MISC

BERHAD
Prepared by:
Goh Yi-Kheng S2100835
Nur Athirah Ahmad S2117928
Nur Khairunnisa Zainal Abidin S2001111
HISTORY + BACKGROUND
Founded and incorporated in Kuok, who had no experience MISC soon enlarged its
1968 as Malaysia in the business, sought the capital base from the original
International Shipping help of the Hong Kong- 100 to 140, with the extra 40
Corporation Berhad Chinese shipping magnate, issued to the Malaysian
by Robert Kuok on request of Frank Tsao for his help with Government, which became
the Malaysian government. establishing the business. the largest shareholder.

In September 2005, Malaysia

International Shipping Main shareholder s
Later became the leading
Corporation Berhad adopted Petroliam Nasional Berhad
international shipping line of
its present corporate identity (Petronas), Malaysia’s
Malaysia.
and changed its name to national oil conglomerate.
MISC Berhad.
STRENGTH
Owner of a modern and well-diversified fleet of more than 160
vessels and a combined tonnage of more than 15,000,000 DWT.
Became the world’s largest single owner/operator of LNG fleet
with 29 LNG carriers.
Owner of third largest Aframax in the world and they owned 36
Aframax according to the 2014 annual report of MISC Berhad.
WEAKNESS
Liner Services – least competitive compared to strong payers like Mearsk lines.

Although MISC owns more than 30 containers ship back then in 2011 still
making lost of $789million in 3 years.
MISC Berhad choose to stop the container service.

Focus on the petroleum tanker, LNG and chemical tanker.

Expertise in LNG and Chemical tanker - main clientele Petronas Company

which produce the Oil & Gas of Malaysia.
OPPORTUNITY / RECOMENDATION

SHOULD BUILD A STRATEGIC ALLIANCES AND IMPROVE EXPERTISE OF EXISTING WORKFORCE AS MONITORING TEAM – CHECK AND BALANCE,
ACQUISITION. THE SERVICE THAT MISC PROVIDED. SUPERVISE FOR EACH ACTIVITY THAT THEY MAKE.
THIS IS TO PROVIDE THE TOTAL QUALITY
MANAGEMENT (TQM) OF THAT COMPANY SERVICES.
CORPORATE STRUCTURE FRAMEWORK
STAKEHOL
DER
ENGAGEME
NT
PRINCIPLES
 Poor Corporate Governance
even from the beginning since 1968

Lack of fairness
The corporate governance framework should protect shareholder rights and ensure the equitable treatment of all
stakeholders, including minority and foreign shareholders.

Lack of accountability
The CG framework should provide for the strategic guidance of the company, the effective monitoring of management by the
board, and the board’s accountability to the company and shareholder.

Lack of independent assurance/responsibility

An effective system of corporate governance must strive to channel the self-interests of managers, directors, and the advisers
upon whom they rely, into alignment with corporate , shareholder and public interests.

Lack of transparency
“Sunlight is the best disinfectant“
The corporate governance framework should ensure that timely and accurate disclosure is made on all matters regarding the
company, including its financial situation, performance, ownership, and governance structure.
DIRECTORS
IN 2011
1. DATO’ SHAMSUL AZHAR ABBAS (CHAIRMAN)
• Master of Science (MSc) in Energy Management, University of Pennsylvania
• Bachelor’s Degree in Social Science (Political Science), Universiti Sains Malaysia
• Technical Diploma in Petroleum Economics, Paris-based Institute Francais du Petrole, Paris
2. AMIR HAMZAH BIN AZIZAN (CEO & MANAGING DIRECTOR)
• Science Degree in Management (Financial & Economy), Syracuse University, New York.
3. KRISHNAN C. K. MENON (CHAIRMAN)
• a Fellow of the Institute of Chartered Accountants in England and Wales,
• member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public
Accountants.
4. DATO' HALIPAH BINTI ESA (COMPANY DIRECTOR)
• Master of Economics degree, University of Malaya
• Bachelor of Arts (Hons) degree in Economics, University of Malaya
• Certificate in Economic Management from IMF Institute, Washington & Kiel Institute for World
Economics, Germany
• Certificate in Advanced Management Programme, Adam Smith Institute, London
5. DATUK NASARUDIN BIN MD IDRIS (PRESIDENT/CEO)
• Bachelor of Arts (Honours) University of Malaya
• Master Degree in Business Administration, Henley-The Management College (Brunel University) United
Kingdom.
6. DATO' KALSOM BINTI ABD. RAHMAN (COMPANY DIRECTOR)
• Bachelor of Economics (Hons), University of Malaya
• Master in Business Administration (Finance), University of Oregon, USA
7. TAN SRI DATO' SRI DR. WAN ABDUL AZIZ BIN WAN ABDULLAH (CIVIL SERVANT)
• Independent & Non Executive Director of MISC
• Bachelor of Applied Economics (Honours), University of Malaya
• Masters of Philosophy in Development Studies, University of Sussex, United Kingdom
• PhD in Economics from School of Business and Economic Studies, University of Leeds, United Kingdom
8. DATUK WAN ZULKIFLEE BIN WAN ARIFFIN (EXECUTIVE VICE PRESIDENT)
• Bachelor in Chemical Engineering, University of Adelaide, South Australia
9. DATUK LATIFAH BINTI DATUK ABU MANSOR (CIVIL SERVANT)
• Masters in Business Administration, Universiti Kebangsaan Malaysia.
• Bachelor in Economics (General Administration), Universiti Malaya.
 2009
Independent Auditor : RM464,991
ERNST & YOUNG million

FINANCIAL
STATUS
(PROFIT/
LOSS)
2011 2010
- RM1,293,254 RM1,488,692
million million
DIRECTORS
IN 2013
1. DATUK MANHARLAL A/L RATILAL (CHAIRMAN)
• Masters in Business Administration from Aston University in Birmingham, United
Kingdom
• Bachelor of Arts (Honours) in Accountancy from the City of Birmingham Polytechnic
(now known as Birmingham City University).

2. KRISHNAN C. K. MENON (CHAIRMAN)

3. DATO' HALIPAH BINTI ESA (COMPANY DIRECTOR)
4. DATUK NASARUDIN BIN MD IDRIS (PRESIDENT/CEO)
5. DATO' KALSOM BINTI ABD. RAHMAN (COMPANY DIRECTOR)
6. TAN SRI DATO' SRI DR. WAN ABDUL AZIZ BIN WAN ABDULLAH (CHAIRMAN)

7. LIM BENG CHOON (COMPANY DIRECTOR)

• Bachelor of Science (First Class Honours) in Mathematics and Computer Science,
Australian National University
 Independent
Auditor :
ERNST &
YOUNG

FINANCIAL
STATUS
(PROFIT/
LOSS)

2013 2012
RM1,345,468 RM298,636
million million
 SCANDAL BETWEEN YEARS 2011 - 2013

MISC and SBM Offshore had formed two joint-venture firms - Malaysia
Deepwater Floating Terminal Ltd & Malaysia Deepwater Production
Contractors Sdn Bhd to own and operate the Kikeh FPSO (Floating production
storage and offloading) project at Sabah which was leased to US oil company.

A document was stolen from SBM Offshore, and the scandal was
revealed by a dissatisfied SBM employee who had earlier demanded a
huge sum of money for non-disclosure.

February 2014, SBM told to the media that the information was alleged
by an angry former employee who tried to extort SBM. They took legal
action against that person and the investigations of the American and
Dutch judiciary were still running.
 Modus operandi;
> MISC officers and 3rd party
contractors made false claims
MISC had received a bribery at higher fee and false claim of
of US$10 million (RM33 non–existent work for
million) from SBM Offshore. maintained of ship, between
2010 and 2013;
The payments for Barnado > Repair works for a tanker
Limited and Delcom Limited vessel at a RM61.6 million cost
(The Companies that were in 2012, despite earlier findings
involved in the transfer line of indicating that the actual cost
Kikeh projects), had been of repairs were at RM31
paid to MISC for the Kikeh million;
FPSO Project. > a loss of approximately RM47
million due to the failure to
observe company procedures
in appointing a contractor.
POOR CORPORATE GOVERNANCE DURING
THE SCANDAL
• Not professional
Morality & • Greedy
Behaviour • Cheating
• Lack of integrity

• Violates the company

policy
Principle • Violates the CG/MCCG
& • Bad quality of
Trust management
• Breach of Stakeholder’s
trust

• Very bad choice/decision

Choice by taking bribery in order
to fund The project
 INCOMPLIANCE OF MCCG 2007/2012 BY MISC
DURING THE ‘CORRUPTION ERA’
> Part 2 (AA) (VIII) MCCG 2007: in the appointment of directors, nominating
committee should consider skills, knowledge, expertise and experience,
professionalism, integrity.
> Recommendation 2.2 MCCG 2012: in the appointment of directors, the
nominating committee should develop, maintain & review the criteria in the
assessment of directors.
> Recommendation 2.3 MCCG 2012: transparent in the procedure to retain
directors
(Managerial hegemony theory – Board as legal fiction, exist to fulfill mandatory
requirement
(Resource-Based view of the firm theory – knowledge & capability of Board for the long-
term growth of the COmpany)
• None of the directors appointed in years 2011 or 2013 having a qualification in
maritime or energy shipping or engineering and construction works or port
management.
 > Part 2 (AA) (I) MCCG 2007: Responsibilities of the Board – reviewing & adopting a strategic
plan, overseeing the conduct of the Company’s business to ensure the business is being
properly managed, reviewing the adequacy & the integrity of the Company’s internal control
systems & management information systems including the compliance with the laws &
guidelines.
> Recommendation 1.2 MCCG 2012: The Board should establish clear roles & responsibilities
in its fiduciary & leadership functions.
> Recommendation 1.3 MCCG 2012: The Board should formalize ethical standards through a
code of conduct & ensure its compliance.
> Recommendation 1.4 MCCG 2012: The Board should ensure the company’s strategies
promote sustainability
(Legalistic perspective theory – Board tasks & roles as corporate leadership)
Resource dependency theory – Board as facilitator of strategy formulation &
implementation)
• The Board failed to monitor the Company’s affairs properly – management of the Project and the
financial account;
• Not acting in good faith; the Boards and officers failed to exercise their power honestly for the
benefit of the Company – abuse of power
• Lack of control; the company fail monitor process to appointment of the contactor.
• Business judgment rule; failed to make business decision in the best interests of the Company.
> Part 2 (AA) (XVII) MCCG 2007: the Board should receive quality information.
> Part 2 (AA) (XVIII) MCCG 2007: the Chairman should undertake primary
responsibility for organizing information necessary to the Board.
>Part 2 (AA) (XIX) MCCG 2007: Directors should have access to all
information within a company.
Recommendation 1.5 MCCG 2012: the Board should have procedures to allow
its members access to information and advice
• Lack of control system; the Company approved claim made by contractor without any
approval or proof of work completion; or the officer approved the claim without any
checking from top management before procced the payment.
• Lack management; approved payment without acknowledge top management,
Standard of Procedure (SOP) company also poor that driver to fraud and corruption.
• Frank & Disclosure: failed to inform on matters detrimental to Company & keep
denying the allegation to the Media.
• Was the annual report submitted to SSM in years 2011 – 2013 accurate?
> Part 2 (AA) (I) MCCG 2007: the Board responsibility is identifying principal
risks and ensuring the implementation of appropriate systems to manage risks.
> Recommendation 6.1 MCCG 2012: the Board should establish a sound
framework to manage risks
(Transaction cost economic theory – efficiency of Company transaction)
(Agency theory – Board as efficient mechanism to monitor the Company for the
Shareholder)

• Poor risk-management; The top management failed to make any decision to

reduce uncertain event as they should have more experience and knowledge
about what company need and required.
> Part 2 (BB) (II) (iii), (iv), (vi), (vii) MCCG 2007: the AC should;
- review the quarterly & year-end financial statements of the board,
- discuss problems arising from interim & final audits,
- review internal audit process,
- Consider any related-party transactions that may arise within the Company.
> Recommendation 5.1 MCCG 2012: the AC should ensure financial
statements comply with applicable financial reporting standards.

• Transparency; MISC AC failed to disclose the materials matters concerning the

organization’s performance and activities, factual information of financial.
• Loyalty; failed to be loyal to the agency of the company by not keeping a financial
statement disclosed with true profits and losses information.
• Mismanagement of financial; taking bribery to fund the Project – where was the
capital fund for the Project?
• Was the annual financial report submitted to SSM in years 2011 – 2013
accurate?
 WHAT LED TO A BETTER MISC?
• In 2020, MISC refreshed its Board composition to welcome new members
including Datin Norazah Mohamed Razali who is also the Chairperson of
the newly constituted Board Governance and Risk Committee (BGRC) and
Encik Mohammad Suhaimi Mohd Yassin.

• MISC also split the functions of the previous Board Audit and Risk
Committee (BARC) between the Board Audit Committee (BAC) and the
newly established Board Governance and Risk Committee (BGRC),
pursuant to the step-up practice recommended by the MCCG 2017.
 BOARD OF
DIRECTORS

BOARD BOARD NOMINATION

BOARD AUDIT
GOVERNANCE & & REMUNERATION
COMMITTEE
RISK COMMITTEE COMMITTEE

PRESIDENT/ GROUP CEO

MANAGEMENT
COMMITTEE

BUSINESS DIVISION
SEGMENTS
 RECENT ACHIEVEMENTS

• Winner for ‘Most Organized Investor Relations’ and ‘Most Consistent

Dividend Policy’ at the Alpha Southeast Asia’s 10th Annual Institutional
Investor Corporate Awards.

• Retained its position as second runner-up in the ‘Strongest Adherence

to Corporate Governance’ category.

• In the FTSE4Good Bursa Malaysia Index, MISC maintained the full

marks in Governance for a second consecutive year and was ranked in
the top 25% by Environmental, Social and Governance (ESG) Ratings
amongst public listed companies in Malaysia that were assessed.
 MCCG 2021
Board Leadership And
Effectiveness

PRINCIPLE
A

Integrity In
Effective Audit & Corporate Reporting
Risk Management PRINCIPLE B PRINCIPLE C & Meaningful
Relationship With
Stakeholders
BOARD LEADERSHIP AND EFFECTIVENESS
• The Board has the overall responsibility for providing
oversight and stewardship to MISC in executing the
Company’s objectives. The Board understands its
responsibility to exercise good governance and is
guided by the principles and best practices as stated in
the MCCG 2021.

• MISC has a Board Charter which provides the framework

for the performance of the Board’s function and duties vis-à-
vis Management and the Company. The MISC Board
Charter outlines amongst others the Board’s and the
individual Directors’ roles and responsibilities, processes,
functions and development, in order to attain efficiency in
Board performance.
• Amongst Board roles and responsibilities are:

a) establishing a strategic plan and setting targets for the

Company in line with the Company’s vision, mission and
business objectives which supports long-term value
creation and includes a sustainability agenda.
b) overseeing the conduct and performance of the Company
and of the President/Group CEO against set goals and
objectives.
c) upholding good corporate governance culture and
business conduct within the Company and its employees,
which reinforces ethical, prudent and professional
behaviour.
• Practices adopted:

a) the positions of Chairman and Chief Executive Officer (CEO) are

held by different individuals.
b) the Chairman of the board should not be a member of the Audit
Committee, Nomination Committee or Remuneration Committee.
EFFECTIVE AUDIT & RISK MANAGEMENT
• In order to ensure Principle B is carried out properly, MISC established the
Board Audit Committee (BAC) which was previously known as the ‘Board
Audit and Risk Committee’ with the objective of assisting the Board in
fulfilling its responsibilities primarily relating to financial management,
financial accounting and risk management framework and process.

• The BAC also monitors compliance with established policies and

procedures and assesses the suitability, objectivity and independence of
both the external and internal audit functions.
• Risk Management and Internal Control Framework
• the Board’s responsibility for continuous maintenance of a
sound risk management framework and internal control to
safeguard shareholders’ investment and the Group’s assets.
• the Board reviews the status of risk management activities and
the updated Risk Register. The Board also ensures that all
relevant project and investment risks, including the mitigation
measures, are deliberated when making such decisions.
• such Project Risk Assessments encompass, amongst others,
project execution risk, contract management risk, counter-party
risk, operations risk, geopolitical risk, and asset integrity risk.
• in relation to reviewing the adequacy and integrity of the
Company’s internal control systems (conducted via the BARC),
the Board reviewed the reports on Related Party Transactions,
Conflict of Interest oversight, Whistleblowing cases and
enhanced management processes thereof, and certain
improvements to internal controls as highlighted by the Group
Internal Audit.
• Practices adopted:

a) the Chairman of the Audit Committee is not the Chairman of the board.
b) the Audit Committee should possess a wide range of necessary skills
to discharge its duties. All members should be financially literate,
competent and are able to understand matters under the purview of
the Audit Committee including the financial reporting process.
c) the board should establish an effective risk management and internal
control framework.
INTEGRITY IN CORPORATE REPORTING &
MEANINGFUL RELATIONSHIP WITH
STAKEHOLDERS
• 3 ways:
a) Investor Relations and Communication with Stakeholders
b) Integrated Reporting
c) Conduct of Annual General Meeting (AGM)

• MISC aims to continuously build and maintain transparent communication

with the shareholders, potential investors and the investing community.
Through MISC Group’s Investor Relations programme, MISC is committed
to uphold best practices in corporate governance and ensure timely and
equal dissemination of material information to its stakeholders.
• MISC has adopted integrated reporting based on a globally recognized
framework with a view of helping our stakeholders understand how MISC
creates value and to promote greater transparency and accountability on
the part of the Company, in line with the MCCG 2021.
• The MISC AGM is the principal forum for dialogue with our shareholders
and an avenue for the Chairman and Board members to interact with the
shareholders.
• The shareholders are strongly encouraged to attend, participate, speak
and vote at the Company’s AGM, and all queries posed to the Board prior
to and during the AGM are responded to accordingly.
• Practices adopted:

a) the board ensures there is effective, transparent and regular

communication with its stakeholders.
b) dialogue with stakeholders is a necessary process as it
enables companies to understand and address stakeholders’
concerns when making decisions.
c) the Chairman of the board should ensure that general
meetings support meaningful engagement between the board,
senior management and shareholders. Discussion should
include among others the company’s financial and non-
financial performance as well as the company’s long-term
strategies.
 CONCLUSION
• Although there is no closure regarding the 2014 Bribery Scandal,
MISC has proved to be a leading organization that practices good
corporate governance.
• This can be seen with many recent awards won by MISC.
• We hope that MISC will continue to consistently provide better
energy related maritime solutions and services.