A carefully thought-out internal leadership succession plan at Khazanah Nasional, Malaysia's sovereign wealth fund is starting to unravel due to some powerful lobbying by external candidates hoping to succeed managing director Azman Mokhtar.
Under the plan that kicked into gear just over a year ago, Tan Sri Azman, 56, is supposed to pick a deputy from Khazanah's senior ranks before the end of this year.
The candidate would shadow his boss for a year before the Khazanah board approves his appointment to take over from Mr Azman, who has been at the helm since 2004 and whose contract expires at end-May 2019.
Khazanah sources say Mr Azman intends to leave to make way for new blood at the fund.
Front runners for the deputy managing director position are the fund's two executive directors, Datuk Hisham Hamdan and Ahmad Zulkarnain Onn, according to Khazanah sources and government officials.
The Khazanah duo are now facing competition from Tengku Zafrul Aziz, who is group chief executive officer of CIMB Bank, the country's second largest financial institution, and president and CEO of scandal-scarred 1Malaysia Development Bhd (1MDB) Arul Kanda Kandasamy, Khazanah sources and government officials said.
Khazanah, with assets valued at RM145 billion (S$47 billion) as at end-2016, ranks as one of the Malaysian government's most important investment vehicles with direct controlling stakes in listed companies such as CIMB, Telekom Malaysia, power utility Tenaga and IHH Healthcare, which also owns Singapore's Parkway Group.
Senior politicians and well-connected business people close to Tengku Zafrul and Datuk Arul are lobbying Prime Minister Najib Razak who, as Khazanah's chairman, would have the final say on who replaces Mr Azman.
The Khazanah panel overseeing the leadership succession was until recently headed by its former deputy chairman, Tan Sri Nor Mohamed Yackop, who recently resigned from the fund following the completion of a Royal Commission of Inquiry into multi-billion dollar losses at Malaysia's central bank stemming from foreign exchange trading in the 1990s.
Mr Nor Mohamed was a central player in the bank's foreign exchange trading then.
Senior Khazanah sources said that Mr Nor Mohamed was a strong advocate for Mr Azman's replacement to come from within Khazanah, and his departure could strengthen the push by vested interest groups to get an outside candidate.