FGV: Failure to appreciate Corporate Governance
By Salahuddin Hisham
THE open feud between the Chairman and Chief Executive Officer of Felda Global Venture Berhad has taken a more political dimension than business and corporate considerations. One wonders whether Felda’s public-listed arm understood the conduct and corporate governance expected for such an outfit.
When CEO Datuk Zakaria Arshad mentioned, “Saya anak Felda (I’m a son of a Felda settler)”, it may not have crossed his mind that he is hired as a professional and should be speaking as a CEO of a public-listed company. It had a political undertone.
On the other hand, when it was revealed on the online political media that Tan Sri Isa Samad called for a Board of Directors meeting monthly and sources claimed it could be called to discuss specific operation matter, it sounded as though Isa had taken on a corporate CEO role than that of a non-Executive Chairman.
State Menteri Besars have weekly meetings with state exco members and decisions can be on both policy matters or operational.
Salahuddin Hisham was involved in various financial markets but has since, turned political and online.
As a veteran politician, Isa is too well-versed in politics and Zakaria could be easy meat to choose the political arena to take his fight. The manner in which Isa denied asking Zakaria to resign shows he has not lost his deft political touch.
Seeing what is happening, it is timely that Prime Minister Datuk Seri Najib Razak steps in to set the three criteria to address the feud – abide by Companies Act 1965, consistent with good corporate governance practices, and fair and just decision.
According to Companies Act and corporate governance practices, the manner in which Zakaria was asked to leave was highly improper. The fact that it went straight up to the BOD indicates that FGV is board-managed by the chairman.
Whenever external auditors spot any discrepancy or suspected questionable dealings, the first order of business is to bring the matter to the respective officers for explanation. If it is not satisfactory, it is then made into a report to the Audit Committee.
The Audit Committee is supposed to call in the responsible party and in this case, the CEO. He would be asked to provide an explanation to the committee. If it is unsatisfactory, then the matter is brought to the BOD.
The CEO should have been given the right to explain himself before the BOD makes a decision. Somewhere in there, the CEO should be given a show cause letter before any disciplinary action is made.
Apparently, they had by-passed these steps. As Zakaria revealed to the media, Isa had asked him to resign. Upon his refusal, Isa convinced the BOD to suspend him for investigation.
To certain professionals with familiarity in engaging auditors, the suspension is seen as too harsh and suspicious. It is not a big deal for external auditors to spot possible discrepancies. They may not be familiar with the business thus the issue raised is for them to understand before any need or investigation.
According to a circulating Zakaria’s letter to Isa, the issue he is being investigated for happened at a subsidiary level thus he is too high up in the hierarchy to be responsible for its day-to-day operations.
In addition, he claimed the facility granted to the buyer was done during the previous CEO, Dato Dr Emir Mavani Abdullah. The flip side to this particular argument is that Zakaria was the subsidiary CEO when the deal was put together.
But then the ultimate responsibility was Emir and likely BOD members for approving the line of credit.
This issue raised is rather as petty to incriminate a group CEO. More so, Isa had not adhered to proper corporate governance practices. It could partly explained why Zakaria’s ownership of a certain luxurious brand of vehicle and contracts to his sister were leaked to social media to give credibility to allegations of corruption against Zakaria.
To be fair and just, such allegations need to be ascertained through investigation by an unbiased third party such as Datuk Idris Jala or MACC.
The same with allegations of corruption made against Isa and also Dr Emir.
There have been many accusations made in the social media and blogs. Face bookers or bloggers provided leads with documents or convincing story lines. To be fair to Isa and Emir, they cannot be judge and jury too. Neither can the public.
