#Edge Weekly* Mahathir to help Proton get govt aid of RM3b; Proton’s RM821m loss not seen in DRB accounts

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KUALA LUMPUR: The emergence of 88-year-old Tun Dr Mahathir Mohamad as Proton’s chairman will strengthen the national carmaker’s hand against the government and end internal management fissures, according to the Edge Weekly. With his clout and connections, Mahathir is likely to play a key role in bringing in a partner for Proton, and may influence the government to extend aid as much as RM3 billion to the loss-making car manufacturer. Proton, which rolled out its first car in 1985, was the brainchild of Mahathir in the 1980s when he was the Prime Minister then. According to the Edge Weekly (June 2-8), key reasons for the return of Mahathir to Proton included tension within the senior management of the car maker and the escalating losses incurred by Proton after it was sold to DRB-Hicom Bhd controlled by tycoon Tan Sri Syed Mokhtar Albukhary in 2012. And Proton is said to be looking at a government aid of RM3 billion to fund its transformation programme.

According to the cover story of the Edge Weekly, problems at Proton had started even at the ground level with many bitter employees opposing the entry of DRB-Hicom in 2012. Then later, tension within the top senior managers emerged – and this had partly to do with Mahathir. After DRB-Hicom acquired Proton from Khazanah in May 2012, it made key changes to the management. DRB-Hicom’s group managing director Tan Sri Mohd Khamil Jamil assumed the post of executive chairman of Proton while another senior DRB-Hicom executive — Datuk Lukman Ibrahim — became the deputy CEO. As Khamil had group responsibilities, he left the day-to-day running of Proton to Lukman, who has been with DRB-Hicom for years, including as group chief operating officer. But over time, the relationship between Khamil and Lukman soured. “Sources say this was because Khamil felt he was bypassed when Lukman started to deal more with Mahathir, who was Proton’s adviser,” said the Edge Weekly in its 3-page cover story. Caught between his executive chairman and the powerful adviser, Lukman resigned abruptly in July 2013. But Mahathir intervened and Lukman returned after a month. But later he left again. While this conflict might have been one factor for Mahathir to step up his role in Proton, there was another more compelling reason. “According to some people, it was Mahathir’s disappointment at the refusal of both Petroliam Nasional Bhd and the government to fund Proton’s RM3 billion transformation plan that prompted him to take on a more prominent role in the national carmaker,” said the Edge Weekly. Proton is struggling with losses mounting, sales declining, margins thinning and market share dwindling. Proton was taken private in 2012 by its new owner, DRB-Hicom Bhd. Following that, Proton’s performance is “hidden” in DRB-Hicom’s financial statements, among all its other car businesses. The Edge Weekly’s check with Companies Commission of Malaysia revealed that Proton had incurred a huge loss of RM606.31 million in the financial year 2012 ended March 31, before the full takeover by DRB-Hicom. After the takeover, Proton’s losses widened to RM821.4 million in FY2013. But, according to the Edge Weekly, “there was not the slightest hint of a huge loss at Proton in DRBHicom’s accounts for FY2013 ended March 31. Instead the financials showed that DRB Hicom’s automotive segment registered a profit of RM194.88 million on revenue of RM10.98 billion. Industry players wonder why this was not reflected in DRB-Hicom’s accounts”. The Edge Weekly has also revealed other intrigues and startling problems within Proton in its investigative and insightful report on Page 71-73 of the financial paper.

It has also examined whether Mahathir could help to turn around the car maker that had in the past three decades sucked away billions of tax-payers’ money.