Ex-Khazanah MD sets record straight
KUALA LUMPUR: Former Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar has set the record straight about the government strategic development company.
In a five-page farewell letter released yesterday, Azman cleared the air on recent controversies, particularly its online undergarment investment in an Indian firm and a private banking venture.
He also shared his 42-minute exit meeting with Prime Minister Tun Dr Mahathir Mohamad on July 31.
Azman said Khazanah had recorded more than RM82 billion worth of net gain over a nineyear period between 2008 and last year. The fund’s net worth adjusted rose from RM33.7 billionn in December 2008 to RM115.6 billion in December last year.
“In fact, it should be noted that our total gains over the period are roughly RM100 billion.”
He added that its top 10 gainers had made up some RM92 billion, while the 10 largest losses amounted to about RM19 billion.
Of the big losses, Malaysia Airlines’ stood at RM8.4 billion and Silterra at RM5.5 billion.
“In investments terms, it means our gains have outnumbered our losses by a factor of 5:1. In footballing terms, it’s like winning a game 5-1,” he said.
Azman said while the losses over the years were indeed large, it was incurred as part and parcel of investment operations.
Azman said the losses incurred in Khazanah’s investment in Swiss bank UBS was RM1.7 billion and not RM3 billion as reported.
“At all times, proper provisioning and recognition of the losses were made in line with accounting and prudential standards with, even at one point, 97 per cent provisioning made of the RM3.6 billion total investments.
“Through diligent recovery work, more than half or 53.5 per cent of the value of the investments or RM1.9 billion were recovered,” he said.
He said a significant factor in the losses had resulted from the negligence and breach of the shareholders agreement by the fund manager Olivant.
On Khazanah’s investment in Zivame in India, Azman said the online e-commerce purveyor of women’s undergarments was a going concern and had just had its best ever quarter.
He said Khazanah remained confident that it could, over the medium term, recover all or almost all of what it has provided for.
Azman said Khazanah had invested US$19 million (RM80 million) for a 22 per cent stake and last December, it had decided to provide in full in its 2017 accounts as a conservative measure as it sometimes did for technology investments.
“In any case, again, as with all our overall investment assessment, we need to look at things in perspective in that the same risk taking in India for the consumer sector in companies ranging from the sale of paints for houses to jewellery, under what we call Project Billion, have generated more than RM1 billion realised and unrealised gains to date.
“Further, lest we forget that in Alibaba alone, we have made more than RM6 billion gains and these gains alone are funding a multitude of technology investments, including in Zivame,” he said.