KUALA LUMPUR: The government is hopeful FGV Holdings Bhd will overcome its current challenges and turn around with the support of the three-member transformation plan team appointed in July, says Primary Industries Minister Teresa Kok Suh Sim.
She said the company was faced with the ongoing forensic audits and international investigations, in addition to the uncertainty in the palm oil industry.
“Last week, I met the FGV team who briefed me on their transformation plan (to turn around the company),” Kok told reporters after opening the Corporate Malaysia Summit 2018 here today.
The transformation plan team comprises chairman Azhar Abdul Hamid, Salmiah Ahmad and Mohammed Nazeeb P Alithambi, which will work closely with the management.
Yesterday, Azhar said the plantation company expected to complete its forensic audits and international investigations into six transactions and investments by year-end.
He said the company was awaiting legal advice on four of the completed investigations.
In a filing with Bursa Malaysia recently, FGV said investigations have been completed on four transactions, namely the acquisition of Asia Plantations Ltd, FGV’s investment in FGV Cambridge Nanosystems Ltd, and the acquisition of two Troika condominiums located near the Petronas Twin Towers.
Additionally, the FGV board has also undertaken internal investigations into open credit lines, poor purchasing trading practices and poor palm oil sales that resulted in bad debts of about RM100 million; direct awards of procurement contracts in breach of best practices; and critical shortage of workers between May 2016 and April 2018 that resulted in losses exceeding RM170 million.
On mitigating further losses in the plantation sector, Kok said her ministry would help the company and urged FGV to develop the downstream sector of the palm oil industry.
“My ministry is willing to work together with them. I told them that if I have the opportunity to meet with investors, we will try to assist them to invest in the industry.
“We also told FGV about the challenges met by the industry, especially on getting smallholders to comply with the Malaysia Sustainable Palm Oil (MSPO) certification.
“We need to engage with FGV and non-governmental organisations to really go down to rural areas and explain the importance of getting five-star oil,” she said, adding that it was vital in order to get Malaysian palm oil accepted by the international community.
“Western countries have the tendency to trace back the oil and they don’t want oil that does not comply with the environmental standard.
“If the smallholders do not comply with this, we fear that the product will be marginalised,” she added.