How Energy Division Lead to Major Losses for Sime Darby

There are 4 multimillion Ringgit barfs entered by Energy and Utilities division of Sime Darby, that turned out bad. One of the supports is coaction with Qatar Petroleum (QP), the Bulhanine and Maydan Mahzam project. Sime Darby has been awarded a RM265 million swerve to nominate wellhead platforms where the scope of whole kit in the contract covers tercet wellhead platforms, inst solelyation of about 40 kilometres of pipeline, 23 kilometres of umbilical and alteration to existing platforms.It started in April 2006 and supposedly completed in noble-minded 2008. However, the division has encountered delays and cost overruns which resulted in losings on the project exceeding RM500 million, which befuddle already been accounted for. At that time, they still guess to negotiate with the QP projects client on claims for the over budget cost, hardly the Board has already decided to turnabout the revenue of RM200 million previously acknowledge in the Group accounts for Financia l grade 2009. The second project is the Maersk Oil Qatar project (MOQ).Maersk Oil awarded Sime Darby Engineering the EPCIC contract to build and install a process platform, a utility platform and threesome tie off the coast of Qatar in February 2007. It was schedule for completion in October 2009 hardly thither have been delays and cost overruns in this project which caused losses of RM159 million for Financial grade 2010. According to Sime Darby, the cost overruns were incurred on transplant and installation, and hookup and commissioning works. It is non sort if the overruns were the result of under-budgeting, and unexpected increase in raw material cost, or both, or somewhat other reason.Even though negotiations were made with the client, they still could not look into the losses. The third project related with the MOQ project, which is the anatomical structure of vessels for the MOQ projects usage called the marine Project. MARINE Project was meant to turn Sime Darby Bhd into a major marine vessel actor in the crude and gas industry, but it didnt turn out as planned when they picked the wrong shipbuilder. The project including grammatical construction a derrick-lay barge, a pipe-laying ship, an anchor intervention towing turn in, and a tug boat that could aerate supplies to offshore oil rigs.Sime Darby had suffered cost overruns of some RM1. 3 billion for all three projects. And the last project is the Bakun hydroelectric impede project. The project was tendered to Sime Darby Group along with seven-member pool by the government at a total of RM 1. 788 billion. The Bakun hydroelectric dam project, in which Sime Engineering Sdn Bhd holds a 35. 7% good interest, was awarded in September 2002 and was initially plan for completion in September 2007. However, over payable to various positionors, completion has been delayed and costs have escalated.There are three developments affecting the Bakun project. The first is the merger of the Sime Darby, Guthrie and flourishing Hope into a new entity named synergism Drive. The second is the proposed takeover of the Bakun project by the contractor, Sime Engineering. The third is the revival of the submarine HVDC production line under the South China sea to transport electricity from Borneo to Peninsular Malaysia. These tetradsome projects were under the former president and four other senior executives control.They are Datuk Seri Ahmad Zubir Murshid (CEO), Vice-president Datuk Mohamad Shukri Baharom, fountainhead financial officer Abdul Rahim Ismail, head of oil and gas Abdul Kadir Alias and senior global manager of Sime Darby Engineering Mohd Zaki Othman. These personnel were charge of failing to carry out a due diligence on all projects. It in any case has been reported that they had neglected decisions from KPMG, specifically on the deals with MLC shipping Group (construction and exchange of four units of anchor handling towing supply at RM285 million and constr uction of a derrick lay barge for a sum total of RM 295 million) and Puteri Offshore Pte Ltd.The VP was blamed for disregarding the due diligence process when he did not disclose or sufficiently highlighted the fact that he had already signed deals with MLC and Puteri Offshore. Sime Darby also has done investigation conduct by the legal and forensic consultants which has validated the finding where they may have been breaches of duties and obligations and inappropriate conduct.