FGVH must act and behave like a listed entity

In March last year, The Malaysian Reserve interviewed Datuk Mohd Emir Mavani Abdullah. The then Felda Global Ventures Holdings Bhd (FGVH) CEO had gone through a very difficult period.

FGVH was in the red. Its share price had slumped. Cash reserves were thinning and crude palm oil (CPO) prices continued to languish.

Excitement over the world’s second-largest initial public offering in 2012 had become a very far distant memory. Nobody was talking about that success.

Investors and Felda (Federal Land Development Authority) settlers, who bought shares at RM4.55 per piece, were reeling.

From a market capitalisation of RM20 billion, FGVH’s stock market value tumbled to just above RM6 billion during the first-quarter of 2016. Almost RM14 billion in market capitalisation had evaporated since its stunning debut on the local bourse.

Fund managers like the Employees Provident Fund (EPF) and Lembaga Tabung Haji (TH), FGVH’s cornerstone investors, were staring down the barrel with huge losses.

Problems at one of the world’s largest CPO producers were amplified over questionable deals like the pricey proposed acquisition of PT Eagle High Plantations Tbk, an Indonesian oil palm planter.

But Mohd Emir was calm and collected. He spoke about the challenges at FGVH, a work in progress, transformation at a three-year-old listed firm and almost zero regrets. Despite knowing his fate was sealed, he didn’t aim his anger at “unseen” hands said to control the firm’s operations and the deals which were brokered.

Morale was also insipid at the conglomerate. Questions over leadership change had created cracks. Senior management had hedged on whose side to take.

Thus, after three years, Mohd Emir was replaced by the firm’s head of palm down-stream cluster Datuk Zakaria Arshad. The then Felda chairman Tan Sri Mohd Isa Abdul Samad had chosen Mohd Emir’s successor.

A year down the line, déjà vu strikes. History is repeating itself — although of a less seismic shift in Mohd Emir’s departure in comparison to his successor.

The handpicked Zakaria was asked to go on leave 15 months after what was the stunning rise of a second-generation Felda settler to one of the biggest jobs in corporate Malaysia.

Mohd Isa claimed “improprieties” over payments and delivery delays between Delima Oil Products Sdn Bhd and Afghan-based customer Safitex.

These improprieties included outstanding debts identified by external auditor PricewaterhouseCoopers Malaysia since 2015. The debts have snowballed to US$11.7 million (RM49.84 million).

Zakaria had rebuffed the allegations, claiming ridiculous “instructions” from the board, unprecedented suspension in the history of Felda and FGVH, visiting the Malaysian Anti-Corruption Commission (MACC) office and challenging Mohd Isa to a showdown.

FGVH’s public leadership spat, like a script from a telenovela, again resonated the frailty at government-linked companies. It had reached the point where the government had to appoint former Minister in the Prime Minister’s Department Datuk Seri Idris Jala as an independent party to “establish the facts” and make his recommendation on FGVH’s management impasse.

Zakaria’s sudden “forced leave” had also created a gap at the 50-storey Menara Felda, FGVH’s headquarters.

“The morale is at an all-time low and staff are unhappy over actions taken against Zakaria,” said a source at FGVH.

Corporate engagements like iftar with the media had been cancelled indefinitely, while future events had been put on the backburner.

The outcome of government-driven mediation may take some time. and the MACC’s mandate will be closely watched.

But while the related stake- holders seek a resolution, people should not forget FGVH is not just about the 61-year-old Felda settlers’ future or livelihood of smallholders that send their fresh fruit bunches to the company.

FGVH — first and foremost — is a listed entity and trades on the floor of the local stock market. It is bound by listing rules and regulations. It is not a private entity and run by individuals for certain benefits.

The firm has a RM6.5 billion loan given by the EPF. TH remains a key shareholder with over 5% interest. Thousands had invested in the company during its listing exercise.

FGVH’s resolution should not only be swift, but resolute and sustainable. Failure is certainly not an option for the millions of Malaysians who are directly or indirectly affected.