Wednesday, November 15, 2006

Meda Inc Group MD breaks his word again, and why?

Can you trust this guy?

Late last year at the Summit Subang USJ shopping complex, Fajar, an anchor tenant, was giving up and moving out. Many other tenants were teaming up and suing the complex management, and they refused to pay management fees and utility bills. The shopping complex was like an air-conditioned pasar malam - untidy, messy and many shops looked simply ugly. The building was badly maintained, its lifts often broke down, and there were so many empty lots it was like a ghost town. Cars were stolen in broad daylight. The crowds were not going there.

They were seriously facing cash flow problems at Group level. They also needed money to keep their Kota Damansara project afloat (which they placed under their private company called Casa Andaman Properties Sdn Bhd - don't we have any regulations regarding conflict of interest?)

After letting the Summit shopping complex rot for so many years, and ignoring the need to manage and promote it professionally for the tenants, Meda Inc Bhd decided to give it an urgent facelift which they hoped would attract new investors to buy the property. They were in a hurry to raise the cash.

They then brought in the Summit hotel management team to execute the plan.

The new team brought in a new cleaning contractor to give the place a new shine, and changed the security arrangements. They painted the basement car park and installed additional lamps to brighten the areas. Meda Inc could have done all these long time ago but they didn't do it - they were not competent enough. Besides, some long-term contract deals were handled by the Meda directors' relatives!

To be fair, the new (hotel management) team did make a big difference to the place within the few months of taking over.

By the way, I have met the new cleaning contractor - they, too, have not been paid even after they completed their six-month contract. The promises made by the new team to pay contractors promptly was not upheld by Kenneth Teoh.

(There seems to be a pattern here. As not many suppliers are keen to submit quotes to Meda Inc, Kenneth Teoh often asks his managers to bring in their contacts. These contacts often extend goodwill and favourable terms to Meda Inc because of these contacts, but in the end, most of them got played out by Kenneth Teoh.)

Kenneth Teoh decided to call a tender to upgrade or change a new car park system at the complex. Two suppliers were eventually shortlisted and asked to give presentations in the presence of Kenneth Teoh and his brother Dato' Patrick Teoh. Kenneth Teoh personally negotiated for the lowest price from a supplier, and the award finally went to a company which I will call STech. The Purchase Order was then issued to STech. I was told, its final total price was way below RM700,000 - the best price among all the bidders.

But STech could never get started on their installation work which was to have begun in December.

Meda Inc had hired a new operations manager by the name of Wan. In the many months following that P.O., STech was given the run-around by Wan who kept postponing the installation dates and delaying the payment of the required deposit. Meanwhile, STech was keeping all those equipment ready in their warehouse. They even paid a deposit to their installation subcontractor.

Six months later, while STech was still waiting for clearance to start installation, Kenneth Teoh sourced for another supplier.

STech made numerous attempts to meet again with Kenneth Teoh, but he declined. He did not even have the decency to face his supplier to try to settle the matter amicably. No apology, no explanation.

Kenneth Teoh then brazenly awarded the car park equipment contract to another supplier which I shall name ScanP. The total price of the equipment? Over RM700,000. It was almost RM100,000 more than the first supplier.

All this while, Meda Inc Bhd was under severe financial strain and cash flow pressure, and unable to pay its hardworking, reliable and patient suppliers. Yet, Kenneth Teoh would splurge almost an extra RM100,000 on a new car parking system.

Two questions arise from this incident:

1. What is his integrity worth? Can anyone trust that his signature on an agreement is binding?

2. Why would Kenneth Teoh want to spend almost an extra RM100,000 more for a car park system, especially since they are tight for cash. What is there to gain from doing this? What's the purpose of this whole exercise? What was his motive?

For question (2), I think we can safely guess where the surplus money go to.

Some of his personal friends who hang out with him told a management staff that Kenneth Teoh is the kind of man who makes an agreement with you today and breaks his contract the next day.

Lesson to learn: You can't trust Kenneth Teoh and his promises. You can't do business with Meda Inc.

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