Boardroom theatrics of FGVH


It Was once the toast of the town. When Felda Global Ventures Holdings Bhd (FGVH) became the world’s second-largest initial public offering (IPO) in 2012, a month after Facebook’s record US$16 billion (RM51.2 billion) Nasdaq Inc listing, it was largely hailed as the “brightest spot” in the gloomy IPO market in Asia.

Global investors were quick to jump on board with Qatar Investment Authority, AIA Group Ltd, Fidelity Investments, Hong Kong-based Value Partners Group Ltd and several Malaysian state-affiliated pension funds purchasing nearly 20% of the IPO.

Of the US$3 billion proceeds, it is said that 55% of the sum went to the government, while about 45% was used to expand FGVH’s landbank size, which already comprised 356,000ha of palm plantations in Malaysia at the time.

Optimism was clearly in the air. However, crude palm oil (CPO) prices took a hefty beating in the ensuing months, trading at a weak range of between RM2,800 and RM3,200.

Three years after its listing, FGVH shares plunged to a record low of RM1.19 in August 2015, tugged down by the weakening CPO prices. The world’s largest producer of CPO has been on a downward spiral ever since.

Five years on and two CEOs later, FGVH seems to have lost its shine. The company’s shares now stand at nearly 65% lesser from its institutional price offer of RM4.55, while current CEO Datuk Zakaria Arshad is pressed to leave on accusations of a corporate code violation.

The controversy over Zakaria is not the first for the ill- fated enterprise.

After the company’s successful listing on the Kuala Lumpur Stock Exchange in May 2012, FGVH appointed Datuk Mohd Emir Mavani Abdullah as its new CEO — succeeding Tan Sri Sabri Ahmad whose contract expired after two years.

Mohd Emir, who previously served as director of FGVH since July 2011, had been made CEO-designate on Jan 1 as part of the firm’s succession plan.

After just two days under his belt, reports surfaced that FGVH’s board was mulling over a decision to terminate Mohd Emir’s contract as his doctorate in government reforms came from an unaccredited university.

Rumours had it that he would be given a six-month grace period to leave FGVH.

Nevertheless, Mohd Emir stayed on and continued to steer FGVH for the next three years until another contentious episode transpired. This time, it involved a failed deal with Indonesia’s Rajawali Group.

FGVH had intended to buy a 37% stake in debt-saddled Rajawali’s palm oil plantation firm, PT Eagle High Plantations Tbk, in a US$680 million deal. The pact subsequently collapsed to evade further criticism from investors who slammed the deal as unreasonable.

Mohd Emir, whose contract expired on March 31, was replaced by then FGVH head of downstream operations Zakaria — who rose to the role on April 1, 2016.

Zakaria is a Felda (Federal Land Development Authority) trouper, having served the group for the past 32 years since 1984, including in Felda Rubber Industries Sdn Bhd, Malaysia Cocoa Manufacturing Sdn Bhd, Felda Rubber Products Sdn Bhd and Felda Marketing Services Sdn Bhd.

Questions over the future of his leadership were raised over pending investigations involving Afghan company Safitex for palm oil products supplied by FGVH subsidiary Delima Oil Products Sdn Bhd.

When asked about the removal of Zakaria earlier, FGVH chairman Tan Sri Mohd Isa Abdul Samad said it was still premature to comment about the CEO’s status.

He commented that what-ever decision taken by the board would be in accordance with the procedures set.

On Monday, Reuters reported that Mohd Isa has requested via letter for Zakaria to take a leave of absence effective immediately.

In an interview with several local newspapers yesterday, Zakaria said he did not expect things to unfold the way it did, but he “accepts” the decision made.

“A board director and the company’s security head handed me a letter asking me to go on leave as group president/CEO and I have been relieved of all duties. I will take leave until the board contacts me.”

He said he did not have a problem if the process is correctly followed.

“I did not expect it to get to this stage as the issue is not big. I have to face this openly and defend myself,” he added.