By Tony Pua
Both the FGV Chairman, Mohd Isa Samad and the Chief Executive Officer (CEO), 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 that had already lost RM117 million in the past few years and another RM300 million to acquire a 30% stake in a creamer factory, which is not part of Felda’s core business.
Isa and the Board of Directors have to date failed to provide any clarity or rebuttal to the CEO’s allegations, lending credence to the veracity that the Board has indeed approved these “ridiculous deals”.
On the other hand, 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 FGV subsidiary, Delima Oil Sdn Bhd.
According to the Board, Safitex’s debt to FGV increased from US$8.3 million in 2015 to US$11.7 million in 2016.
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 FGV’s total revenue and that it did not justify the gravity of the actions taken by Isa.
Yesterday, in a Edge Financial Daily report, 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, Zakaria did not sound convincing in the reasons for the delay of payment by the Afghan 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 Afghan 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 raise major questions about the scale of shenanigans taking place in FGV over the past few years.
Therefore, the dire situation in FGV demands more than the mere appointment of 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 outcome arising from his appointment will smell of a political compromise and smack of opaque cover-ups.
The gravity of the failure and imbroglio in FGV demands a thorough investigative audit by both the Auditor-General (A-G) 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 had also carried out thorough investigations of the construction of KLIA2 by Malaysia Airports Holdings Berhad.
Both the A-G 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 A-G 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 A-G 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 are investigated.
Tony Pua is Member of Parliament for Petaling Jaya Utara and DAP National Publicity Secretary.
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