Corrupted Customs racket busted: gold bars, cash seized from dirty Customs officers!

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Customs racket busted 
 New Straits Times

PUTRAJAYA - A nationwide swoop on Customs officers has resulted in 62 staff being arrested so far, with 17 of them to be remanded soon.

Of the total, 48were from Port Klang, one of five Customs premises raided over theweek by a high-powered task force led by the Malaysian Anti- Corruption Commission. The other premises were in Kuantan, Penang and the Tanjung Pelepas and Pasir Gudang ports in Johor.

Those arrested were rank and file and senior officers, among them nine female staff.
The arrests were disclosed by MACC investigation division director Datuk Mustafar Ali here yesterday. He said some of the officers had been released on bail.

The task force, which on Monday had crippled a network involving Customs officers that had been siphoning billions of ringgit of the country's revenue, is investigating the smuggling of some RM10 billion(S$4.2bil) overseas.

The MACC said the amount was based on investigations and from questioning the 62 officers who had been arrested.

Following the arrest in the east coast of a state Customs director and his wife for their alleged involvement in the network earlier this week, Mustafar said 17 officers would be remanded soon under the ongoing Ops 3b.

The 17 are believed to be part of the network, which is alleged to have been asking and receiving gratification from forwarding agents, to reduce duties and to expedite processes involved in bringing in imports.

Mustafar said during the surveillance and probes into the officers' involvement, MACC had noted highflying lifestyles of not only some of the senior officers but also among the rank and file.
He said long before Ops 3b, which began on March 28, Customs officers at the ports, including junior officers, were seen driving posh cars.

Investigations revealed that many of them had hundreds of thousands of ringgit in their bank accounts.
Checks also revealed that one officer had RM10,000 credited into his account seven times.

At the home of an officer, the task force found at least RM12,000, while others had invested RM200,000 in Amanah Saham Bumiputera. Among other items believed to be illicitly obtained were a luxury gold watch and two fake guns with 241 bullets, as well as flashy cars.

Mustafar said the officers also revealed that they were receiving between RM100 and RM500 for each Customs declaration form in which the importer had under-declared the value of the items brought in.

It was also disclosed that in one raid on Friday, a Customs officer was found with three bags of cash, totalling about RM625,000, and five gold bars worth RM50,000.

"One of these officers had half-amillion ringgit in his account and another had RM850,000.

"We are going all out to plug the gaps for these dirty hands, which results in billions of ringgit in losses to the country," he said, adding that investigations would also determine the source of the money and items that were in their possession.

On the case of the state director, Mustafar said initial findings revealed that the director had several accounts and one of it had RM2.1 million.

He added that the remand of the director had been extended but his wife had been released.

-New Straits Times

Gold bars and bags of cash among items seized from dirty Customs officers

By LESTER KONG and LOURDES CHARLES newsdesk@thestar.com.my

PUTRAJAYA: Gold bars and bags of cash containing up to RM600,000 have been discovered in the homes of several Customs officers during raids by the Malaysian Anti-Corruption Commission (MACC).

Other ill-gotten stash included luxury watches and posh cars.

The MACC seized millions of ringgit from at least five of the 62 Customs officers arrested to date in a series of raids over under-declaration of duties and tax evasion.

MACC investigation director Datuk Mustafar Ali said a Customs director arrested last Tuesday had millions of ringgit spread over several bank accounts.

Another officer had almost RM1mil in his bank acount. Two others had between RM500,000 and RM850,000, he told a press conference yesterday.

It is learnt that investigations by a task force estimated that about RM10bil had been smuggled out or remitted overseas.

Last week, the MACC revealed that the raids were carried out as part of investigations into organisations believed to be involved in under-declaration of duties, tax evasion and money laundering.

Yesterday, Mustafar said that several officers had admitted to collecting “fees” ranging from RM100 to RM500 for every Customs declaration K1 form submitted and approved. (K1 forms are meant for imported goods.)

Up to RM10,000 is believed to have been collected for the K1 forms, which contained details of shipments and their dutiable value.

Such crimes, he said, accounted for RM108bil annually in unpaid duties and income tax.
On the MACC raids, Mustafar said: “Our officers found gold bars in the home of one officer.
“Another one had more than RM600,000 in several bags in his house.

“A senior officer had two imitation pistols with more than 200 bullets, besides fireworks and cigarettes,” he said, adding that the raiding team also seized high-end watches and posh cars from the officers concerned.

It is learnt that nine of the 62 arrested to assist in investigations are women. Those caught are aged between 24 and 56.

Mustafar said investigations were still ongoing and that more people would be picked up. He hinted that at least 100 forwarding agents were also being investigated for bribery.

To a question, he said the Customs unit based in Port Klang was the most corrupt with 48 officers arrested.

Malaysian gutter politics: sex video, like a blast from the past to end up as Three Stooges?

It's like a blast from the past
On The Beat By Wong Chun Wai

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There is a sense of déjà vu in the sex video case but this time, public expectations seem to have changed.

IT’S now called a sex video and the footage is probably only contained in a thumb drive. But 22 years ago, during the analogue days, they came in the form of the bulky VHS (video home system) tapes.

The visual on tape was often poor and grainy, especially if taken with a hidden camera and in bad lighting. But if they involved political figures, the intrigue and curiosity created would have been no less strong.

There would be the typical open declaration of disgust and anger over such intrusion of privacy but most would want to know more, especially the identities of the people involved.

The controversy over the sex video involving a man resembling Opposition Leader Datuk Seri Anwar Ibrahim is like a replay of an old video, or “rewind” as it used to be called.


Twenty-two years ago, DAP’s Karpal Singh walked into the Dewan Rakyat with an expose of a sex video implicating then Dewan Rakyat deputy speaker D.P. Vijandran. The press was tipped off earlier about this tape, which purportedly featured the bachelor politician and a woman in a yellow saree.

Karpal told Parliament then that he was exposing the MIC leader in “public interest” while then Prime Minister Dr Mahathir Mohamad expressed regret that the issue had been exploited so much that those allegedly involved were being “persecuted”.

At the height of the issue, this writer received a call from Vijandran who pleaded for the story not to be reported. He also called reporter K.P. Waran at the New Straits Times, hoping for the same thing. But we both told him that it would not be possible.

He then issued a statement criticising the Opposition’s call for the setting up of a Special Tribunal or Royal Commission of Inquiry.

There is certainly a sense of déjà vu among veteran journalists today.

Karpal Singh was regarded as quite a hero for his expose then, and even MIC boss S. Samy Vellu was asked by DAP to resign because of the controversy.

Vijandran, who was then the MIC secretary-general, denied he was the man in the video. In fact, when the issue went to court, he maintained that it was not him.

Political enemies would be blamed but, like most sex videos, they are often the work of people closest to the politician. Blaming the former is often a political reaction.

In Vijandran’s case, he blamed his nephew, S. Ravindran, for using a hidden camera to film him in a compromising situation. In his affidavit, he accused Ravindran of “splicing and superimposing his (Vijandran) image onto the pornographic tape portraying him as an actor”. In short, the tape was doctored. It wasn’t him, he maintained.

Fast forward to the present. No one would claim credit for such gutter politics but the Datuk Trio of Tan Sri Rahim Tamby Chik, Datuk Shazryl Eskay Abdullah and Datuk Shuaib Lazim have unprecedentedly taken responsibility for their action. They are also claiming “public interest” as grounds for doing what they did.

Eskay, a former physiotherapist to Anwar and who is said to be the closest to the Opposition Leader, even signed off a press release as “the insider” and dropped hints that he knew more.

Rahim has rebutted allegations that he had an old political score to settle with Anwar. Not many political analysts, however, are convinced.

Umno leaders have said Rahim has not done the party a favour and they are privately saying he lacks credibility. Many have said they are being blamed for something they had no hand in and that they are nervous over how the drama would end.

In 1998, Umno Youth leader Ruslan Kassim, who was aligned to Anwar, alleged that Rahim was the publisher of the book 50 Reasons Why Anwar Cannot Be PM.

Rahim retaliated by suing him for RM15mil. The case only ended in 2004 with Ruslan, who had by then joined PKR, making an open apology to the former Malacca Chief Minister.

Old soldiers may fade away but in Malaysia it would appear that old political enemies will stay on to renew their fights. Anwar certainly has plenty of old enemies both inside and outside his party.

The trio has called for foreign experts to verify the identity of the man in the video.

Interestingly, during Vijandran’s trial, Dr Alfred David Linney, a University College of London specialist in planning and assessment of facial reconstruction, said the actor in the tape was a different person.

In fact, the defence witness testified that “if both the men were the same person, then their facial angles will not differ very much”.

Another defence witness, Japanese forensic anthropologist Masatsugu Hashimoto, testified: “It is wrong to state that the two earlobes of the man are the same because at least 14 points of similarities should have been found. In this case, not even a single point of similarity was found.”

Another defence witness, a lawyer, said he viewed the tape for 75 minutes and did not recognise the actor. When asked if he was sure, he replied: “I am positively sure it wasn’t Vijandran.”

The point is: in a court case, the prosecution and defence can always get witnesses, even so-called experts, to testify in support of their case.

In that instance, with the tapes freely available, the public had formed their own conclusion. In the People’s Court, Vijandran was the actor. Forget about the foreign experts.

In 1994, the Sessions Court sentenced him to a month’s jail and a fine of RM2,000 for fabricating evidence and making a false declaration. He took his appeals to the various upper courts and finally in 1998, he was acquitted by the Court of Appeal, which also set aside his conviction and sentence. But his political career was dead and public opinion of him and the tape remains unchanged.

This time around, however, public expectations seemed to have changed. Most Malay­sians do not believe Anwar is the man in the video even though they haven’t seen it. And even if they did, the die-hard Anwar supporters would regard the use of the video as gutter politics.

If the Datuk Trio had thought they could play heroes, they have found out that the psychological battle has become more complicated. Un­like Vijandran’s tape, only 10-odd journalists, some policemen and a few local film experts have seen the video, not 20 million people. The police have said the video is genuine, so the three Datuks had better plan their next steps carefully if they do not want to end up as the Three Stooges.

Reliable audit opinions don’t come cheap

OPTIMISTICALLY CAUTIOUS By ERROL OH

A lot is riding on the sturdiness of the Audit Oversight Board framework
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WHOSE fault is it if the quality and reliability of audited financial statements in Malaysia suffer because the audit fees don't correspond to the amount and nature of work required to do a good job? This mismatch is a common complaint among the auditors. We often hear them lamenting that the fees in Malaysia are on the low side. For an example of this, read our Up Close & Personal interview with KPMG Malaysia managing partner Mohamed Raslan Abdul Rahman.

The maiden annual report of the Audit Oversight Board (AOB), issued on Thursday, has amplified the issue. When highlighting the key findings from its inspections of the six largest audit firms in the country, the board points out that auditors need to price their services at levels that will ensure that they can comply with the requirements of auditing and ethical standards. The worry here is that firms may decide on the resources to be deployed for audit engagements based on the fees they will earn rather than on the risks that need to be addressed when auditing the accounts.

In its annual report, the AOB relays the grouse of audit firms that “due to the relatively low audit fees in Malaysia, it is a big challenge for them to secure adequate resources”. Considering that the AOB was set up to assist the Securities Commission in regulating auditors of public interest entities (PIEs), it's telling that the board saw this matter as worthy of a mention. But does this mean that the authorities agree that the auditors are not being paid enough for their services?

If you're bent on getting an unambiguous answer to that, good luck to you. The board will only go as far as to emphasise that the fees should be properly tied to the audit work that ought to be done. It says in the annual report: “The AOB is mindful that the global economy is still in a recovery stage. This will continue to place pressure on PIEs to contain their operating costs, including audit fees. Nevertheless, the AOB expects auditors to price their fees to commensurate with the risks undertaken so as not to compromise on audit quality.”

PIEs include listed companies, banking and financial institutions (including Islamic banks and development financial institutions), insurance companies and takaful operators, and holders of Capital Market Services Licences (such as securities and futures trading firms, and fund management companies).

When fielding questions from reporters after releasing the report, AOB executive chairman Mohamed Nik Hasyudeen Yusoff stopped short of endorsing the view that companies in Malaysia should get used to the idea of paying higher audit fees. He said the board would not tell the firms what to charge clients and would leave this to the market forces to decide. Instead, he urged companies to look at audit fees as an investment rather than as a cost, because the work of auditors supports the enhancement of a company's value.

To help audit firms in determining fees, the Malaysian Institute of Accountants have something called A Guide To Charging For Professional Assurance Services. It says: “Fee arrangement is a matter for commercial negotiation by practitioners. The Institute does not prescribe the mandatory basis for calculating fees, nor does it ordinarily investigate complaints relating solely to the quantum of fees charged.

“The level of fee is to be mutually agreed between the auditor and his client, which largely depends upon the skill and knowledge required, level of training and experience of the staff involved, the time necessarily occupied and the degree of responsibility and urgency of work involved.

“However, this RPG (recommended practice guide) is useful as a benchmark to establish the reasonable level of remuneration, commensurate with the provision of professional services of an acceptable and recognised standard in the absence of other more sophisticated billing methodology.”

The problem is, not many firms make full use of the RPG. Hence, we continue to hear the auditors' grumbling about the fees. Perhaps their best hope is that the AOB framework will bring about desirable changes.

The strategy here is that the AOB inspections will compel the firms to improve their compliance with the standards, and consequently, the firms will turn to their clients and say: “Look, we'll get into trouble with the regulators if our audit work falls short of the requirements of the standards. We won't cut corners and we won't reduce the scope of the work. Our fees have to be right-sized. If you don't want to pay that much, find auditors who are willing to risk being slapped with sanctions by the AOB.”

Of course, such a transition in mindset will take time. Meanwhile, let's see how the AOB handles the errant firms that has no qualms about bending the rules to fit the fees. The annual report has this to say: “It has been a known area of concern that the provision of non-audit services by audit firms to their listed audit clients may result in auditors low-balling their audit fees to gain more consulting jobs at clients and this may compromise independence. The AOB will be reviewing the safeguards in place to understand how the threats are mitigated.” Again, who should we blame for low-quality audits?

Deputy executive editor Errol Oh believes that many people don't understand what is it that auditors really do.

How liveable is Kuala Lumpur ?

By THEAN LEE CHENG leecheng@thestar.com.my 



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Cities are built for tomorrow. As Asia progresses and joins the ranks of advanced economies, green-related issues such as sustainability, liveability and smart cities have cropped up as this drawing by a child from India illustrates.

THERE is a 20-something person let's call him T who has a I Wanna Be a Millionaire ringtone on his iPhone. Every now and then, he would touch base with his roots in Gemencheh, Negri Sembilan. There are many Ts in Kuala Lumpur, and other Ts from neighbouring countries who have made Kuala Lumpur their home and job market. The city and its promise of a better life draws many young people here.

They come, or their parents came decades ago, to eke out a living and over the years, this working class moved up to join the ranks of the middle-class who make up much of Kuala Lumpur today. But like any other city, the have and the have-nots create the diverse demographic landscape of Kuala Lumpur.


I lives in a nice middle-class Petaling Jaya, about 15km from the Kuala Lumpur City Centre. There are many others who are not so fortunate. Many live in slums, besides rivers and on the fringes of Kuala Lumpur.

It is not that the city draws the poor and succours the rich, but that the working class are attracted by job and economic opportunities in the city and the rich enjoy the urban pleasures like art and culture (or what we currently have) and consumption culture of the city. They may not live cheek by jowl as housing from low-cost government-subsidised flats and gated communities and shopping districts, separate them, but all of them are here because they want to be at the centre of activities, be it political, economic or cultural. As the country evolves, so does the city. In fact, because the city is the gateway to the nation, the rate of evolution begins and goes at a faster pace than the country.

The city we know today is the result of an evolution which began in 19th century Malaya. Kuala Lumpur started at the meeting point of the Gombak and Klang Rivers when early travel was by foot, boat and on bullock carts.

Today, the Federal Government is planning to have mass rapid transit (MRT) among other infrastructures. Much has taken place between the bullock days and today's rail travel. There is the Petronas Twin Towers and, before that, the current railway station and Bangunan Sultan Abdul Samad.

Heritage buildings have today given way to iconic buildings. But it is not buildings that make up a city. It is the community of people who gave breath and life to the city.

According to the United Nations Population Division, the share of Asians living in urban areas has grown from 32% in 1990 to 42% last year. In 15 years, the UN forecasts that half of Asians will be city dwellers.

This can be seen in the population growth of Kuala Lumpur. In 2000, it had a population of 1.305 million (density of 53.7 persons/ha). Today, it stands at 1.627 million (density of 66.9 persons/ha).

Says Dewan Bandaraya Kuala Lumpur, or City Hall, the guardian of the city in a statement: “KL's population is growing at the rate of 2.2% per annum in the last 10 years, exceeding the national population growth rate of 2.17% per annum.” This excludes the number of foreigners who have made Kuala Lumpur their home.

What will this mean for the city's infrastructure? More people also means a greater demand on the infrastructure transport, water, amenities, healthcare, education and services. More people also means greater waste. How will the city manage this? These are the challenges confronting Kuala Lumpur today.

The Economist Intelligence Unit has ranked Kuala Lumpur 79 out of 130 listed liveable cities. The ranking has given Federal Territory and Urban Well Being Minister Datuk Raja Nong Chik a new vision to see it in the top 20 by the year 2020. That is just nine years away. Before getting to the 20th spot, he says there are several measures that need to be fulfulled, and one of the main criteria is an effective infrastructure.

In its Asian Green City Index, German power house Siemens independently commissioned the Economist Intelligence Unit to assess the performances of 22 Asian cities. Kuala Lumpur is one of them. It was given a rating of average. It was judged based on its performance in eight areas: energy and CO2 emission, transport, land use and buildings, waste management, water mangement, sanitation, air quality and environmental governance. Among the greatest concerns were waste and water management. It scored well in transport.

Says Siemens chief sustainability officer Barbara Kux: “The battle against climate change will be decided in cities. This applies to Asia, with its booming conurbations, more than anywhere else on earth. Only green cities will make life worth living over the long-term.”

US-based technology company IBM did a presentation on Smart Cities last month. It compared Kuala Lumpur with some of the best international practices in areas such as city services, people, business, communications, transport, water and energy. Kuala Lumpur was ranked below international best practices in all areas and lagged further behind in the people, business and city services systems. It was just close to average in its water and energy segments.

IBM's general manager (government and healthcare) Nazerollnizam Kasim in his paper notes that “smarter cities are working to infuse intelligence into each of their core systems.”

Therein lies the crux of the issue human intelligence. A city thrives because of its creative, productive and talented workforce. Smart people go out in search of smart people to benefit from that interaction. Over this, there is the great need for governance and government. Which is why the Government is trying hard to pull talent and high-value human capital back to the country.

But people will only return, and new ones come, if Kuala Lumpur promises more than just tall skyscrappers. Security, amenities, liveability, education, financial rewards for hard work and talent among other urban pleasures are their measure.

Harvard economic professor Edward Glaeser in his book Triumph of the City writes: “London's amenities have helped the city attract 32 billionaires, according to Forbes, an impressive share of the world's wealthiest people. About half of those mega-rich Londoners are not English ... Human capital, far more than physical infrastructure, explains which cities succeed.”

The fact that we are trying to bring back our own is very telling.

Last year, the Government through Minister in the Prime Minister's Department Datuk Seri Idris Jala unveiled the Government's plan to improve the city's liveability. His tool urbanisation.

His rationale is that the city will provide the engine of growth for the entire country. That means, the next 10 years will be crucial. A decade is a short time, actually, to do all that he has laid down. His emphasis on liveability is based on improving the public transport system, stability, healthcare, edcuation, infrastructure, culture and environment.

At the moment, the city has big plans for infrastructure. By the middle of this year, the Government will begin work on the RM50bil MRT system to connect the entire city. Seven mega projects are currently being planned in and around the city. There is another type of infrastrasture which is not so physically visual, but of utmost importance water and waste management. Both the studies by Siemens and IBM have highlighted the fact that these two areas need attention.

The issue of water management was brought up by Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui last week. He lamented that Malaysians use an average of 226 litres of water per person daily, which is way above Singapore's 154 litres and Thailand's 90 litres.

Unlike our neighbour Singapore, which has two-thirds of its land area as water catchment areas, Kuala Lumpur, together with the state of Selangor and Putrajaya, are expected to suffer water shortage by 2014.

Says Syarikat Bekalan Air Selangor Sdn Bhd corporate affairs department executive director Abdul Halem Mat Som: “We only have 6% reserve (of water supply). By right, we should have 20%. During the dry season, the demand goes up, so the reserve is gone. We cannot maintain a 20% reserve, which is why the Selangor government is buying water from Pahang.”

Says Economist Intelligence Unit head of research Jan Friederich: “The wastage comes from old pipes and high water consumption. Water leakages is running at an estimated 37%, compared with the Asian Green Index of 22%.” Today, there is an impasse as the water sector is being restructured.

Water and waste management is crucial because many diseases are water-borne. Before the days of air travel, some of the diseases that had ruined many a city were due to contaminated water. City Hall is also planning to plant more trees from 25,000 to 100,000 and clean up the Klang river. All these efforts are to add value to the city.

“Intensive cleaning of the river and flood mitigation works are the most crucial parts of the whole programme. These works will include rivers from upstream in Gombak and Selayang and scheduled progressively until 2020. The budget allocated for these works is RM3bil,” City Hall says.

Botanist and researcher Dr Francis Ng is all for beautification. But he stresses the need for diversity. “We have a total of 4,000 species compared to Britain's 50. But our city does not reflect the biodivesity of our forest. There are about 50 species planted in and around Kuala Lumpur today, about half of which are imported.

“Diversification will help to address the problem of extinction, as more areas are opened up for development and other uses besides putting a bit more creativity in our planting, such as creating small clusters of three to five trees.”

Ng, who is the former deputy director-general of the Forest Research Institute of Malaysia, says the country works with five-year plans, “basically to keep contractors going and all they can think of is having concrete, but no maintenance. So the lack of maintenance is built into our culture. That's why trees fall on rail lines and cars in the city. There has to be a tree maintenance programme which includes fertilising and pruning.”

But beautification programmes alone will not draw people into the city. Security, still an issue, is being progressively and successfully addressed. Cities are crime-prone because people bring their social problems such as poverty with them. It's hard to make a living as a snatch thief in small towns, although some do as some of our newspaper headlines testify. The many pockets riding on the rail system promise better returns.

So as Kuala Lumpur restructures and weeds out crime, builds new rail linkages, addresses water and waste management issues, the issue of balancing competing needs comes into the picture. Opening up green fields versus reducing water catchment areas, congestion versus crime, carbon dioxide emissions versus selling more cars, there is no end to competing needs.

But if it is to be ranked as a city for the future, it must build for the future.




Related Stories:
The liveability index and complexities of urban living
Keeping track of our neighbour's growth
The integrated approach in solving transport woes
Experts: Water issue needs thrashing out
Intensive cleaning of rivers is necessary in improving the quality of drinking water

What house are you building?

SCIENCE OF BUILDING LEADERS By ROSHAN THIRAN


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Building a solid house can only be done through reflection.

“Keep doing what you're doing, and you'll get what you are getting. If that is good, great. If it's not, you better change.” Ang Hui Ming

A FEW years ago, I heard about an elderly construction worker who wanted to quit. He told his boss of his plans to leave. His boss was sorry to see such an excellent worker go and asked him to build one last house as a personal favour.

The construction worker said yes, but his heart was not in his work. There was no passion left. He resorted to shoddy workmanship and used inferior materials, cutting corners to get the work done.

Finally, when the house was finished, his boss handed him the keys to the house saying, “This is your house. It's my gift to you.” The construction worker was stunned and full of regret as he knew he was sloppy working on it. If he had only known he was building his own house, he would have done it all so differently.

Isn't it the same with us? Often we work hard but after a point in time, we dish out less than stellar performances. Our attitudes differ but we console ourselves by saying it doesn't matter. But in most cases, it does matter.

Each day, we build our lives, one transaction at a time. Each day counts as we build our life's building. When I worked at General Electric (GE), people always spoke about the “house that Jack built.” Jack Welch, painstakingly, for more than 20 years, built the foundation of GE, then its rooms, its roof and finally completed a remarkable turnaround. This took patience, time and years.

When we don't get the promotion we crave, or we fail to get what others get, we are surprised. Could it be because the house we built doesn't have strong foundations or good materials? It's not just last year's performance or last week's deal that counts it is your cumulative effectiveness on a daily basis.

So, how does one ensure that you are effective daily? Based on our research, it requires an equilibrium of action and reflection. While most leaders are biased towards action, the best leader balances contemplation and action, creating daily solitude for effective action.

Ineffective leaders

Most leaders say the resource they lack most is time. But if you really observe managers for a day, you will see them rushing to meetings, constantly checking their Blackberry, dodging fires, believing they are attending to important matters.

For 10 years, Bruch and Ghoshal observed behaviours of busy managers, and their conclusions: 90% of managers squander their time in all sorts of ineffective actions and activities. A mere 10% of managers spend their time in a committed, purposeful, and reflective manner. These 10% are usually classified as great leaders.

Worst still, psychiatrist John Diamond found that 90% of people “hate their work.” They come to work to punch their time clock and can't wait to go home. The difference between leaders who love their jobs and those that don't they take time daily to re-energise themselves and focus through reflection.

Reflection

The practice of reflection goes back centuries and is rooted in numerous institutions including the Japanese samurai. Ben Franklin, one of my leadership heroes, had a rather systematic approach to reflection, which was a fundamental part of his daily life. He developed a list of 13 virtues and each day he evaluated his leadership relative to these virtues.

A sincere examination of ourselves is never easy. It involves the willingness to face and acknowledge our mistakes, failure and shortcomings. Albert Schweitzer, Nobel Prize winner, believes reflection in life is critical to leadership as it allows you to take into “account what you have neglected in thoughtlessness.”

Interestingly, a key step in the Alcoholics Anonymous programme asks participants to make a probing and courageous moral inventory. Steve Jobs went to India to reflect prior to starting Apple.

In business, reflection provides an opportunity to consider the ramifications of the services they provide and how to keep raising the bar. Business grows when they look within.

So, what does one achieve by reflection and contemplation? Productive action relies on a combination of three traits:

1. Focus the ability to zero in on an objective and see the task to completion
2. Energy the vitality that comes from concentrated personal commitment.
3. Learning the ability to correct past mistakes and improve oneself

Focus without energy results in lethargic execution or burnout. Energy without focus leads to aimlessness or artificial busyness. And not learning from your mistakes ensures you repeat them.

All three pieces can only be obtained through reflection. Procrastinators are usually people with low levels of energy and focus. Leaders with high focus but low energy never inspire and generally end up ostracising the troops. Managers with high energy but low focus confuse their employees with chaotic activity.

Reflective managers are purpose-driven with high energy levels, learning from their mistakes. They start their day in reflection to ensure purposeful execution and action.



Focus

Confucius once said, “A man who chases two rabbits catches neither!” In Star Wars Episode 1, Qui-Gon says to the young Jedi Anakin, “Always remember, your focus determines your reality.” There is an ounce of truth in that Jedi wisdom. A focused person usually attains his/her goals.

At the end of a tiring day, if we focus on how tired we are, generally we will remain tired and end up vegetating in front of the TV set. If we re-focus the mind from being tired to needing to be healthy, there is a bigger likelihood we will exercise.

It is easy to stray with all the distractions, TV, Internet and mobile devices that we have today. These distractions can lead us off-tangent, stealing our focusing power. Reflection corrects that.

Energy and passion

Reflection generates passion and energy. Energy comes from passion. Passion is self-generated as you can motivate yourself to be excited about what you do.

Author Bill Strickland writes: “Passions are irresistible. They're the ideas, hopes, and possibilities your mind naturally gravitates to, the things you would focus your time and attention on.”

Strickland believes that only by following your passion will you unlock your deepest potential. “I never saw a meaningful life that wasn't based on passion. And I never saw a life full of passion that wasn't, in some important way, extraordinary.”

Learning from mistakes

Reflection allows us to learn from mistakes. We all make mistakes I have done so spectacularly at times. We have all been in situations where things don't go exactly to plan. But how often do we take the time to sit down to reflect on where it all went wrong?

Plato's great words “know thyself” implies that a lifetime of self-investigation is the cornerstone for knowledge. John Dewey states, “We do not learn from experience, we learn from reflecting on experience.”

In fact, the Kolb Learning Cycle, is based on the belief that learning for real comprehension comes from a sequence of experience, reflection, abstraction, and action. All learning can come only through reflection.

Check your attitudes daily

Living an extraordinary life is done internally through the daily positive alignment of your attitude. Your attitudes and the choices you make today build the house you live in tomorrow. Build wisely! Build with commitment, pride, joy, love and passion.

Your attitude is contagious and sets the mood for those around you. Your employees get excited when you are excited. They are energised when you are.

Plato opened up The Academy in Athens at the age of 40, when life expectancy was 36. He ran this first university, training Aristotle and others, until he was 80. Pursuing focused positive dreams arms one with high energy and leads to an extended, rewarding life.

I don't have time to think!

This is a pretty common reaction: I don't have time to reflect.

Which begs the question: Do you have time to make the same mistakes over and over again? Or to remain unfocused, running around like a headless chicken? Or lack energy to fulfil your dreams?

I remember an old boss once told me that I was not paid to sit around and think. On hindsight, that was probably the worst advice I received. Leaders should spend at least a quarter of their time thinking about the future of their company and reflecting on the past. It may seem ludicrous to spend time reflecting but “real work” can only be done right when you know where you are going and have the energy to get there.

Final thoughts

If we could do things over, we probably would do many things differently. And better. But the problem is, we cannot go back. We are just like the construction worker. Each day we hammer a nail, place a board, or erect a wall in our career, family and lives. Are you doing it with focus and energy? Are we improving ourselves by learning from our mistakes?

If the fire in our eyes has diminished and we are going through life in auto-pilot, with the joy of life seemingly leaked out, it is time to take stock of life and reflect.

Socrates, Ben Franklin and most great leaders believed that reflection led to a productive and fulfilling life. And don't say you don't have time. After all, as Buddha aptly puts it, “All that we are is the result of what we have thought.”

Roshan Thiran is CEO of Leaderonomics, a social enterprise passionate about transforming the nation through leadership development. For more information on leadership programmes for your organisation or youth camps for your kids, call +60122006045 or login to www.leaderonomics.com

China defense transparency

Military open to media scrutiny
By Cheng Guangjin and Li Xiaokun (China Daily)
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Beijing - Increased transparency on China's defense spending is not only a government initiative but also a result of a high level of media coverage, meaning that the claims made by some Western countries that China's military is shielded from public scrutiny are groundless, according to a top expert on military affairs.

"Now China's national defense expenditure is not only an issue dealt with by the government, lots of mainstream Chinese and other media organizations are carrying huge amounts of military information," Chen Zhou, from the People's Liberation Army's Academy of Military Science, also a member of the think tank behind China's White Paper on national defense, said in an exclusive interview with China Daily.

Related readings: Full text: China's National Defense in 2010 China sticks to defensive national defense policy  China issues white paper on national defense

For example, reports on the test flight of China's stealth fighter jet appeared on the Internet minutes after the aircraft's debut.

Beijing unveiled a 12.7 percent increase in its 2011 defense budget of 601.1 billion yuan ($91.4 billion) earlier this month.

Chen noted that China's defense expenditure as a proportion of its overall GDP, between 1.4 to 1.5 percent, was below the global average of between 2.5 and 4 percent. Statistics also showed that China's defense expenditure per soldier in 2009 was $30,600, compared with $481,000 in the United States, $410,400 in the United Kingdom and $172,700 in Japan.


"The increase in our defense budget is at an appropriate level. We have two guidelines when planning the defense budget, to meet the needs of both national defense and the national economy," said Chen.

The increase in defense expenditure in recent years is actually to make up for losses in the 1980s and 1990s, when China focused on economic construction at the expense of military development, Chen noted.


China recently allowed more family members of military personnel to join their spouses, which would help end the separation of nearly 100,000 service persons from their spouses.

The military will make efforts to provide housing and employment for family members, which means that young couples, even if living in the most expensive Chinese cities such as Beijing and Shanghai, will get government-subsidized apartments.

China said some Western nations make a habit of attacking China by criticizing its increased defense spending.

"Such accusations are unacceptable. The critics either do not respect the facts, or they do it for other reasons," he said.

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Are Solar Power Incentives A Nasty Regressive Tax On The Poor/Misinformed?

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By GORDON JOHNSON

Image by Getty Images  via @daylife 

Lately, a lot of attention has been given to the solar industry due to the unfortunate set of events which have unfolded in Japan as a result of the earthquake. The prevailing theme among journalists, mis-informed Wall Street analysts’, and investors who have a positively biased view on the solar industry is that due to the problems with the nuclear plants in Japan following the earthquake, this form of renewable power should be abandoned in favor of power sources such as solar.

The fundamental problem with this thesis is that it is impossible to replace distributed (i.e., power this is accessible equally at all times of the day) baseload (i.e., energy produced at a constant rate) nuclear power with intermittent (i.e., energy that is only accessible during certain times of the day) peakload (i.e., power sources that provide the most output at select times of the day) solar power. Furthermore, given nuclear power costs roughly $0.015/kWh, while solar power costs closer to $0.25/kWh, if all of the world’s nuclear plants were to be replaced by solar plants, the cost to the rate-payer would go up by nearly 25x (we do not think this would bode well in countries facing high unemployment – U.S., France, Greece, Spain, Italy, Germany, etc.). Stated more simply, if you were to replace the world’s nuclear power with solar power, you would only have power during the day when the sun is shining the brightest (if a rain storm, or large cloud, happened to pass over, you would suddenly not have power – this could be a problem in less sunny regions). In addition, your cost of electricity would rise by roughly 25x. Under this backdrop, it seems many of the arguments suggesting solar energy can replace nuclear are delusional at their core.

Now, to the question posed in the heading of this entry: Are solar power incentives a nasty regressive tax on the poor/misinformed? Well, first, it may make sense to know what a regressive tax is. More specifically, in terms of individual income and wealth, a regressive tax imposes a greater burden on the poor than the rich – there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption, or income. Stated differently, a regressive tax tends to reduce the tax burden of people with a higher ability-to-pay (i.e., the rich), as it shifts the burden disproportionately to those with a lower ability-to-pay (i.e., the poor).

So, how do solar incentives work? Well, there are a number of schemes in which solar power is “incentivized”. However, the most popular form of solar incentive globally is in the form of a feed-in-tariff (FiT). Under a FiT incentive structure, renewable energy generators (homeowners, businesses, pension fund investors, private equity investors, etc.) are paid a premium by the utility buying the solar power generated by their roof-top system, on top of the cost of generating the solar power. As a point of reference, it is important to remember that while natural gas costs roughly $0.035/kWh, and coal costs approximately $0.05/kWh, with nuclear power at $0.015/kWh, solar currently costs about $0.25/kWh. Thus, if you are using solar under a FiT incentive structure, you are being paid by the utility $0.25/kWh for the solar power you are producing, plus an additional “premium” as high as $0.25/kWh, making the total cost to the utility subsidizing this incentive significantly higher than it would have otherwise paid using more traditional forms of electricity.


Thus, the cost to the utility appears to be significant, right? Well, it’s not that simple. That is, what the utility does when it pays the person who is using the renewable energy under a FiT program is simply redistribute the difference in what it is paying the renewable energy user (i.e., $0.35-$0.55/kWh) and what it pays for more traditional forms of energy (i.e., $0.045/kWh) to all of its ratepayers; in essence, the utility is not paying the exorbitant cost of incentivizing solar, but rather the collective ratepayers in any region which implements solar incentives are. This begs the question… can’t everyone equally share in the benefit of this structure? Well, unfortunately, due to the high cost of solar, the answer to this question is no. What do we mean? Well, when considering at present, the cost for a solar system is approximately $5.50/watt, and the average home installation is 5.5kW, the cost to anyone considering such an installation is $27,500 up front. Furthermore, given a solar system is a 20-year investment (meaning the returns on these systems are calculated over a 20-year period), the first 5-to-10 years of your investment in a home solar roof-top system, you will be cash flow negative. Admittedly, for those ratepayers in a FiT area who have a spare $27,500 to invest, which they don’t need access to in 5-to-10 years, an investment in solar makes a lot of sense (you are paid to use power). However, for the bulk of Americans who do not have a “spare” $27,500 to invest over a 20-year period, for which they will be cash flow negative for 5-to-10 years, solar is not an option. Despite this, however, because the utility redistributes the cost of solar to all ratepayers, whether you are using solar or not, you are paying if you live in a state that has significant solar incentives (i.e., California, New Jersey, Florida, North Carolina, etc.). As such, despite you not being able to afford putting solar on your roof, you are effectively being forced to subsidize your “rich” neighbor who does have the resources to put solar panels on their roof. Stated differently, a solar incentive is a form of a regressive tax on the “poor”. This begs the question… do many of the “poor” people in the States who have passed solar legislation understand this dynamic? Likely not.

When you add to this dynamic the fact that the majority of solar modules are produced in China, with U.S. solar module makers First Solar (FSLR) and SunPower (SPWRA) producing the majority of their panels in Malaysia, Germany, and Vietnam, the idea that solar installations in the U.S. create American jobs is another mistruth (this is an understatement). In fact, First Solar’s 290MW Agua Caliente Solar Project, which will receive nearly $1.5 billion in tax-payer funded money from the U.S.

government, and is being supplemented, for the most part, by modules produced in Malaysia (thus, effectively, creating jobs in Malaysia using U.S. taxpayer dollars), being constructed in Yuma County, Arizona, will only create 15-to-20 full-time U.S. jobs (a cost to the U.S. taxpayer of nearly $85.7 million per full-time job; this does not appear like a good return on investment for the U.S. taxpayer).
Another form of incentive, more widely used in the U.S., comes in the form of a loan guarantee, or tax credit. While these differ from FiTs, they are effectively the same thing… money taken from the taxpayer used to subsidize high-cost solar power.

In short, the way solar incentives work is by taking money from the poor to subsidize the rich homeowners, businesses, and investors who can afford the high upfront costs of installing solar power (a reverse Robin-Hood structure), which is among the most expensive forms of energy available today. While the solar industry has grown considerably, increasing its lobbying power globally, which in-turn has allowed for a massive expansion in marketing (with the key selling point being you must support solar to stop global warming), it remains among the most costly and inefficient forms of electricity available when observing: (1.) cost/kWh compared to other forms of electricity (i.e., wind, hydro, geothermal, nuclear, etc.), and (2.) usage (solar power is only available when the sun is shining, and declines in output with less intense sunrays and cloud coverage).

While it goes without saying that many of the same people who support solar in the U.S., and other countries, don’t fully understand this dynamic, as they see material spikes in their electricity bills, despite limited job creation associated with the massive solar plants being constructed in their backyards, this could become more of an issue.

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