Prime minister Datuk Seri Najib Tun Razak has instructed Felda Global Ventures (FGV) to resolve its problems before Hari Raya. This shows that the PM really wants this thing to be settled as soon as possible so as not to affect the upcoming general elections.
The 112,635 Felda households are scattered across 50 parliamentary constituencies in the country. These are the people who have been loyally supporting the ruling coalition, and Najib does not want this to change the least.
Less than two weeks from Hari Raya now, it is not easy to carry out investigation as per the three principles the PM has mentioned.
If any hint of irregularities has been involved, it is almost impossible to have the whole thing settled in under two weeks. Moreover, management weaknesses may not be completely rectified within such a short period of time.
Of course, to meet the deadline, it is possible for problems to be swept right under the carpet, but they will emerge again some time in the future.
The FGV scandal highlights the fact that the government has hardly learned a lesson from past mistakes, such that it wants to get this whole thing over as soon as possible in order to contain the negative impact.
Firstly, it has very much to do with poor management. In 2013, FGV chalked up an impressive RM980.992 million in net profit, drastically reduced to RM306.369 million in 2014 and RM117.123 million in 2015. Last year, its net profit stood at a very humble RM31 million largely due to the RM81.07 million loss incurred during the last quarter.
FGV’s IPO in 2012 was the second largest in the world of that year, after Facebook. Unfortunately due to bad policies especially in its oversea acquisition plans, FGV’s shares have plummeted from RM4.55 to merely RM1.65 today, translating to a dissipation of around RM13.4 billion in its market capitalization.
Since the days of Mahathir, many GLCs have suffered tremendous losses as a consequence of mismanagement, For instance, Proton acquired Italian motorcycle manufacturer MV Agusta for RM368 million in 2004, and later sold it at a dirt cheap price of 1 euro. Why on earth did Proton buy a motorcycle manufacturing company in the first place?
The 1MDB experience has been equally agonizing. It sold Edra Global Energy to China General Nuclear Power Corporation for RM9.83 billion, incurring a loss of RM2.27 billion in doing so. 1MDB also reportedly remitted a sum of US$3.5 billion to a fake company.
Embarrassingly, MACC is investigating the case involving abuse of power by a senior FGV officer, including first class air travels by his wife on company expenses and awarding renovation contracts to companies owned by his cronies, according to a New Straits Times report.
Secondly, no politicians in GLCs. MACC anti-corruption advisory board chairman Tunku Abdul Aziz has proposed that politicians should not be appointed to head GLCs because politicians are generally inclined to bring politics into business.
This, nevertheless, is only one point. Another major point is that politicians are not experts in running companies.
Isa Samad, who was Negeri Sembilan menteri besar for more than 20 years, had his party membership suspended three years for vote buying. After winning big for BN in the Bagan Pinang by-election in October 2009, he was rewarded with the appointment as Felda’s chairman By PM Najib. Nevertheless, he did not perform well and was subsequently replaced by MP for Johor Bahru Shahrir Samad this January.
Umno leaders are not happy with the FGV board for instructing four senior officers to go on leave indefinitely, but as Felda is not represented in the FGV board, there is little they can do.
Thirdly, the misperception that being big is beautiful. Having raised the fund from the listing exercise, FGV went on a shopping spree overseas but the acquisition plans were irrational, with the bill shooting up to RM100 million a year on M&A operating expenditures.
The same thing also happened to 1MDB, whose ambitious purchases of a power generating plant and prime commercial land on bank loans obviously did not pay off well.
The country and her people have paid an astronomical price for mismanagement and lax supervision on the part of government-linked companies..