Deal or No Deal?

Early spring this year saw a remarkable takeover battle between a few major banks in Europe. The Dutch major bank ABN Amro, the largest bank in the Netherlands, has become subject of a fierce fight for control by the British Barclays at one hand, and a consortium of three banks at the other. The last ones are the Royal Bank Of Scotland, the Belgian-Dutch Fortis and the Spanish Banco Santander.

It all started with a letter sent by an activist investment funds, The Children’s Fund, to the management board of ABN Amro in February this year. It demands a break-up of the bank and a sell off of its assets in order to increase the shareholders’ value. Although ABN Amro’s chief, Rijkman Groenink, brushed off the claim by the activist funds, it has triggered the bank to do something. Under Groenink´s rule ABN Amro has shown poor performances over the past seven years, and it is now feeling the heat from discontented shareholders.

It looks much like a panic reaction when ABN Amro unexpectedly announced a full merger with the British Barclays in March. The tie-up will turn ABN and Barclays in one blow into one of the top three leading financial institutions in the world. The British bank offers 67 billion euros, mainly in shares, while it generously agrees to move the headquarters from London to Amsterdam.

So, have Rijkman Groenink and Barclays’ chief John Varley struck an outstanding deal for themselves? If they are in a victorious mood, it is however short lived. Following their announcement, a consortium of banks express their interest in ABN Amro as well. The consortium that is led by the Royal Bank of Scotland is keen to buy and break up ABN Amro into parts. The Scottish bank, which is a key rival of Barclays in the UK, is in particular interested in LaSalle, the US subsidiary of ABN Amro. Since it fits into its chairman Fred Goodwin’s ambition to further expand its operations in the US.

Fortis, that ranks number four in Holland, wants to take a predominant market position by the takeover. If it manages to buy ABN´s operations, than Fortis will become the largest bank in the Netherlands. As about Banco Santander, the Spanish have set their eyes on ABN Amro’s operations in Brazil. The consortium says that it is willing to pay 71 billion euros for ABN Amro. This offer, mainly in cash, is superior to that of Barclays. It has become a serious threat to ABN Amro and Barclays’ merger deal.

Rijkman Groenink who favours a tie-up with Barclays is not amused by this hostile bid from the consortium. In order to outmanoeuvre it, ABN Amro announced in April that it has agreed to sell LaSalle to Bank of America for 21 billion US dollars. It is a cunning move from Groenink who knows that, once LaSalle is no more part of the deal, the Royal Bank of Scotland may abandon the bid and thus making the consortium to falter.

Have ABN Amro gotten away with this? The answer was yes, had there been no incidents at its annual shareholders meeting in Amsterdam April last. Some shareholders got furious when the management board declined to discuss the consortium’s counter offer. Also, they are unhappy about the fact that they are not heard on the sale of LaSalle.

Peter Paul de Vries, who is the chairman of the Dutch association of shareholders, takes the lead in the protest. He climbs up to the stage and seizes the microphone but is quickly dragged away by the security. The scene only shows how high the emotions have run. Affected by the loud protests the emotional Groenink almost on his knees was begging the shareholders to take the deal with Barclays. But to no much avail.

Peter Paul de Vries takes the case to the court claiming that the sale of LaSalle by the management is illegal, as it has no prior approval from the shareholders. The conflict between the bank and the shareholders is getting personal as Peter Paul is determined, not only to undo the LaSalle deal, but also to topple ABN Amro’s chief Rijkman Groenink as he beliefs that the last one is not acting to the best interests of the shareholders.

In June a Dutch court decided that ABN Amro’s selling of LaSalle was illegal without prior consent from the shareholders. Groenink, however, appealed successfully as the Dutch Supreme Court overturned the previous decision by the lower court. In early August the consortium pressed ahead by launching an official bid, no matter LaSalle was part of the deal or not. It is now up to the shareholders to speak out on the fate of ABN Amro.

Behind the scenes of this fight for controlling ABN Amro there is a struggle between a few powerful and ambitious men. Rijkman Groenink who is keen to save his damaged reputation by finding a safe refuge for ABN Amro in the hands of Barclays. Fred Goodwin, the chief of the Royal Bank of Scotland, feared by many because of his reputation as “Fred the Shred”, has set his teeth upon ABN’s LaSalle and is not likely to give up. And Peter Paul de Vries, who has a reputation of being a knight crusader, fights relentlessly for the interests of the shareholders. The question is who will come out as winners from this bitter fight for corporate control?

Yee Chuen Leung
Chief Editor

The Curse Of The Golden Flower

What is the problem of Chinese moviemakers? Every new movie is getting grander, more expensive, and spectacular than its predecessor is. After Chen Kaige’s vainly The Promise last year The Curse Of The Golden Flower takes the honor to be the most expensive film ever shot in mainland China. Thus far.

The story of The Curse Of The Golden Flower is however appallingly simple. Emperor Ping (Chow Yun-Fat) takes revenge on his ill wife empress Phoenix (Gong Li) due to her illicit relationship with the crown prince Wan (Liu Ye) who was born out of a previous marriage. Ping decides to add poison to the daily portion of herbal medicine for the empress. In response, the empress and the second prince Jai (Jay Chou) plot a rebellion to overthrow the emperor on the Festival of the Chrysanthemum.

Fans of Zhang Yimou, who are familiar with his creative use of abundant colors, lights and settings are unlikely to be put off by The Curse Of The Golden Flower. In the contrary, this time it is even getting more excessive than as ever. Nothing is spared in order to overwhelm the audience completely with an overdose of magnificent scenes, gorgeous costumes, colorful and surreal settings. There is just one way to describe The Curse Of The Golden Flower, and that is in terms of megalomania: hordes of walk-ons, impressive palaces and beautiful sceneries. Salient details are the bare boobs of the maids that add extra spices to this already lavish movie.

Following the example of The Promise Zhang Yimou is also guilty of over-usage of CGI. In his obsession with visual dazzle, the sceneries and battles are spruced up by computer-animations turning the film needlessly into something artificial and clumsy.

The story is in no way in proportion to the pictures. The Curse Of The Golden Flower has a thin story line with an extremely predictable plot. The scene of the revolt within the imperial palace resembles to the The Emperor And The Assassin (1998) where storming rebels were ambushed and butchered by the palace guards. As about the illicit affair of the empress with the crown prince, where did we see this before? This was also a key element in Xiao Gangfeng’s The Banquet (2006). When it comes to originality, Zhang Yimou really did a bad job this time.

The great star Chow Yun-Fat seems to be too much constraint in his role as the old shrewd emperor. In none of the scenes is he able to show some of his great acting. Instead of being an almighty ruler, he rather looks like a silly old fool. Gong Li, however, manages to show a great dignity and beauty being the empress. The rest of the cast are rather shallow. So is the dramatic scene, when the maid Chan (Li Man) finds out that she has been in an incestuous affair with the crown prince, rather hilarious than tragic.

Admittedly, The Curse Of The Golden Flower is in terms of cinematography absolutely a masterpiece. In his enthusiasm, however, Zhang Yimou has overlooked an important thing: the story.

Yee Chuen Leung
Chief Editor

Adam Air Flight 574

On the 1st of January 2007, an airplane of the Indonesian budget airliner Adam Air went missing over the archipelago Sulawesi. Flight 574 with 96 passengers and six crews on board was on its domestic flight from Surabaya to Manado. After a search for more than ten days, a few pieces debris from the crashed airplane, were found at the shores near Makassar in southern Sulawesi on 12 January last. What are the circumstances and background of this air disaster?

Adam Air was founded in 2002 by the well-known Indonesian businessman, Agung Laksono, who is also an influential politician linked to the powerful political party Golkar. Adam Air inaugural flight took place on 19 December 2003 from Jakarta to Medan on Sumatra. Its CEO is Laksono´s own son Adam Adhitya Suherman who was then 22 years old.

The crashed airplane was a Boeing 737-400 with registration code PK-KKW which was 17 years old. The fleet of Adam Air consists of 20 Boeings 737, with an average fleet age of 18.5 year, ranking Adam Air on the third position of the newest aircraft fleet in Indonesia. The national carrier Garuda leads with an average 10-year-old fleet.

Flight 574 left Surabaya at 1 pm local time and was bound for Manado on northeast Sulawesi. It was a normal 2-hours flight. The weather conditions were bad as the area was hit by high winds and severe storms in the past few days. In the last radio contact the captain reported heavy side winds. The contact was then lost one hour before destination at an altitude of 35,000 feet.

The cause of the crash may be found in the severe weather conditions. The first question that arises is why Adam Air flight operation did not cancel the flight but rather allowed it to take off? Two days prior to the crash a ferry with 600 people on board sank on its way from Kalimantan on Borneo to Java Island. Experts believe the same storm might well have been the cause of the crash of this aircraft.

So, why did the pilot not divert the flight, as he could see on the weather radar that the plane was going to fly into the extremely bad weather? An anonymous pilot reported from the Professional Pilots Rumour Network website that all 737-200s of Adam Air are not equipped with such weather radar. Thus, pilots have to rely on weather satellite pictures of Indonesia. The PK-KKW plane was, however, a 737-400 which was believed to have weather radar on board. Was the weather radar already inoperative before departure?

The ´Tambolaka Incident´ may shed more light on this matter. In early February 2006 an Adam Air Boeing 737-300 flying on the route Jakarta-Makassar went off course and was eventually found back on the airstrip of Tambolaka on Sumba Island. The plane was then 2,000 km off its final destination.

Adam Air explained that ´due to bad weather the pilot was forced to make an emergency landing on Tambolaka`. Three days later, however, the Indonesian ministery of transport announced that ‘Adam Air had committed a serious violation by operating a plane which flight navigation system still needs to produce evidence of repaired.’ So was the plane wandering in the sky for more than two hours without proper navigation before it touched down at Tambolaka?

The way Adam Air´s senior management handles safety is questionable. According to the pilots´ rumours website, the cabin crews are poorly trained while a substantial number of flight operation officers lack necessary experience or proper qualifications. There are cases where pilots who protest to the management on its way of handling aircraft safety are sacked and sued by the airline for professional negligence.

An example on the operational safety with Adam Air: the priority is set on cargo. In order to maximise cargo revenue, it happens that the aircraft is sometimes over its maximum zero fuel weight. The captain, not wanting to enter into a delay, decides to reduce weight by burning off fuel before take off.

As long as the wreck of flight 574 is fully recovered, the question of what might have caused the crash cannot be answered. Given the way Adam Air runs airline business, investigators may not have to beat around the bush. Ervina Liauw, 28, an accountant from Jakarta, when asked on her experience with flying with Adam Air: ´I dare not flying with Adam Air as I heard a lot of scary stories about it. A friend once took a flight from here to Semarang. She was shocked when she saw how old the aircraft looked like, and she was scared to death when the plane smashed hard onto the runaway.´

Yee Chuen Leung
Chief Editor