Focus View
Clean up the mess in FGV quickly
FocusM team | 14 Jul 2017 00:30
The Federal Land Development Authority (Felda) has just appointed three representatives to the board of listed Felda Global Ventures Holdings Bhd (FGV). That brings the total number of directors to 12. 

With more members, will the board be able to make any difference in resolving the plantation giant’s poor financial performance and dismal share price?
  
Looks like despite its bloated board, FGV might not be able to put its house in order anytime soon. That’s because its CEO Datuk Zakaria Arshad and several senior officials have been suspended pending investigations. 

A report by former minister Datuk Seri Idris Jala, tasked to oversee an internal probe, revealed there were sufficient grounds for disciplinary action against Zakaria, the CFO and other senior management officials. 

The report added FGV should improve its corporate governance and business controls by setting up a “governance quantum leap” team urgently. 

Zakaria and the others were told to go on leave on June 6. On June 13, Zakaria was issued a show-cause letter to which he replied on June 29.   

The company has given no indication on how long these probes will take. It could be several months as an array of agencies are involved. 

Until then, will FGV put off all important plans and decisions? The entry of new substantial shareholders such as Indonesian tycoons Martua Sitorus and Tan Sri Peter Sondakh was also imminent before Zakaria’s suspension. It is uncertain if they are still interested in taking up a 25% stake in FGV.
 
Minorities want FGV, which is 33% controlled by Felda, to return to its glory days of 2012 when its shares were listed at RM4.55 each. They are now trading at around RM1.66.  

While plantation companies are benefiting from firm palm oil prices, FGV is struggling. It is also bogged down by a land lease agreement where it pays Felda RM250 mil a year to lease 335,000ha. 

Its subsidiary, FGV Cambridge Nanosystems Ltd which produced carbon nanotubes and graphene, lost around RM120 mil in the past four years. A joint venture between FGV’s Felda Iffco Sdn Bhd and Abu Dhabi-based food manufacturer IFFCO lost RM23.6 mil. 

It is sad that five years after its listing, FGV has sunk to this state of affairs. So, set up the governance quantum leap team and clean up the mess quickly! 

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