Wednesday, June 07, 2017

Felda Global Ventures Holdings Chairman must explain suspended CEO’s allegations of “ridiculous deals” steamrolled by the FGVH Board of Directors

The Board of Directors of FGVH has suspended both the Chief Executive Officer (CEO), Dato’ Zakaria Arshad and the Chief Financial Officer (CFO), Ahmad Tilfi Mohd Talha pending internal audit investigations over purported irregularities in payments made by a subsidiary company.

Until such a time where there is greater clarity on what the purported irregularities are, Malaysians can give the Board of Directors the initial benefit of the doubt as we are sick of hearing cases of misappropriation and corruption in government-linked companies (GLCs) which never get investigated or the perpetrators never getting prosecuted.

However, what is most shocking is the revelation by the suspended CEO that he was being punished for attempting to block “ridiculous deals” from being approved by the Board of Directors.

Amongst the investments, he said, was plans for a GBP100 million (RM551 million) expansion of Felda Cambridge Nanosystems Ltd, a nano carbon company, which had already lost RM117 million in the last three to four years.  "Now they (the FGV board) want to expand, they need another 100 million pounds. To me this is ridiculous, we're a plantation company," he was quoted as saying by The Star.

Another investment, Zakaria said, was the plan to spend RM300 million to acquire a 30 percent stake in a creamer factory, owned by a company primarily involved in making cans.  "Why do I want to put RM300 million for a non-core business? They also overruled, even though exco already said no-go but the investment was given the go-ahead," he said.

More frighteningly, Zakaria also 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.

These are shocking revelations, which to a certain extent explains how purportedly the largest plantation company in the world saw its profits plunged dramatically from RM982 million in 2013 to RM325 million, RM182 million and RM31 million in 2014, 2015 and 2016 respectively.

The above doesn’t yet take into account the botched US$680 million (RM2.9 billion) acquisition of a 37% stake in Eagle High Plantations at an astronomical price which FGVH could in no way afford.

Based on the latest financial statement in March 2017, FGVH has only RM1.8 billion in cash left while it has to service loans and borrowings exceeding RM4 billion.

Tan Sri Isa must immediately confirm if what Dato’ Zakaria said is true and provide the valid reasons why the Board of Directors are making executive decisions which overruled the company’s top management team and executive committee.

The failure of FGVH Non-Executive Chairman to explain the above scandalous allegations will expose himself to the “violation of corporate governance code”, the very wrongdoing which the FGVH CEO and CFO are purported guilty of.

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