Malaysian palm oil giant FGV puts chief exec on forced leave of absence

Malaysia's palm oil giant, Felda Global Ventures (FGV), said yesterday that it has given its chief executive officer an indefinite leave of absence with immediate effect,

Mr Zakaria Arshad and the firm's chief financial officer Ahmad Tifli Mohd Talha were both forced to go on leave, while FGV looks into transactions involving its subsidiary, Delima Oil Products.

Mr Zakaria had earlier been asked to resign over alleged wrongdoings involving a delayed payment to Delima by a long-time client, Afghan company Safitex.

"It is the board's view he (should) resign so that the finding does not escalate into a bigger issue that would taint FGV's image. But this does not mean we are covering it up. We did not force him to quit," said FGV chairman Isa Samad.

Mr Zakaria had written a letter to Mr Isa denying wrongdoing, as the payment was approved by the firm's previous management.

FGV, the world's third largest oil palm estate operator, is conducting an internal probe over "improprieties" involving millions of ringgit, Mr Isa said. He did not provide details of the allegations, other than how these came from findings by external auditors PricewaterhouseCoopers. As Mr Zakaria had "jumped the gun with his statements to the media", he and three other executives will take their leave while the firm does its internal audit, Mr Isa added. The other three are the chief financial officer and two heads of FGV subsidiaries.

FGV is tied to the Federal Land Development Authority (Felda) set up by Tun Abdul Razak, Malaysia's second prime minister and father of current Prime Minister Najib Razak. Felda was started to help rural and poor Malays by giving them land and loans to plant cash crops.

For decades, ruling party Umno has enjoyed the support of Felda settlers in 54 constituencies nationwide. However, palm oil prices have been falling in recent years. FGV's share price has declined by almost two thirds on the local stock exchange since its listing in 2012.

Even before the latest incident, Felda has been in the spotlight for the wrong reasons. These include the arrests of high-level Felda staff by the Malaysian Anti-Corruption Commission (MACC) for alleged graft.

Mr Zakaria told local media that since his appointment in April last year, he had rejected several FGV investments but was later overruled. Among them, he said, is Felda Cambridge Nanosystems, an entity in Britain, which lost RM117 million (S$38 million) and wanted an additional £100 million (S$178 million) for expansion. MACC deputy commissioner Azam Baki said it would investigate the allegations involving Mr Zakaria, based on information it has received.

A version of this article appeared in the print edition of The Straits Times on June 07, 2017, with the headline 'Malaysian palm oil giant FGV puts chief exec on forced leave of absence'. Print Edition | Subscribe