New FGV management investigating past investment deals

By MARK RAO / Pic By ISMAIL CHE RUS

Felda Global Ventures Holdings Bhd (FGV) is investigating irregularities in investments made under the previous management, including the RM1.1 billion spent to purchase Asian Plantations Ltd.

The edible oil producer completed the RM628 million acquisition in October 2014, while assuming RM388 million in liabilities.

Issues arose when it was discovered a sizeable portion of the 24,622ha plantation owned by Asian Plantations in Sarawak were unplantable, while 700ha were not owned by the company itself.

Chairman Datuk Azhar Abdul Hamid (picture) said prior to his appointment on Sept 8, 2017, there were several irregularities found in the investments.

“The board has decided to undertake a forensic audit on a few of the investments. The investigation is in progress and has yet to be concluded,” he said after the company’s AGM and EGM in Kuala Lumpur yesterday.

“A few scopes are being assessed including the valuations of some of the deals and we need at least two months to come to a conclusion (before we announce anything).”

He said the investigation includes the RM1.1 billion Asian Plantations deal which has serious issues. A legal firm based in London was appointed as the external auditor as part of the forensic investigation, he added.

Azhar said the government’s plan to raise the minimum wage could have a significant cost impact on FGV and the plantation industry, as every RM100 increase in salary will result in a RM33 million increase in production costs annually for the company.

He said FGV currently pays its workforce a monthly average of RM1,300 in salary and monetary benefits per month.

The minimum wage in Peninsular Malaysia and East Malaysia is RM1,000 and RM920 per month respectively, but could be raised as high as RM1,500, as pledged by Pakatan Harapan.

FGV approved a proposed change in name to FGV Holdings Bhd to create a clear delineation between the company and its major shareholder, the Federal Land Development Authority (Felda).

Felda owns about 33% of FGV via various holding companies and banks.

FGV withdrew one of its 15 AGM resolutions, namely the appointment of a director of the company whom Azhar declined to name, but said the individual is a Felda representative.

It was announced in a filing yesterday that non-independent and ED Datuk Seri Abu Bakar Harun, who is the chairman of Pahang State Felda Affairs Committee, retired effective yesterday.

Another director up for re-election during the AGM was Felda representative Datuk Ab Ghani Mohd Ali.

Azhar said he is appointed by the government, but answers to the board and shareholders of FGV. This comes after he was quoted as saying he is not a “political appointee” in various local media on Wednesday.

He also chairs MSM Malaysia Holdings Bhd — the sugar producer which is a subsidiary of FGV.

Azhar is one of three government appointees at FGV along with group president and CEO Datuk Zakaria Arshad.

FGV manages about 440,577ha of landbank in Malaysia and Indonesia. The company’s stock price has taken a beating due to disappointing financial results, corruption allegations, questionable deals and management uncertainty.

It currently hovers near a record low of RM1.48 from its initial public offering of RM4.55 back in 2012.

FGV’s net profit dropped 21.8% year-on-year (YoY) for its first quarter ended March 31, 2018, to RM1.33 million, in line with its revenue falling 16.5% YoY to RM3.6 billion, weighed down by lower recognised average crude palm oil price of RM2,472 per metric tonne.