Malaysian palm oil giant chairman quits amid management ructions
Kuala Lumpur — The chairman of Felda Global Ventures Holdings (FGV) resigned on Monday amid a leadership tussle and graft probe at the world’s biggest crude palm oil producer. Shares in the Malaysia state-linked company rose.
Isa Samad stepped down "to focus on his personal undertakings", according to a stock exchange filing on Monday.
Sulaiman Mahbob, a board member at FGV, was appointed acting chairman with immediate effect. He was no longer a government-appointed director amid an effort to "uphold the integrity" of ongoing investigations, the government said.
The resignation comes after FGV’s board of directors this month instructed four senior managers, including CEO Zakaria Arshad, to take a leave of absence pending investigations involving transactions at a subsidiary. Isa is not one of the four officials.
Zakaria, who denies wrongdoing, has urged Malaysia’s anti-graft agency to probe alleged improprieties at FGV and said he often disagreed with Isa on how the company was managed.
The public wrangling at FGV has created political risk for Prime Minister Najib Razak as its parent agency is the Federal Land Development Authority, which was set up during Malaysia’s independence to allocate land to farmers, many of whom are now FGV shareholders.
Isa is unpopular with some farmer groups — known as settlers — who saw Zakaria, a planter’s son, as making progress in improving FGV’s performance. Isa will be appointed acting chairman of Malaysia’s Land Public Transport Commission, the government said in its Monday statement. Isa also relinquished his position as chairman of MSM Malaysia Holdings, the country’s leading refined sugar producer and a listed subsidiary of FGV, according to a separate filing on Monday.
The chairman’s resignation may ease pressure on Najib, whose coalition needs farming votes to extend its 60 year grip on power in an election that may come within months. FGV’s shares climbed as much as 6.3% to 1.87 ringgit after the announcement, reaching their highest level since May 30. The stock closed at 1.84 ringgit on Monday.
Settlers — mostly ethnic Malays — are already upset by a long decline in FGV’s stock and late assistance payments from the company, which traces its roots to a 1956 grant from the World Bank and is virtually synonymous with government aid to rural Malaysia.
Najib has urged FGV’s problems to be resolved quickly. The government appointed an independent party to look into the board’s decision to suspend the four company officials related to an alleged breach of procedures at subsidiary Delima Oil Products.
The report showed "there are sufficient facts and reasonable grounds warranting the disciplinary proceedings" against the officials, according to the government statement on Monday. No one is guilty of wrongdoing at this stage unless proven by pending domestic inquiries and the officials will be given a chance to defend themselves if needed, it said.
Malaysia’s Anti-Corruption Commission on June 8 launched an investigation into issues involving several individuals in FGV to determine if there was any element of corruption and abuse of power. That probe is still under way, the government said Monday.
The Delima case highlights the immediate need for FGV to "radically improve" its corporate governance and business controls at group and subsidiary levels, the government said. It added the decline in FGV’s and Felda’s financial performance in the last few years "warranted a comprehensive business review" that is under way and should be completed with urgency.