Friday, June 09, 2017

It is time for the Auditor-General and Public Accounts Committee to investigate the shenanigans which has taken place in Felda Global Ventures Holdings Bhd

Both the FGVH Chairman, Tan Sri Mohd Isa Samad and the Chief Executive Officer (CEO), Dato’ Zakaria Arshad have traded barbs and accusations against each other on irregular transactions and activities which have taken place in the struggling plantation company.

The CEO has accused the Board of Directors of approving “ridiculous deals”, despite the objections of the management executive committee.  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.

Tan Sri Isa and the Board of Directors have to date failed to provide any clarity or rebuttal against the CEO allegations, lending credence to the veracity that the Board has indeed approved these “ridiculous deals”.

On the other hand, Tan Sri Isa has led the Board to suspend the CEO and four other members of the Management, including the Chief Financial Officer for alleged irregularities in payments from a Dubai-based Afgan company, Safitex Trading LLC to a FGVH subsidiary, Delima Oil Sdn Bhd.

According to the Board, Safitex’s debt to FGVH increased from US$8.3 million in 2015 to US$11.7 million in 2016.

Dato’ Zakaria has publicly denied any wrongdoing or “violation of the corporate governance code”.  Initially, in a letter to the Chairman dated 5 June 2017, Reuters reported that he claimed “The payment process... was approved and implemented by the previous chief executive...”

He has also insisted that the amount involved was only US$11.7 million, barely 0.2% of FGVH’s total revenue which did not justify the gravity of the actions taken by Tan Sri Isa.

Yesterday, in a Edge Financial Daily report, Dato’ Zakaria further insisted that the Safitex debt is “100% recoverable”.

However, despite the denial and the attempt to make light of any possible transgression in the above payment, Dato’ Zakaria did not sound convincing in the reasons for the delay of payment by the Afgan company.

No tangible reasons have been given as to why the sum has been outstanding since 2015, or why it would be recoverable. It further begs the question as to why the Afgan company has been given such special leeway in payment terms, particularly since the sums involved were so small in the first place.

Juxtaposed against the company’s performance where its profits plunged dramatically from RM982 million in 2013 to RM325 million, RM182 million and RM31 million in 2014, 2015 and 2016 respectively, the exposes by both the Board and the Management raises major questions on the scale of shenanigans taking place in FGVH over the past few years.

Therefore, the dire situation in FGVH demands more than merely the appointment of Dato’ Seri Idris Jala to be an “independent party” to establish the facts of the case and recommend the way forward.  The former Minister’s appointment and any outcomes arising from his appointment will smell of a political compromise and smack of opaque cover ups.

The gravity of the failure and imbroglio in FGVH demands a thorough investigative audit by both the Auditor-General (AG) as well as the parliamentary Public Accounts Committee (PAC).  This will not be the first time an audit is carried out in a public-listed company substantially owned and controlled by the Government.  Previously, the PAC has also carried out a thorough investigations of the construction of KLIA2 by Malaysia Airports Holdings Berhad.

Both the AG and the PAC have previously refused to re-open investigations into the 1MDB scandal despite new incriminating evidence from the United States Department of Justice, as well as to initiate investigations into SRC International for transferring tens of millions of ringgit into the personal bank account of the Prime Minister.

However, Malaysians hope that both the AG and the PAC will still carry out part of their responsibility to investigate major shenanigans in government-linked companies to protect the interest of the nation’s taxpayers.  The failure by the AG and the PAC to do so would only go to prove that these vital institutions have been severely compromised to ensure that only minor infractions in the civil service will be investigated.
Post a Comment