Saturday, June 03, 2017

PM Dato’ Seri Najib Razak must ensure that proceeds of assets stripped from Proton must be used to repay the Government’s RM1.5bn soft loan and not siphoned by shareholder, DRB-Hicom

Yesterday, the Prime Minister, Dato’ Seri Najib Razak was absolutely right to ask the question, “will you retain a loss-making company?”, in a pointed justification for the sale of Proton. It is a rhetorical question of course, as no one wants and should retain the company if it is in this case, almost forever making losses.

However, aside from the fact that the Prime Minister sets double-standards by not asking the same question to other bleeding companies such as Malaysia Airlines (MAS) which received a RM6 billion bailout package in 2014, Dato’ Seri Najib Razak must ensure that the sale of 49.9% of Proton to Geely by DRB-Hicom does not become a cover for a multi-billion ringgit bailout of the latter.

DRB-Hicom, a conglomerate owned by Tan Sri Syed Mokhtar Al-Bukhary, who has received billions of ringgit in preferential contracts and concessions from the Government in the past, has been making hundreds of millions of losses over the past 2 financial years.

For the years ending 31 March 2017 and 2016, DRB-Hicom recorded losses of RM260.4 million and RM871.6 million respectively. The share price of DRB Hicom has declined by 56% from RM2.60 as at the end of 2012 to RM1.15 as at the end of 2016.

As Second Finance Minister, Dato’ Seri Johari Abdul Ghani announced, as part of the Geely acquisition, the Government will still pay RM1.1 billion in R&D grant to Proton, which will be “refunded” to DRB-Hicom.

In addition, the Government is disbursing another RM250 million, on top of the existing RM1.25 billion in soft loans for the beleagured company.

Proton will also be stripped of its assets in the process, with the Lotus car company being sold to a Geely-led joint venture for GBP100 million (RM556 million) and real estate properties worth at least RM540 million transferred to DRB-Hicom.

The Edge Weekly also reported last week that the bulk of the proceeds from the Lotus sale will find its way back to DRB-Hicom.

Hence the question, Dato’ Seri Najib Razak, is not whether we should dispose of “a loss-making company”. We have already disposed 100% of Proton to DRB-Hicom in 2012 and hence no longer owns loss-making ‘national car-maker’.

The question Malaysians are asking the Prime Minister is why are we allowing DRB-Hicom to benefit billions of ringgit by helping them dispose half of their loss-making company, Proton?

Two days ago, I’ve already issued a statement seeking the Ministry of Finance to elicit a shareholders’ joint and several guarantee on the Government’s RM1.5 billion soft loan to Proton if the Government refuses to recall the loan in the light of the Geely acquisition.

On top of that, given the factors above, the Government must block the transfer of cash and assets to DRB-Hicom unless the Government’s soft loan is repaid first. In other words, the proceeds from the GBP100 million Lotus sale and the RM540 million property transfer to DRB-Hicom must not be allowed to take place, until and unless the Government is paid first.

Otherwise, the 49.9% stake sale of Proton to Geely has only become just a façade not only for Proton’s assets to be stripped, but for Tan Sri Syed Mokhtar and DRB-Hicom to benefit billions of ringgit in the process at the expense of the Malaysian tax-payers.

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