Saturday, December 16, 2006

Owners' relatives are now the middleman supplier!

Solving the no-supplier problem

The word in the market is that many more suppliers have been avoiding doing business with Meda Inc Bhd and their associated companies, unless the terms are favourable such as cash on delivery or deposit + post-dated cheques upfront.

But Meda Inc Bhd's choices are getting less with each passing day. For some services, such as cooling tower repairs and maintenance, there are only those few big players. When these few suppliers hold back their services, shopping complexes and hotel operations can literally grind to a stop when the air-con system breaks down. Shoppers will run off, shops will refuse to pay their monthly maintenance charges and even sue Meda Inc Bhd for loss of revenue, and hotel guests will refuse to pay their bills even though the sauna is free.

You know what the Meda Inc Bhd owners are now doing to get around this no-supplier problem?

They're now getting their supplies through another company operated by their relatives!

Let's call this company Teoh Relative Sdn Bhd (TRSB). I will reveal the real name of this company in a later posting.

So, supposing Tak Mahu Lagi Sdn Bhd stopped supplying products to Meda Inc Bhd and Summit Hotel Subang USJ because of their infamous bad payment reputation, Teoh Relative Sdn Bhd steps in and source for those products, and then supplies these products to Meda Inc Bhd/Summit Hotel Subang USJ at inflated prices! Tak Mahu Lagi Sdn Bhd won't even know where the products end up, but most likely, they will be saddled with another bad debt from Teoh Relative Sdn Bhd.

My sources report that many of the products and services now being supplied to Meda Inc Bhd and/or Summit Hotel Subang USJ come solely from the owners' relative's company, whose actual business is nothing related to the products and services supplied.

Do Not follow standard procedure

What is even more interesting is that the normal standard procedure of open competitive bidding or tender is NOT being followed. This is against the legal requirements of procurement in a Bursa-listed company.

I can imagine the amount of profits this Teoh Relative Sdn Bhd will be making. I don't think the Teohs' relatives are the only ones benefiting from this profitable venture.

Isn't this a failure of directors' duties?

Isn't this an abuse of the owner-directors' position?

Isn't this an outright breach of trust?

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