bank” as a “straw man” to justify the company investing in publicly-listed securities on shareholders’ behalf. Shareholders should consider this: Should it be the business of Datapulse to invest in publicly-listed securities? Or should the cash be returned to shareholders for them to invest as they wish? Given how it bought Wayco, do shareholders really want the board to invest in other companies on their behalf?
The company makes a sweeping statement that my suggestions and recommendations appear to be beyond my expertise and say that I am biased and partial. I do not know what lack of expertise the board is referring to. Perhaps the board should take a look at the mirror and look at its own expertise viz-a-viz the areas that it is trying to get Datapulse to invest in. In terms of being biased and partial, I was not the one who decided to buy a company with minimal due diligence that was recommended by the controlling shareholder and which was owned by her business associate who was the boss and is a business associate of the then CEO – and which the strategic review has concluded is not sustainable unless a number of significant conditions are met.
The company said that my comments on the current board is not based on concrete evidence. You mean evidence such as the multiple “inadvertent omissions” of regulatory actions and the winding-up petition by Mr Low? Or the fact that Cosmosteel, where he is the chairman, is on the MTP watchlist and has also made three successive years of losses and is therefore facing a potential mandatory delisting? Or that OEL Holdings where he was chairman and managing director spiralled into financial difficulties under his watch? Or the evidence provided by the other independent directors themselves that they have no prior experience as listed company directors, have no prior experience in the consumer business and were business associates of the controlling shareholder? Or the evidence that the current CEO does not have relevant experience in the consumer business? Do I need to cast this evidence in concrete?
In terms of the proposed directors, the company said that I did not comment on the suitability of Ng Boon Yew and Intan Ng. For Mr Ng , it refers to losses at Raffles Campus causing a Middle East Fund to take massive write-offs. First of all, Raffles Campus is a private company, and unlike say several of the companies that Mr Low are at, did not take money from ordinary retail investors and lose it for them. My comments on the current directors was about their track record (poor record or lack of record) in publicly-listed companies. Second, it is not unusual for businesses to make losses because they have to take risks. The directors ought to know that. I would of course be worried if a director has a consistent track record of poor compliance, poor corporate governance and poor performance in various companies that he is involved in. That is why I am worried about Mr Low much more than I am about Mr Ng. Third, companies sometimes have to make difficult decisions to terminate certain products, services or programs because not everything will pay off, and this may result in write-offs. It is, however, comforting to know that Raffles Campus is still around – unfortunately we may not be able to say the same for much longer for, say, OEL Holdings or Cosmosteel.
As for Intan Ng, I have still not met her. I started writing about the Datapulse saga before she requisitioned for the EGM to remove the current directors. I am not interested in innuendos about circumstances of her previous departure from the company in the same way that I only use what is publicly available and factual for the current directors. I am just pleased for the many minority shareholders that she has decided to bear the cost of requisitioning the meeting so that they have a chance to remove the current board and reject their diversification plan.
As I have pointed out in my previous articles, in the current situation where requisitioning shareholders are trying to remove a board, many potential directors will not want to be involved. I have also written that I hope that the new board, if appointed, will review its own composition once it is in place to get the directors most suitable for Datapulse, and that this may mean that some of them will not stay around for very long.
What is very clear to me is that the current board should be removed because it made a hasty acquisition which is now shown to be unsustainable on its own and shareholders may now be asked to throw good money after bad.
