KWAP poised for change at the helm

This article first appeared in The Edge Malaysia Weekly, on October 8, 2018 - October 14, 2018.

Wan Kamaruzaman has headed KWAP since 2013

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DATUK Wan Kamaruzaman Wan Ahmad, the CEO of Kumpulan Wang Persaraan (Diperbadankan) (KWAP), is expected to be the next head of a government-linked investment company (GLIC) to be replaced.

Government sources say Wan Kamaruzaman was notified of his imminent departure from the civil servant retirement fund by the Ministry of Finance (MoF) last Tuesday. The effective date is still being worked out, they add.

“Both parties are still negotiating the severance package that Wan Kamaruzaman will receive from the MoF due to the early termination of his contract, which is supposed to end in April next year,” says a source familiar with the matter.

It is not known who will be replacing Wan Kamaruzaman. Early last month, KWAP chief investment officer Nik Amlizan Mohamed, who was being groomed to take over from him, was seconded to Lembaga Tabung Angkatan Tentera to take over from its long-serving CEO Tan Sri Lodin Wok Kamaruddin.

Nik Amlizan’s redeployment means KWAP might not have an internal successor to take over the reins, says another source.

Wan Kamaruzaman has held the top position at KWAP since May 2, 2013. During his tenure, the GLIC’s total fund size increased to RM140.8 billion in the financial year ended Dec 31, 2017, from RM99.92 billion in FY2013.

In the 10 years from 2007 to 2017, the fund size grew at an average rate of 12.98% per annum with investment income being the largest contributor to asset growth. It was incepted in 2007 with a fund size of RM41.94 billion.

It was Wan Kamaruzaman’s initiative to invest more of KWAP’s money abroad. In 2016, investment outside Malaysia accounted for 11% of the GLIC’s total fund size compared with 6% in 2012.

Last year, KWAP recorded its highest gross investment income of RM9.03 billion since its inception with a gross return on investment of 5.77%. The time-weighted rate of return for the year was 9.09%, almost double from the previous year’s 4.59%.

However, it was also during Wan Kamaruzaman’s time that KWAP became involved in 1Malaysia Development Bhd (1MDB) and SRC International Sdn Bhd.

In May 2015, former prime minister Datuk Seri Najib Razak revealed in parliament that KWAP had investments and holdings totalling RM1.4 billion in 1MDB and its subsidiaries as at March 31, 2015.

The civil servant retirement fund had also lent RM4 billion to SRC International for the purchase of a mining company in Mongolia.

The loan was investigated by the Malaysian Anti-Corruption Commission (MACC) in 2015 to find out if there was any criminal breach of trust. However, the then attorney-general Tan Sri Apandi Ali cleared Najib of any wrongdoing with regard to the loan and the Mongolian deal.

After Barisan Nasional’s fall in GE14, the case was reopened by AG Tommy Thomas. On July 4, Najib was charged with misusing his position to accept a RM42 million inducement to provide a sovereign guarantee for the loan on behalf of the Malaysian government.

Coming back to Wan Kamaruzaman, he could probably be the last top GLIC official to be replaced following GE14.

Former Johor Baru member of parliament (MP) Tan Sri Shahrir Abdul Samad was the first to resign as the head of a GLIC after he vacated the chairman’s seat at the Federal Land Development Authority (FELDA) on May 14, barely a week after Pakatan Harapan’s landslide win.

On the same day, Baling MP Datuk Seri Abdul Azeez Abdul Rahim also offered his resignation as Lembaga Tabung Haji’s chairman, a position he had held since July 1, 2013.

While Shahrir’s departure from FELDA transpired without any drama, that of Azeez was followed by the MACC raiding four locations connected to him, including his residences in Subang Jaya and Baling, as well as Tabung Haji’s office in Jalan Tun Razak.

In the raids, the MACC seized RM500,000 in cash, foreign currencies worth RM500,000, 20 watches and pieces of jewellery. Azeez was later remanded by MACC for four days to help in investigations involving a Tabung Haji contract.

Professionals appointed to top positions by the previous regime were also caught in the “big shift”.

Permodalan Nasional Bhd chairman Tan Sri Abdul Wahid Omar offered his resignation on June 29 while Tan Sri Azman Mokhtar, together with eight directors of Khazanah Nasional Bhd, stepped down on July 26.

Longtime civil servant Tan Sri Mohd Sidek Hassan quit as chairman of Petroliam Nasional Bhd on June 30. Note that prior to assuming the post in July 2012, Sidek was the chief secretary to the federal government between September 2006 and June 2012.

In the meantime, whoever replaces Wan Kamaruzaman at KWAP will have the heavy task of ensuring that the fund size grows quickly in order to take over the government’s pension liability.

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