This article first appeared in The Edge Financial Daily on June 7, 2017 - June 13, 2017
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) chief executive officer (CEO) Datuk Zakaria Arshad has slammed its non-executive chairman Tan Sri Mohd Isa Abdul Samad for avoiding accountability in his role in the business dealings between FGV’s subsidiary and its long-time client Safitex, which has recently triggered an internal investigation on grounds of misconduct.
“He [Isa] needs to have a sense of accountability. Even though he was not involved in the business transactions directly, he is still on the board [of Delima Oil Sdn Bhd]. He cannot just say he is not the ‘operations man,’” Zakaria told The Edge Financial Daily.
Yesterday, the board of FGV gave notices of leave of absence to four executives, including Zakaria, the chief financial officer Ahmad Tifli Mohd Talha and two management-level officers in two of FGV’s subsidiaries after being implicated in the misconduct.
Zakaria, who risks losing his job due to the recent allegation, said that payment owed by Safitex to Delima Oil, which is supposedly the root of the commotion, is too small — at 0.2% FGV’s net profit of RM110.6 million in the financial year ended Dec 31, 2016 — to trigger such a big commotion at management level.
Safitex, added Zakaria, will be able to settle its payment by end-June, according to the company’s owner. “Delima Oil has dealt with Safitex for over 20 years with [a] good credit track record. On the decision to proceed with the investigation [before June], I do not agree,” he said.
Zakaria also said that he had not seen the irregularities found by FGV’s auditor PwC. “I haven’t seen PwC’s report [why I am implicated]. What are the specifics?” he said.
“As far as I know, PwC conducted a normal audit for the first quarter of 2017. We at the board meeting then unanimously agreed to look into a few irregularities in the audit report, which is a normal process.
“But the subsequent meetings, [there were] three of them, were done without me being present,” he added.
He said that Felda, as the largest shareholder of FGV, had requested for the matter to be managed within the business operations units of the company, and not the current corporate level.
“I did not invite the press, nor did I leak my letter [to Isa] as people claimed I did. Now that the word is out, Felda is very concerned as it has affected FGV’s share price significantly,” he said.
Earlier, Zakaria told the media that any investigation in FGV should concentrate on the company’s procurement body. “On paper, our procurements may look great. But try to see beyond that, beyond the approvals.
“Not all of the company’s procurements and purchases go through me. There are different levels [involved]. You have to also look at people who play the smaller roles … not forgetting certain ‘invisible hands’,” he said.
In a separate statement, Malaysian Anti-Corruption Commission deputy commissioner (operations) Datuk Azam Baki revealed that the organisation has received different tip-offs regarding corruption and abuse of power in FGV.
“MACC will request Zakaria to assist the investigation by testifying soon to provide additional information,” said Azam, adding that the investigation will focus on allegations of corruption and abuse of power, and not on the personal details of any whistle-blower.
Zakaria, a Felda settler’s son from Negeri Sembilan, has served Felda for over 33 years. He was FGV’s executive vice-president and head of palm downstream cluster before he took over the role of CEO from Datuk Mohd Emir Mavani Abdullah on April 1, 2016.
His strategy as CEO was contrary to Emir’s, who embarked on an acquisition spree during his three-year stint. Zakaria instead halted merger and acquisition plans, and divested loss-making assets in a bid to improve the group’s cost management and bottom line.
Seven days into the job, he scrapped the acquisition of a 55% stake in China-based Zhong Ling Nutril-Oil Holdings Ltd for RM976.25 million.
FGV’s overpriced acquisition of a 37% stake in PT Eagle High Plantations Tbk for US$680 million was also called off under his watch.
The investigation is another blow to FGV, which is rife with allegations of poor management decisions. With the general election round the corner, FGV will need to provide a clearer picture soon lest the issue unsettles its biggest shareholder, who should be scrutinising its every move.