Khazanah board backed into a corner
The mass resignation was likely its only option, given the absence of direction from the new government.
WHEN Malaysia voted in a new government on May 9, many probably did not vote to see a change in government-linked investment companies (GLICs) such as Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB).
It is generally known that the appointees to the boards of Khazanah and PNB persons heading the investment arm of the government are supposed to be apolitical.
They are more focused on managing the wealth of the country and meeting the social objectives of the Government such as helping to distribute such wealth.
They take instructions from the Prime Minister leading the government of the day – a practice that started during Tun Dr Mahathir Mohamad’s earlier tenure as Prime Minister.
Hence, some were surprised when Tan Sri Abdul Wahid Omar handed in his resignation letter in the last week of June.
After a meeting among board members on Tuesday, Khazanah managing director Tan Sri Azman Mokhtar handed in his undated resignation letter to the Government.
What stunned Putrajaya and even some of the closest top officials within Pakatan Harapan was the undated resignation letter from all the other board members of Khazanah as well.
Among those on the board of Khazanah were the likes of Tan Sri Mohd Nor Mohd Yusof, a close ally of Dr Mahathir.
Parti Bersatu council member Wan Saiful Wan Jan was also surprised by the move, which he described as having a “hint of protest”.
Some even speculated that there was a pied piper at work leading the entire board to offer their resignation en bloc.
But for those following the developments between Khazanah Nasional, Dr Mahathir and the Council of Eminent Persons led by Tun Daim Zainuddin, the latest move was about the only thing that the board could do in the absence of direction from the new government.
The board members did not need anybody to tell them that the options were limited since the shareholder was silent on the future direction of Khazanah.
It is learnt that Khazanah Nasional Bhd’s managing director Tan Sri Azman Mokhtar had been trying to meet up with Dr Mahathir on issues related to Khazanah. But he was unable to see the Prime Minister, who instead made several disparaging statements criticising Khazanah.
Dr Mahathir said Khazanah had deviated from its original objectives and that its executives were overpaid. He also said Khazanah was supposed to hold the shares for Bumiputera temporarily, but was instead holding the equity on a long-term basis.
As for Daim, he has said that the success of companies under Khazanah was largely due to the Government as its shareholder and consequently, the executives did not deserve high salaries.
Such statements do not help the Khazanah board undertake its duties. The board meets every quarter where it takes instructions from its shareholder, who is the chairman.
When a new chairman is not appointed, the board is left rudderless. There are no instructions coming and it becomes ineffective, leaving only whispers that the new government wants to see some personalities resign.
That is the Malaysian culture. Nobody is told to leave, but they are left guessing.
The Khazanah board comprises members who have earned their stripes in the corporate sector. The last thing they want to see happen is them being blamed for the sovereign wealth fund not performing well due to lack of directions.
Hence, the members decided to put in their undated resignation letters, paving the way for the Government to reconstitute the Khazanah board. The board members did not want their move to be known publicly but in the new Malaysia, nothing is a secret.
Nevertheless, the development puts to rest the impasse between the sovereign wealth fund and the new government.
Dr Mahathir was instrumental in setting up Khazanah in 1993. When he established Khazanah, he would have had a vision.
However, the corporate world has evolved over the years. Corporate Malaysia went through some rough years. After 2000, Khazanah was the vehicle used to clean up corporate Malaysia.
It cannot go back to what it was previously. That would be a major setback for corporate Malaysia.