Did FGVH "Non-Executive Chairman" Tan Sri Mohd Isa Samad over-extend his role to become the de facto CEO and an executive director?

We welcome the Government’s appointment of Dato’ Seri Idris Jala as an “independent party” to establish the facts of the case and recommend the way forward following FGV board’s decision to suspend its chief executive officer, chief financial officer and two other senior members of the management team.

In his investigation process, Dato’ Seri Idris Jala must not only look into the truth behind the purported trangressions by the suspended management team, he must also review the corporate governance practice within FGVH, particularly the role of the Board of Directors.

The current board of directors comprise of a Non-Executive Chairman, Tan Sri Isa Samad; 3 Non-Executive Directors - Dato’ Dr Omar Salim, Dato’ Yahya Abd Jabar and Dato’ Siti Zauyah Mohd Desa who represents the Ministry of Finance; 4 Independent Directors - Datuk Noor Ehsanuddin Mohd Harun Narrashid, Tan Sri Dr Sulaiman Mahbob, Dato’ Mohd Suffian Awang and Dato’ Zafer Hashim as well as the suspended CEO, Dato’ Zakaria Arshad, who was also the sole Executive Director on the Board.

When Dato’ Zakaria publicly alleged that the FGV Board authorised “ridiculous deals” against the opposition of the executive committee, it raised the question of who is ‘running’ FGVH.

The “ridiculous deals” included a GBP100 million additional investment in Felda Cambridge Nanosystems Ltd which had already lost RM117 million in the past few years and another RM300 to acquire a 30% stake in a creamer factory, which is not part of Felda’s core business.

The problem is none of the Board of Directors, other than the CEO have ‘executive’ functions.  This means that they cannot be bringing “deals” directly to the Board for its approval.

Excluding the Independent Directors, Tan Sri Isa and the 3 Non-Executive Directors must explain what powers do they have in FGVH to direct transactions which were specifically rejected by the management executive committee (Exco)?

The proper process should be any proposed transactions must be studied by the Exco and put forward to the Board of Directors for approval.  The Board, after deliberation, could then decide to agree or reject the proposed deal.  It is not be any Board member, even a non-executive chairman, to propose a transaction directly to the Board for approval, especially if it has been specifically rejected by the Exco.

If the non-executive directors of FGVH have failed in carrying out their grave responsibilities and fiduciary duties, then it should be recommended that they be sacked from their positions.

What’s more, Dato’ Zakaria had further revealed direct interference by the Board in FGVH to award directly negotiated contracts without tender which he had wanted to stamp out since he was appointed just over a year ago in April 2016.

As a former Cabinet Minister who preached accountability in our GLCs, Dato’ Seri Idris Jala must verify the very serious allegations above and take action against those who broke the codes of corporate governance in FGVH.

Finally, Malaysian call upon Dato’ Seri Idris Jala to complete his investigations within two weeks so as to ensure the uncertainty within FGVH which is listed on Bursa Malaysia can be resolved the soonest possible.