💡 Darussalam Assets’ billion-dollar share cancellation is being called a “technical clean-up.” But beneath the numbers lie deeper questions — legacy overvaluations, delayed accountability, and the future Brunei has long debated: a stock exchange of its own. Is this simply correcting the past, or quietly preparing for the next chapter?
Second Follow-Up to KopiTalk’s Investigations | By Malai Hassan Othman
In two previous reports, we looked at how Darussalam Assets Sdn Bhd (DA) asked the High Court to cancel over B$1.24 billion in “lost or unrepresented” shares — a move seen as a balance-sheet tweak but viewed by many as a billion-dollar mystery. In this third instalment, we’re diving deeper: what historical and structural factors might have led to this mismatch, why the delay in seeking court approval occurred, and how it connects with broader issues of governance, oversight, and Brunei’s economic future.
Legacy Overvaluations
DA was set up in 2012 to bring together government-linked companies under one roof, starting with around B$2 billion in share capital. Analysts are now saying that the recent capital cut might show overvaluations that have been around since the beginning. Assets transferred at book value might not have accurately reflected their true value, and over time, impairments or depreciation widened the gap.
This doesn’t necessarily mean fresh losses today — it might just be a delayed recognition of past mismatches. Sometimes, assets inherited from earlier restructuring were recorded too optimistically, only for today’s stricter accounting rules to reveal the overstatement.
The Two-Year Delay
The special resolution for the reduction was passed in November 2023, but the High Court petition didn’t come to light until mid-2025. That nearly two-year gap has raised eyebrows. Usually, such delays happen when internal audits, external valuations, or shareholder talks drag on. In Brunei, where private GLCs don’t have to publish accounts, the lack of transparency let this issue stay under wraps until the court notice popped up.
Critics see this as another sign of systemic inertia in SOE oversight. The IMF has repeatedly pointed out Brunei’s slow progress on reform and risk management in state entities, which resonates with this case.
📡 Subsidiaries and National Priorities
Some of DA’s subsidiaries, like those in telecommunications and infrastructure, are said to operate with more of a national-service focus than a profit-driven one. Building networks in remote areas or maintaining underused facilities is great for social policy, but not for making money.
When these investments are racked up at high costs but bring in little return, they create “fictitious” value that eventually needs to be wiped off. This is a common issue in resource-dependent economies: state-owned enterprises are expected to serve the public good, but eventually, the financials need to reflect reality.
⚖️ Accountability and Oversight
Why weren’t these mismatches caught earlier? DA’s audits aren’t made public, raising questions about both internal audit strength and board-level financial know-how. International observers have long urged Brunei to improve governance in its SOEs, noting that boards often lack the specialised skills needed to keep an eye on risk.
The lack of accountability fuels public mistrust. As one online comment put it: “A billion dollars written off may be a paper exercise, but to the rakyat, it feels like a wasted opportunity.”
📈 A Prelude to a Stock Market?
Some folks think the cleanup isn’t just about fixing the past but also about getting ready for the future. Brunei has been talking about setting up a domestic stock exchange for ages — discussions date back to the early 2000s when neighbours like Malaysia and Singapore ramped up their markets, while Brunei stayed cautious.
Progress has always hit the same roadblocks: a small corporate base, low liquidity, and the need for better transparency in financial reporting. For an exchange to work, GLCs need to present credible accounts that meet international standards.
Seen this way, the adjustment at Darussalam Assets could be viewed as a prelude to market reform — a step toward aligning financial reporting with what’s expected in public capital markets. If Brunei really wants to push for a stock exchange in the coming years, then balance sheets need to be believable, valuations realistic, and accountability essential.
Whether or not this is a deliberate move, the ghost capital saga highlights the scale of preparation needed before Brunei can make such a big leap.
🌍 Broader Risks for Brunei
This capital reduction isn’t just a corporate footnote. It risks sending a message to investors that Brunei’s valuations are unclear and that SOEs might have hidden weaknesses. For a country looking to diversify under Wawasan 2035, such doubts can derail efforts to attract joint ventures and foreign partners.
The public also connects these numbers to real-life issues: unemployment, rising costs, and underfunded social programs. Even if technically “no money was lost,” the perception is that value slipped away without explanation.
✍️ Closing Reflection
From the start, our KopiTalk series has stressed that this isn’t just about lost or unrepresented shares. It’s about governance. Whether the mismatch came from unpaid share capital, uncollected debts, or legacy overvaluations, the bottom line is: it took more than a decade and a High Court petition for the issue to come to light.
This report doesn’t aim to interfere with the Court process. The petition will be decided within its legal framework. Our focus is on the larger lesson: Brunei needs to tackle its governance challenges head-on if it wants to build public trust and achieve Wawasan 2035.
If the adjustment is indeed part of gearing up for a more transparent financial future — maybe even paving the way for Brunei’s long-discussed stock exchange — then the ghost capital story might carry not just lessons from the past but also hints about the country’s next chapter. (MHO/09/2025)
.jpeg)
No comments:
Post a Comment