Chairman Isa and the listing of Felda Global Ventures-1

Let’s talk about FELDA Global Ventures Bhd. It owns 49% of FELDA Holdings Berhad. 51% is owned by KPF. KPF looks after the interest of 220,000 felda families. It gives out dividends which you see the PM gives out at elaborate festivities. Its investment in FELDA Holdings makes money. Its own business forays overseas bombed. It’s the business arm owned 100% by FELDA that does international businesses. It hasn’t got a good track record. The subsidiaries of FGVH like FELDA Iffco Sdn Bhd, FELDA Global Technologies through Twin Rivers Technologies US (TRT), FELDA Global Ventures Middle East and  FELDA Global Ventures Arabia have all chalked up accumulated losses of around  RM500 million up to 2010.

What do the brain boxes at FELDA propose? They propose FELDA Holdings Berhad be absorbed into FGV and managed by FGV. FGV which has accumulated losses that of which reflects poor management and business acumen will now manage the business owned by FGV and KPF? The management team that loses money in FGV will manage a profitable business? That’s like asking a rat to look after the pumpkin. This must a new breakthrough in management science- the party that has fumbled is tasked to manage a bigger business.

So let’s talk a little about the coming IPO of FELDA Global Ventures Bhd. Let’s humor the sycophants. It’s touted as the next big thing to spruce up Malay economics. What isn’t? There has never been any economic initiative that is not described glowingly as a facilitator for the betterment of Malay economics. At the end of the day, the lion share in the IPO will go into hands of the select few. As to the economic facilitators regarded as a boon to Malay economics, usually, in the end, they fumbled and ended up in the hands of non-Malays. The redevelopment of KTM land in Sentul? That’s YTL country now, How is the equity breakdown? Or was the land given up in exchange for an elevated highway? The redevelopment the Sungai Besi Base? That will be a Middle Eastern enclave. The development of Sungai Buloh land? The only difference with FELDA is because the majority of settlers are Malays. That gives the corporate exercise a Malay flavor.

FELDA Global Ventures is going for listing. It hasn’t got credibility if it goes alone. So it absorbs FELDA Holdings SDN Berhad because it owns 49% of the equity. To entice the majority owner of the 51% equity, it made a sweetener allowing KPF to own 61% of listed FGV.

FHB makes money, FGV on its own doesn’t. They operate in different markets and therefore do not compete. If they compete, it’s a natural outcome that the weaker and less efficient will lose. That’s the law of free competition any way. If you force the weaker to team up with the stronger, that act may result in the weakening of the whole new partnership as the culture in the weaker organization can prevail. The culture of the city cousin (FGV) - more worldly and sophisticated will prevail over the hillbilly culture of the country cousin. We have to make this analogy so that people understand the possible outcome of the merger between FHoldings and FGV.

I find the arguments that the new company will benefit from better professional management and all that as facetious. The fact that FHB has done exceedingly well means that the management is alright. It’s definitely better than the cosmopolitan FGV because the latter is not doing that well. FHB should be allowed to buy out FGV and apply its superior management on the newly acquired asset. Probably FGV should be allowed to hold only 20%.

But before the listing can come to fruition, FLEDA must put its own house in order. Let’s see what’s happening in KPF which looks after the interest of 220,000 Felda families. A bigger rat is assigned to look after its money. Isa Samad. It’s the PM’s wish that Isa Samad, a close comrade in arms, be installed as chairman of KPF.

Let’s discuss the PM’s wishes. Its an interesting subject in itself. Not a few pro UMNO bloggers aligned to one particular individual put up a spirited objection when the PM announced he wished one Omar Ong be given a seat on the PETRONAS Board. The same people objecting to the wish of the PM then are now supporting putting up Isa Samad as chairman of Kumpulan Permodalan FELDA because it’s the wish of the PM. Very pious indeed.

But see the contradiction and hypocrisy? The PM wishes in both cases; but his wish in the first case is objected vehemently while his wish in the second case is warmly supported. So, what the PM wishes isn’t relevant. What is relevant is whether the person assigned gets the approval of the shadowy approval committee comprising of some pro UMNO bloggers. They didn’t approve Omar Ong and now they approve Isa Samad. We can’t operate government business through some clandestine secret society.

Isa Samad’s position as chairman of KPF( kumpulan Permodalam FELDA) is objected on account of several reasons. The refusal of some people in accepting the coup de tat has prompted them to make a police report. The appointment of Isa goes against the bylaws of KPF. KPF is subjected to its by-laws and rulings and the PM is also subjected to the law. 9 of the committee members must be elected by delegates at its general assembly. FELDA board appoints 3 additional members subject to confirmation in the general assembly of delegates. Bu the 3 appointed members of the committee must either be a FELDA settler or children of settlers, FELDA employee, wife or their children. A board member must also be a member of KPFB for at least 10 years. In either case, the 3 appointed must be either a member of FELDA settlers cooperative or FELDA employee’s cooperative.  Furthermore, he/she must a least be a cooperative member for a least 2 years and must come from within the governing board of the cooperative which he/she represents.

First thing first. Why is it necessary to appoint Isa as chairman of KPF? Clearly by the terms of the bylaws and rulings governing cooperatives in FELDA, Isa is disqualified. Dato Dzulkili Wahab has been doing a reasonably good job. Isa on the other hand, hasn’t got a good track record at managing assets. When he was MB for Negeri Sembilan large tracts of leasehold land were given to certain non bumi corporate figures and converted into freehold land. The state economic development corporation of which he was chairman didn’t fare well at all. Is he appointed chairman so that the PM can have a trusted person oversee the more than RM 7 billion money that KPF has?