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So a special audit of Transmile Group has discovered that its revenue for 2005 and 2006 may have been overstated by over RM500 million ringgit. Gulp! Let me say that again s-l-o-w-l-y: over RM500 million.

And its pre-tax profit for 2006 of RM207 million may have been inflated by RM333 million - which means that its real bottom line should have been a pre-tax loss of RM126 million.

Uh-oh, someone has been very naughty here. Cooking the books, it would appear. A fine work of “creative accounting”, indeed.

And investment analysts have got egg on their face, expressing shock and horror at this turn of events. When news first emerged that something was amiss at Transmile after the firm failed to submit their audited account before the 30 April deadline, it seemed that the market consensus was that the bottom line was overstated by about RM50 million or so.

But I knew something was seriously wrong when I first heard that the external auditors had refused to sign the declaration stating that the accounts showed a true and fair view of the state of affairs of the firm. That refusal should have sent up a wave of red flags. It simply couldn’t have been merely because of a book-keeping error, which could have been easily rectified.

Auditors rarely refuse to sign the accounts - unless something is seriously, seriously wrong.

The real question we should now ask is: how widespread is such dodgy accounting in Malaysia?

Most accountants would be familiar with the tricks of the trade - “creative accounting”, they call it. This involves creating fictitious invoices and dummy sales contracts, for instance. You know, the stuff they don’t teach you in accountancy school. Basic book-keeping entries - such as credit sales, debit debtors - can do “magic” to your bottom line. Another common trick involves playing with provisions for doubtful debts and stock losses - or not making enough provisions.

Accountants and management often have an intuitive feel for what kind of bottom-line the market (or their board of directors or key shareholders) is expecting. When their promotion prospects, stock option prices or bonuses depend on what kind of profit they deliver, devious management staff can easily “massage” the figures until they reach a “profit” that is within the range the market (or top management) is expecting. As for junior accounting staff, they often know when they see accounting entries or dummy invoices that are false or concocted. But they are usually too afraid to refuse to enter such transactions in the books for fear of losing their jobs.

About a decade ago, I sent in an article to the journal of the Malaysian Institute of Accountants titled “My boss wants me to cook the books” or something to that effect. In that article, I discussed what accountants and other financial staff could do if ever they faced pressure from their bosses to manipulate the accounts or to put in false entries. The article was never published.

Anyway, this is a piece I wrote a couple of days ago for Asia Times Online - before the preliminary findings of the special audit on Transmile were reported. You will see that Transmile is not the only firm to practise “fancy accounting”:

PENANG, Malaysia - Dodgy accounting at a handful of prominent listed companies has put the spotlight back on Malaysia’s financial reporting and corporate governance. Not only has it taken the shine off the stock market’s recent good performance, which is only now emerging from the doldrums of the 1997-98 Asian financial crisis, but it has cast a shadow over recent upbeat investor sentiment. Full article: Cooking the books in Malaysia

Emperor Constantine’s conversion to Christianity had a profound impact on history. The imperial values of the Roman Empire were pitted against the values of the Gospel, as expounded by Christ in the Beatitudes (Blessed are the poor, blessed are the meek etc). That tension and contradiction has reverberated right down the ages. Many Christians, while on the surface subscribing to the teachings of Christ, were in reality taken up by the values of worldly empire, materialism and militarism rather than the renunciation, simplicity and non-violence that Jesus advocated.

Although we do not have the Roman Empire with us today, we have other superpowers. The values of Empire - and a global neo-liberal economic structure that favours the rich and the powerful - are still very much in our world. If at all there is an unseen global enemy, it has to be the unjust economic system that these powers nurture. It is a world ruled by a small group of fabulously wealthy elites who promise an utopia of worldly riches and bliss but instead oppress the poor and downtrodden even more.

In this piece for the Herald, I tried to show the impact that Constantine’s conversion had on Christianity and how the early dynamism was eaten up when Christianity became the religion of the Empire.

For the first couple of centuries after Christ, the early (Christian) communities were very much the Church of the Poor, sharing their possessions and working for the common good. “I have come to bring the Good News to the Poor,” were Jesus’ first words as he embarked on his mission. Since then, the message of Christianity has been widely seen as a critique of the rich and powerful.

Constantine’s conversion to Christianity had positive and negative implications for Christianity and the Gospel message. Constantine’s chief legacy was to ensure that the persecution of Christians ceased. Christianity, as the state religion, became more widely known to the farthest reaches of the Empire.

But Christianity also assumed some of the imperial trappings of the Roman Empire, though some laws were liberalised a little and Christian worship was tolerated. Much of the trappings of imperial power had nothing to do with the teachings of Jesus but everything to do with the quest for earthly power. Gradually, the Emperors turned Christianity into a religion of the rich and powerful while the Church confined itself to formalism and ritualistic legalism and basked in triumphalism.

Constantine unfortunately introduced the sword into Christianity – a prelude to the use of violence in the name of Christianity. He ironically and tragically put the cross - a symbol of Christ’s suffering and oppression – on the shield of the Roman soldiers, the majority of whom were pagans.

It set the stage for the abuse of Christianity to justify violence in centuries to come: the bloodbaths and torture during the Crusades, the Inquisition, and the conquistadors (the Spanish conquests that brought swathes of Asia and South America under colonial rule).

These were the dark eras in church history, for which the late Pope John Paul II, to his lasting credit, apologised. In a marked contrast to earlier ages when the church was allied to the superpowers of the day, John Paul earned the ire of the present day superpowers, the United States and its allies, when he rejected arguments in favour of the war on Iraq and condemned the US-led invasion in 2003.

….

Other transformations occurred when Christianity became the official religion of the Empire. The reign of God, under which the early Christian communities believed they were ruled, was compromised as many mainstream Christians tried to conform with the values of the Empire and the reign of the Emperor.

Instead of the liberty they enjoyed as the people of God, there was the obligatory profession of an imposed religion. Instead of trying to detach themselves from worldly possessions and sharing their possession in solidarity with others, Christians were now content to perform the bare minimum ‘obligations’ to conform with the ‘natural law’.

As Antonio Gonzalez observes in his book ‘The Gospel of Faith and Justice’, (Orbis Books, a Maryknoll publication) the non-violence, great love for the community and the sharing of possessions, which was distinctive of the early Church, ceased to be practised widely. Instead, many began to regard these practices and way of life as the preserve of ‘superior’ Christians who opted for religious or monastic life.

So Wolfowitz goes without being held accountable for his criminal scheming against Iraq.

After I wrote the piece below, an academic friend told me, “Although he did have to step down, it was hardly a fall — guy walks away with that statement about acting in good faith, plus a golden hand-shake of a year’s salary. The girlfriend gets to keep her pay increase and the pension of USD100k.” Well, he has a point.

Still, Wolfowitz’s gone, with his reputation in tatters. And, as an Indonesian activist told me when I was writing this piece, now that Wolfowitz is stepping down, it is time for people around the world to realise that the World Bank’s role is over. ”We must learn from Hugo Chavez that there is no development and democracy with the World Bank,” he stressed. ”I hope it’s not just Wolfowitz stepping down from the World Bank, but the World Bank must now ’step down’ from our country (Indonesia) and the world.”

PENANG, Malaysia, May 21 (IPS) - Paul Wolfowitz’s fall from grace is symptomatic of the double standards and hypocrisy of the World Bank and strains the marriage between neo-liberal policies and militarism that he embodied, say activists and analysts.

Wolfowitz, an architect of the war on Iraq, finally bowed to pressure after a favouritism scandal involving his girlfriend, ex-bank employee Shaha Riza. He is due to step down as Bank president on Jun. 30, three days after another key player in the aggression on Iraq, British Prime Minister Tony Blair, heads for the exit.

“It’s a humiliating, and, for many, not unwelcome, fall for Wolfowitz who thought he’d found a respectable bolt-hole at the World Bank after his criminal enterprise in Iraq,” said Glasgow-based political scientist John Hilley, who has written on militarism and neo-liberalism. ”Yet, it’s a dark irony that he has gone down for engaging in cheap, nepotistic malpractice while his high crimes, the design and execution of mass terror in Iraq, go unpunished.” Full article: World Bank should go with Wolfowitz - Activists