PMO: FGV should continue disciplinary proceedings against CEO, CFO and two others

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KUALA LUMPUR (June 19): Felda Global Ventures Holdings Bhd (FGV) should continue with its ongoing disciplinary proceedings against its chief executive officer (CEO), chief financial officer (CFO) and two other senior management officials over alleged improprieties between the group's subsidiary and a customer, said the Prime Minister's Office (PMO) today.

This came from a statement it issued revealing that the independent report prepared by Datuk Seri Idris Jala in relation to claims of mismanagement in FGV has found "sufficient facts and reasonable grounds warranting the FGV board to initiate disciplinary proceedings" against the four in relation to the alleged breach of procedures in Delima Oil Products Sdn Bhd. Delima Oil is a subsidiary of FGV.

"As such, FGV should continue with its ongoing disciplinary proceedings," said the PMO. However, it highlighted that no one is guilty of any wrongdoing at this juncture, unless proven by the impending domestic inquiries.

"During the domestic inquiries, the four management officials will be able to defend themselves in line the laws of natural justice," it said.

The individuals in question are: FGV CEO Datuk Zakaria Arshad, CFO Ahmad Tifli Mohd Talha, Delima Oil senior general manager Kamarzaman Abd Karim and FGV Trading Sdn Bhd CEO Ahmad Salman Omar.

They are currently suspended from duty after being told to go on leave by FGV's board, following investigation by the company's internal audit committee involving unapproved extension of credit limit by Delima Oil to its customer, Safitex Trading LLC.

In suspending them, FGV board gave both Zakaria and Talha until 4.30pm tomorrow to explain the allegations against them via a written reply to the show-cause letters issued by the board last Tuesday.

Meanwhile, the government has recommended the setting up of a "government quantum leap" team to improve corporate governance and business controls in the oil palm giant.

"Instead of making incremental improvements, with the help of this team, FGV should, in the first instance, identify best practices, policies and procedures within or outside the industry and thereafter, adopt these for FGV," the PMO said.

The PMO further acknowledged the need for a comprehensive business review in both FGV and its largest shareholder Federal Land Development Authority (Felda) amid the decline in financial performance in both entities.

"Indeed, such a review has already started late last year. Both FGV and Felda should continue and complete this work with urgency. Once completed, it will put in place the right platform which will position both FGV and Felda to become successful companies now and in the future. This platform includes the right leadership, strategies, business and operating model," it said.

Further, it said the appointment of Tan Sri Sulaiman Mahbob as acting chairman of FGV, while sending incumbent Tan Sri Isa Samad to Suruhanjaya Pengangkutan Awam Darat as acting chairman, is to uphold the integrity, spirit of impartiality of the ongoing inquiry and ensuring proper corporate governance of FGV and Delima Oil.

"Apart from undertaking the normal roles and responsibilities of the chairman, he will immediately take action to oversee the implementation of the above way forward," the PMO added.

The statement went on to clarify that the decisions by the government and FGV are separate from the ongoing investigation by Malaysian Anti-Corruption Commission (MACC) on the company. "Their investigation is still underway and the outcome will be revealed by them only after MACC has completed their work," the PMO added.

MACC initiated investigations on FGV over the alleged improprieties, a day after Zakaria and the three others were told to take an indefinite leave of absence and given the show-cause letters.

The irregularities, according to FGV board of directors, were brought up by FGV's auditor PricewaterhouseCoopers several times, the latest being during the auditing of FGV's financial results for its first quarter ended March 31, 2017.

Zakaria was earlier told to quit by Isa over the issue, but refused, claiming he had done nothing wrong.