THE dark clouds of 1MDB has cast a spell over the Malaysian economy and narrative and it’s not going away any time soon until the culprits are brought to book and someone is held accountable for the loss of Malaysia’s Sovereign funds.
Before we can catch our breath reading the mind-boggling excesses in the DOJ latest report on 1MDB, we are faced by another huge scandal in Felda FGV.
There are reports of corruption and mismanagement involving billions coupled with ugly infighting at senior management levels, all at the expense of the Felda settlers.
Felda was supposed to take the rural Malays out of the poverty cycle; instead the Felda settlers became victims of corruption and inept management.
The Felda FGV scandal is nothing new, it’s been simmering over the last few years and eventually boiled over with the “resignation” of the Chairman Isa Samad. Before FGV, Isa was suspended for three years from June 24, 2005 on seven corruption charges for money politics and vote buying in the 2004 Umno elections.
People have asked how can someone who has been charged and disciplined for party corruption can be appointed as Chairman of a major public listed company!
Is there any proper vetting done to ensure that the person appointed has a clean record?
FGV is not a small company by any means. In 2012, when FGV went for its US$3.1 billion initial public offering (IPO), it was the world’s second largest IPO of the year after Facebook Inc’s US$16 billion IPO.
What made people very angry was the announcement that Isa has been appointed to another position as the Chairman of SPAD.
Here’s a guy who messed up Felda FGV being rewarded to another position as Chairman of an organisation with billions of projects under its wings.
To certain people, Isa appears to be indispensable despite his history of mismanagement and all the accusations surrounding him within Umno and at Felda FGV.
We should ask – don’t we have any more capable people left in Malaysia that can helm important organisations other than recycled politicians?
Is this the kind of example that we want to show to our youths? Are our leaders saying that we can screw up big time, put our economy in jeopardy and continue to be rewarded.
Seeing the performance of 1MDB, FGV, MAS, Proton and many other Government Linked Organisations (GLCs) and State-Owned Enterprise (SOE), critics have said that Government has no business to be in business.
The government owns approximately 36 percent of the value of firms listed on the Bursa Malaysia through its seven Government-Linked Investment Corporations (GLICs), including a majority stake in many companies.
State governments are also involved in business through their wholly owned companies, joint ventures and stakes in companies. In many cases it is evident that political interventions and interference have contributed to the losses and poor performance of these organisations.
One of the major complaints by people that have worked in GLCs is that the Board members are mostly political appointees.
Those who come through political appointments, have no prior business experience, do not understand business ethics and do not contribute much to the development of the company.
The Chairman becomes an Executive Chairman of the company and more powerful than the CEO.
They do not understand the roles of the Chairman and the Executive in Corporate Governance leading to conflicts.
Many do not know what running a business entails.
Some people says Felda has no effect on the Sabah side. This is further from the truth.
The Felda FGV scandals affects us all. In December 2016, it was announced that EPF has sold its 3.85pc stake in FGV.
In five years, FGV’s market capitalisation dropped more than 60pc from around RM19 billion to only around RM6 billion, wiping out RM13 billion from the original value of the company.
Furthermore, EPF also said a RM 6.5 billion loan was taken out by Felda Global Ventures’ parent, Felda Holdings.
These losses will ultimately translate to less dividends pay out to EPF contributors and financial exposures if in case of loan default by Felda. It is noted that that the EPF 2016 dividend of 5.7pc is the lowest paid since 2010.
If this Felda defaults, who is accountable? EPF for making bad investments or the government appointees who helm these organisations?
In the case of MAS or 1MDB, no one in Malaysia has been accountable for the mismanagement.
In contrast, many international banks and bankers has been put to pasture due to their involvement with 1MDB illicit transactions.
CNBC recently reported Malaysia’s sovereign rating by S&P Global may be in trouble as the ongoing corruption saga threatens to destabilise the nation’s fiscal position.
“Those challenges could manifest themselves via a rise in the cost of refinancing Malaysia’s sizable gross external financing needs, or via non-resident outflows from Malaysia’s deep local-currency government bond market,” S&P said. These kinds of warning should not be taken lightly as large scale corruption has direct impact on the Malaysian economy and our image as a nation.
MACC putting a hold on acting against politicians until after the next election does not help in the eradication of corruption.
MACC chief Dzulkifli Ahmad said they did not want to act against politicians now as it could be used as campaign fodder in GE14. Giving moratorium on corrupt politicians is rather a strange decision and could send different signals to the public and the corrupt.
It’s about time our government develop new leadership line-up and drop political appointees in key organisations.
It is evident everywhere that the 2nd liners and 3rd liners are not identified early in GLC or SOE organisations succession plan. For example, the recent UMS Vice-Chancellor controversy.
When it was heard that UMS was going to appoint a non-Sabahan to the post, there was an outcry requiring political intervention.
If there was a clear line of succession, this would not have happened as everybody involved in the appointment of the next VC would be in the know and the State leadership informed before confirming the appointment.
We hope that the ones in charge would do away with political appointees and appoint professional people with clean records based on meritocracy and who can contribute to the success of the GLCs/SOEs and the country.
We can’t afford more colossal failures of GLCs entities due to corruption and drag Malaysia down the drain.