Graft probe leads to power struggle in Felda unit

FGV's suspended CEO Zakaria Arshad (above) was at the Malaysian Anti-Corruption Commission headquarters yesterday to submit documents and help in the probe into controversial dealings that could implicate FGV's chairman, Tan Sri Mohd Isa Samad (below
FGV's suspended CEO Zakaria Arshad (above) was at the Malaysian Anti-Corruption Commission headquarters yesterday to submit documents and help in the probe into controversial dealings that could implicate FGV's chairman, Tan Sri Mohd Isa Samad, an Umno warlord.PHOTO: FOTOBERNAMA
FGV's suspended CEO Zakaria Arshad (above) was at the Malaysian Anti-Corruption Commission headquarters yesterday to submit documents and help in the probe into controversial dealings that could implicate FGV's chairman, Tan Sri Mohd Isa Samad (below
FGV's suspended CEO Zakaria Arshad was at the Malaysian Anti-Corruption Commission headquarters yesterday to submit documents and help in the probe into controversial dealings that could implicate FGV's chairman, Tan Sri Mohd Isa Samad (above), an Umno warlord.PHOTO: FOTOBERNAMA

Unit CEO submits documents that may implicate the chairman, who has lashed back

Graft investigations into troubled Felda Global Ventures (FGV) have led to a power struggle between the chairman and chief executive of the world's biggest crude palm oil producer, in what could be a damaging battle for Malaysia's government.

Felda, the land development agency that has given land and subsidies to a votebank of 112,000 Malay families since 1956, injected its palm oil business into FGV's 2012 listing, but the latter has been plagued by scandals over deals worth several billion ringgit.

FGV's suspended CEO Zakaria Arshad was at the Malaysian Anti-Corruption Commission (MACC) headquarters yesterday to submit documents and help in the probe into controversial dealings that may implicate FGV chairman Tan Sri Mohd Isa Samad, an Umno warlord.

Datuk Zakaria has refused orders from the board to resign over a Dubai-based palm oil buyer, Safitex, owing money to an FGV subsidiary Delima Oil, insisting the amount owed was a mere 0.2 per cent of the company's annual revenue and not sufficient to force his ouster.

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"I invite the MACC to investigate... who's behind all the deals, who are the people we're giving contracts to, which companies and why only these companies get contracts," the chief executive said in an interview with The Star daily on Tuesday.

He instead pointed to his success in reporting a RM2.5 million (S$809,000) first-quarter profit this year, turning around an RM81 million loss in the quarter just before he took over in April last year.

Coincidentally, Tuesday saw a newspaper employee claim trial to a charge of receiving RM20,000 from Datuk Zakaria's predecessor, Datuk Emir Mavani Abdullah. The money was allegedly to be handed to an MACC officer to close a probe.

INVITATION TO PROBE

I invite the MACC to investigate... who's behind all the deals, who are the people we're giving contracts to, which companies and why only these companies get contracts.

SUSPENDED FGV CEO ZAKARIA ARSHAD

Tan Sri Isa, who was given the reins of Felda in 2011 and oversaw FGV's initial public offering before becoming its chairman, has lashed back at allegations of a cover-up and counter-accusations that as a director of Delima Oil, he, too, should be responsible for Safitex's non-payment. "If you make this statement, I will sue you," the former Umno vice-president told a press conference on Tuesday, when asked about claims of a cover-up.

Prime Minister Najib Razak's administration stepped in late yesterday, announcing an independent inquiry led by former minister Idris Jala to establish the facts behind the spat. The Prime Minister's Office said "the relevant parties have agreed to the appointment of Idris", who headed the government's efficiency unit from 2009 up to March this year.

Tan Sri Isa was replaced as Felda chairman by veteran lawmaker Shahrir Samad in January amid growing anger among settlers, who have for six decades returned Barisan Nasional to power in almost all of the 54 parliamentary wards - nearly a quarter of the entire legislature - where Felda is present.

Its last audited records, in 2014, show Felda is RM6 billion in debt with annual negative cash flow in the billions. The government admitted last year that settlers owe RM5 billion largely due to replanting costs, and also home loans and fertiliser purchases.

A government audit last year found Felda invested in dubious projects under the leadership of Tan Sri Isa, which collectively lost more than RM100 million.

When Tan Sri Shahrir took over, he immediately sacked the entire board of FIC, Felda's investment arm. FIC had put millions into forays, such as a RM47.6 million sturgeon farm, with two former officers being charged in March.

A version of this article appeared in the print edition of The Straits Times on June 08, 2017, with the headline 'Graft probe leads to power struggle in Felda unit'. Print Edition | Subscribe