FGV says suspension takes effect immediately with a notice of inquiry issued to the CEO
by ALIFAH ZAINUDDIN / pic by ISMAIL CHE RUS
FGV Holdings Bhd has suspended its group president and CEO Datuk Zakaria Arshad (picture) until further notice, the second time in 15 months the head of the troubled palm oil company has been relieved of his duties.
His suspension came hours after the Ministry of Finance Inc (MoF Inc) withdrew its nomination of Zakaria, 58, as a government-appointed director at the the world’s largest crude palm oil producer.
FGV said the suspension takes effect immediately.
A notice of inquiry had been issued to Zakaria following the conclusion of the company’s internal investigations into 10 critical issues.
“FGV will continue its business as usual. In the interim, the Special Board Committee (SBC) 2 comprising four FGV directors, namely its chairman Datuk Azhar Abdul Hamid, Datuk Dr Salmiah Ahmad, Dr Mohamed Nazeeb P Alithambi and Datin Hoi Lai Ping, will take over the responsibilities to perform the functions of the group president and CEO of FGV,” the company said.
Trading of FGV shares was suspended at 3.29pm yesterday to make way for the announcement.
Management changes at the government-linked company (GLC) have been widely expected following the shake-out at the board level.
Azhar, who was appointed as FGV chairman in September last year, had initiated various changes to the planter. He is said to have a hands-on approach in the GLC’s running.
The former executive VP of “the old” Sime Darby Bhd’s plantation and agribusiness division had also made structural changes at FGV. The company appointed Syed Mahdhar Syed Hussain, a former Sime Darby senior personnel as FGV’s chief transformation officer in September this year.
The Transformation Management Office was created in April this year to review FGV’s overall performance and report on the weaknesses identified. The board also created an SBC comprising Azhar, Salmiah and Mohammed Nazeeb.
The company recently changed its name from Felda Global Ventures Holdings Bhd and is moving its corporate office from the present Menara Felda near KLCC to the old Sime Darby corporate offices at Jalan Raja Laut. The building will be named Wisma FGV.
Speculation of a management fallout heightened after Zakaria and CFO Ahmad Tifli Mohd Talha were absent at a recent press conference called by Azhar to reveal the company’s forensic audit over irregular transactions.
FGV, which was the world’s second-largest initial public offering (IPO) in 2012 behind Facebook Inc, has been dogged by poor financial performance, allegations of bad deals and political interference.
The GLC’s share price has gone into a tailspin from its IPO reference price of RM4.55, erasing over RM13.5 billion of its market capitalisation since it went public. Shares of the plantation giant was traded five sen higher yesterday at RM1.54, valuing it at RM5.62 billion.
In that press conference, Azhar did not mention any names, but alluded that the transaction irregularities involved past and present board members and management.
FGV’s investigation into its investments began in January and is focused mainly on its RM1.1 billion acquisition of Asian Plantations Ltd, FGV Cambridge Nanosystems Ltd and its purchase of luxury condominiums at The Troika in Kuala Lumpur.
The forensic investigators had examined open credit lines, poor purchasing trading practices and palm oil sales, direct awards of procurement contracts that breach best practices, and the shortage of workers from mid-2016 to mid-2018 that resulted in financial losses.
The company had announced an immediate turnaround plan, which aims to restore operational integrity. Azhar did not provide a timeline for the completion of all the initiatives, but expected the plan to be in force throughout the remaining two years of his tenure.
National Felda Settlers’ Children Association president Mazlan Aliman declined to comment on Zakaria’s suspension when contacted by The Malaysian Reserve.
The association had been supportive of Zakaria when the latter was forced to temporarily step down last year. Previously, Zakaria was asked to take a four-month leave of absence in June 2017 in relation to an unpaid bill by one of FGV’s subsidiaries. He was later reinstated on Oct 16 the same year.
Zakaria was appointed as FGV group president and CEO on April 1, 2016, to replace Datuk Mohd Emir Mavani Abdullah whose term had ended.