Recently, some pro-UMNO and establishment blogs painted the perception that Petronas President and CEO Tan Sri Hassan Merican as falling out of favour from Prime Minister VI Dato’ Seri Mohd. Najib Tun Razak. They suggested that Hassan either should leave or be made to leave prematurely, for blatantly defying wishes (more like ‘instructions’) of PM Najib.
PM Najib was insistant of appointing former Special Function Officer and currently Ethos Consulting CEO Omar Ong as a Non Executive Director of Petroliam Nasional Bhd (Petronas). Despite two board of directors (BOD) meeting rejecting the ‘request’, PM Najib ‘forcefully installed’ Omar in.
The repercussion of Omar’s appointment into Petronas BOD is far reaching. For starters, Omar was a Petronas sponsored scholar who had a bond to complete for a term of service but failed to do so. He prematurely left just under two years of service in February 1997 to join Multimedia Development Corporation (MDeC) as the Executive Assistant to the Chairman. Later he left MDeC to join McKinsey & Co. From McKinsey, he formed Ethos Consulting with Dr Liew Boon Horng in 2002. During this time, Petronas issued a letter of demand for the remaining value of the bond yet to be completed.
Petronas has a policy to not admit personnel who left, to seek greener posture. As a matter of principle, the admission of Omar back into Petronas is morally and ethically wrong. Despite the admission is not as an employee but instead a member of the BOD, it can be seen as Petronas failed to uphold its own policy and ruling.
The amount sought by Petronas and awarded by the Shah Alam courts is not small. It is almost RM 200,000.00.
The appointment into the BOD is deemed demoralising amongst Petronas people. Not only a loan bond defaulter who was subjected to a court judgment and still ignored his dues, later he was ‘rewarded’ with a very strategic position in Petronas. This could send a message within Petronas that a ‘diliquent’ not necessarily needed to be reprimanded but instead rewarded, as long as one could earn a political patronage.
Despite being a wholly owned Government corporation, the organisation remained apolitical. Petronas management comprises professionals, which include top civil servants. Never has Petronas admitted a political appointee. PM Najib insistant of Omar’s appointment to the BOD could be perceived as Petronas being made serving political needs. It can also send the signal and set a precedence that Petronas personnel are free to breach any rule and/or directive, as they like.
Petronas is one of if not the best example of a GLC which has developed a formidable succession plan. The processes, work culture and dynamics and productivity have reached a point where results can clearly be seen, tactically and strategic. Bringing in ‘outsiders’ for a short term grooming process to take over as the CEO will definitely create ripples within the long serving executives of the state oil corporation. Some actually have illustrious service track records.
Loyalty and adhering to traditions are virtues that made a lot of corporations where they are today.
Oil and gas industry is the most productive sector in the Malaysian economy today. The productivity is glaring amidst regional and global economic slwodown. Hence, the sluggish Singapore’s economy has now set their aim to capture businesses being developed in Malaysia, which Petronas is taking the lead. Some even believed that this is one of the agenda to bring Omar into the BOD.
The excuse that Eisenhower Foundation Fellowship Alumni Omar was ‘sent’ by PM Najib is to look into ‘corporate governance’. How and why Petronas needed an extra independent director to oversee the ‘improvement of governance’ is not clear yet. So far, Petronas’s results have been far more than impressive. Unlike under other GLCs, for instance Khazanah Holdings Bhd., The investment arm of the Malaysian Government is known for spending lavishly and make bad returns despite ‘GLC restructuring master’ Tan Sri Nor Mohamed Yackop (now Minister in charge of EPU) specific instructions on ‘ROI’ and bullish obsession on ”value creation’. Some of the dealings could only be perceived as Malaysians being shorthanged. For the record, Khazanah Holdings has the fondness of outsourcing their consultancy jobs to firms like McKinsey and Co.
As is, Petronas people are not paid like the oil majors, despite outstanding success stories. Needless to say, their productivity still remain high. ‘Rumblings the interior’ is very much the flavour amongst her 23,000 personnel. Of course, Petronas has lost a stream of good oil and gas professionals due to the ‘below market’ remuneration packages for the lucrative industry.
These ‘interventions’ will have a pessimistic reaction, if not adverse for Petronas. Thoroughbred Petronas people would definitely be affected. The boost morale is not an easy task. For a corporation which has a turnover of RM 254 billion and almost RM 90 billion EBITDA, mutiny is something the Federal Government should want to avoid at all cost. That result is analitically 60% of the Malaysian GDP (PPP adjusted) for 2008.
In sundry, recent developments are premonition to pandemonium within Petronas. PM Najib and Federal Government should really think through deeply.
The "thirteen million plus Ringgit" guy rambles.... 
Why don’t you dig up Hassan’s shit? Then formalize an opinion.
Don’t you find it odd that Hassan is willing to defy his boss over the appointment of a non-executive independent director?
Could it be that Hassan does not update his boss that his boss needs to put someone in to see what is happening in PETRONAS? Wasn’t Omar the go between in updates of PETRONAS between Hassan and Najib when he was DPM?
In case you need some direction, what happened to PETRONAS RM 8 billion investment in the lube company in Italy? And their 1.8 billion (RM or US I forgot) in LNG terminal in Egypt? They have on in UK too, costing 65 million pounds a year whether it is used or not.
How much of PETRONAS overseas investment is actually making money? Does PETRONAS have a KPI to meet? 60% of GDP sounds impressive but what is the baseline benchmark?
Why did PETRONAS invest all that monies overseas when they could spend in country and helped out the local economy?
Go dig before you make a position. It’ll help you credibility. The ‘prp-UMNO blogs’ dun create smoke without the fire.
“Why did PETRONAS invest all that monies overseas when they could spend in country and helped out the local economy?”
I’m not sure what this means, but I thought the very reason PETRONAS ventures overseas is to help the country and the local economy?
Hmm like the F1 sponsorship? It used to cost PETRONAS abt USD 70 million a year. But we got our name in the spotlight, PETRONAS-Sauber. And we had access to Sauber’s engine technology.
That was history. Now we pay USD 100 million a year and its called BMW-Sauber. What happened to the engine technology? I remember it used to be in a Perdana which Hassan had in his house many many years ago.
PETRONAS, Proton, Perodua.. semua hak kerajaan. Semua tak bolih berkerjasama.
Might as well forget the F1 and use just USD 10 million for a good golf game. I imagine for that kind of money, Tiger Woods and the world’s top golfers (yes, including the near Malaysian Vijay Singh) will come down and play here. PETRONAS Malaysian Masters. Cheap cheap relatively but with a bigger impact on the the local economy.
Now this “errand boy” or “spy” is in the company, now what?
We are dying to know more!!
mohamed
How about a proposed bail-out of KIC’s Tanjong Pelepas bunkering project?
I was told Hassan has instructed MISC to look into the possibility of bailing-out Faizan and gang. And the reason given was cuz to help Nazir’s CIMB cuz they provided loan facilities. (RM 700 million pile of shit there.)
Apa nak dia buat tu? Setting up Najib? Or maybe his trump card to get an extension?
Maybe if Hassan goes back and focus more on his job and less in politicking, he would have gotten his extension.
Does All Golf not read that the OO fellow defaulted on his scholarship obligation? To the point that Petronas had to go to court to get judgment against him. Wasted money. When he could own up and negotiate a repayment package from monthly salary etc?
What kind of a sense of responsibility is that? Is that a person fit to be a member of such an august and respectable body as Petronas? If indeed DS Najib had parachuted, even hammered OO into Petronas BOD, his motive appears fishy, to say the least.
Can All Golf or DS Najib not appreciate that Petronas BOD has rules and regulations on BOD membership?
Are there not other members of the Board who are also men of integrity and can be watchdogs for DSN?
Even if he wants somebody close to him, why, for goodness sake, must it be someone who has a bad record with Petronas itself?
Maybe cuz I onced defaulted on my scholarship too. But I cried ‘constructive dismissal,’ so they were slow or reluctant to pursue. But when it came time to do business with PETRONAS, I threw out my principles and paid them back. Omar was not the only VIP with so called ‘hutang’ with PETRONAS.
Men of intergrity on the BOD? You mean people like Pak Kadir? Straight as he is, he has a warped approach in its implementation. He, like Hassan, thinks its their god-given right to rule cuz they believe they belong to the ruling elite. Ok la, Pak Kadir not as bad as Hassan. At least, he still can humour himself at the shit he helped the ‘establishment’ create. (re: TTdotcom and their 3G con game.)
I doubt Najib has ‘his people.’ One of the main reason, change is so slow. Bila dia DPM, sapa berani nak kata dia orang Najib? Sekarang, semua tak sempat nak mengaku.
Bottom line, have you people met Omar to judge what he is really like? Sure, he is an asshole, like KJ. But then again, aren’t most ambitious young men?
I too was a bigger asshole when I was young. Sometimes, now too (especially on the net.) But age tends to mellow people down.
Omar, like me may have a bad record (officially) with PETRONAS but we know more about what is going on in PETRONAS than the BOD. We still have our old network for the gossips.
Apa Hassan nak takut? Takut Omar is speaking on behalf of Najib? Hassan reports directly to Najib. Speak to the boss if he needs any clarification. And NOT the Press.
It is a small issue to fight over. Omar was a soldier in Pak Lah’s time. Small time soldiers can be turnaround. Its the big generals (like Nor Mohamed Yakcob, Khaled Nordin or even Musa Hitam) still running loose, I rather worry about.
kalau dig betul2….ada dirt hassan…dari awal lagi dia masok petronas dah ada cerita tapi dia perform orang dalam hormat……carilah kalau mahu
Mintok izin lalu Tuan Rumah,
Jib! Jib! Bak po mung ni Jib! Mu ni sakit ko?
– OO bising2, jadi tok jadi, tup-tup jadi jugok Petronas Director
– IJN pun bising2 jugok. Nok jadi macam OO episod jugo ko?
– Dasar liberalisasi mung Jib, orang Melayu curiga
– Bajet mung Jib, bukanla molek sangat. Flip-flop kereta 15 tahun, ikut Nuar Brahim pasal credit kad. Tu hok kecik-kecik. Hok besar2, aku tok tau la Jib
– Mu ni suko sangat ko dengan budok-budok kera Tingkat 4 tu?
– Yo la, kuasa mung nok amik sapo jadi ahli kabinet mung. Tapi, mung ni tok gheti pilih orang ko?
Guano Jib? Mu ni sakit gapo dio? Telingo dok dengar ko? Mato kelabu koh? Ko mung ni ado tok Dalang dibelakang punggong mung?
Eh? Buat macam MCA lah. UMNO buat EGM pilih presiden baru & barisan baru. Ko guano Jib?
Mung sakit koh?
moleknya tu! Buat macam MCA.
Saya yakin degan ni UMNO akan jadi benar-bemar kepunyaan orang Melayu dan boleh membela orang melayu.
mohamed
I agree that Petronas is well run, but pls remember that the risk of domestic exploration and production is still with the foreign firms that sign the JV production contract.
My bigger question is how can you compare Petronas sales with the GDP?
Yes – Petronas had sales of ~RM 254 billion, but what about the monies spent on procuring the equipment necessary to sustain the operations overseas where Petronas Carigali has to drill for the oil? (This number is 42.1% of the total for Fiscal Year 09)
In that case, we should restate the GDP by excluding imports. I do not know what we call this, but this number is then RM 1.206 trillion, and RM 250 billion out of RM 1.206 trillion looks more like 20% rather than 60%.
Just pointing out something that looks odd.
Would be grateful if you could clarify..
Wenger. Please stop making statements like this. It is distortionary and is insulting to Petronas whilst giving too much credit to foreign oil & gas firms, one of which I am a proud member. It is in the nature of the oil business that we may need to form partnerships with local NOCs in order to develop a country’s reserves. In my time in an O&G MNC, I see much credit due to Petronas for being a stand-out partner and an NOC to be emulated by others… Credit to the management IS due for this.
Which part of “I agree that Petronas is well run” do you fail to understand?
The whole point of my comment was to try and frame a discussion on how a GDP calculation of X-M+C+I+G can be used to compare against a sales figure of Petronas.
Instead your deliberately missing this. Do you think you make Petronas look better by deliberately skewing the facts? Should a Fortune 500 company need this sort of cheap PR.
Answer me this question. In a Joint Production contract who bears the risk of exploring and then producing the oil?
How is the risk compensated. Don’t tell me, I’ll tell you. The foreign firms get some of the oil produced. In theory, this actually is a form of import, but I let it pass.
I am just stating a fact, your trying to paint a picture that I was in anyway insulting the company.
Your only insulting the intelligence of the readers.
And furthermore, I feel Joint Production is a good thing from a financial point of view.
Especially given that the oil wells are out in the sea, allocating resources to do that may result in the company taking additional risk for which it is not compensated.
As I said clearly 41% of Petronas revenue is now derived from outside the country, where Petronas Carigali produces the oil.
So I still fail to understand why your getting so worked up.
petronas should remain as an noc…not joining the independent operators…so it has to behave like one…so far so good but of late, even at the tail end of hassan ‘s tenure, its getting capitalistic…..
Wenger
A figure more similar to GDP would be sales plus cost or 2*sales – profit.
Thats almost double sales. There goes your argument down the tube out of the sink.
To make it closer to that would be not to use GDP but include foreign elements.
Still it does not negate the argument that Petronas contribution to the economy is still significant.
Just dont understand arguing by spliting hair of definition.
Wenger is hardup for acknowledgement.
Smart doggie! Kekeke …
Excellent!
Consider this.
The entire economy is 1 company drilling for oil.
The income statement
Sales of Oil = $100
Salaries = $30
Import of services = $50
Profit = $20
Workers spend all the money subscribing to your Apabenda blog which is full profit for you.
Lets look how the Rest of the World calculates GDP
Expenditure approach
(X-M)+C+I+G
=(100-50)+30+0+0
=80
Lets see from the Income approach
GDP = COE + GOS + GMI + TP & M – SP & M
= (30)+(20)+(30)
=$80
In this situation, the GDP of the economy is $80, $50 (62.5%) was direct contribution from the Oil company, $30 (37.5%) was contribution from your blog.
According to your calculation, the GDP should be 2*Sales – Profit = 2*100-20
= 180
Where did the extra 100 come from?
Read here
http://en.wikipedia.org/wiki/Gross_domestic_product
http://staffwww.fullcoll.edu/fchan/macro/2gdp_computation.htm
No I am never hardup for acknowledgement, I’m hardup for kicking ass,and now you got served!
Wenger teh Wanker
You didnt serve me nothing.
You are still splitting hair and sahowing off formula like a kid just gratuated.
YOu are basically doing fault finding over a miniscule aspect of the whole article.
It doesnt change or alter one bit of the issue raised by Big DOg.
Ladies & Gentleman
Thats one of the better of the KJ supporters who write blog.
Thats what you can expect from a bunch of people who diehard who call KJ sir. Self worth and confidence of a peanut brain.
Sori for long spelling. me sekolah melayu yoko oso can see wnker stlupid sow off.
Donno say DONNO lah!
I can say, wanker!
Go stay in your blog that nobody read.
The Prime Minister of Malaysia has been downgraded to the status of a puppet…
HAHAAHHAHAHAHA!!!!! MM’s boo boys at it again. Cant believe you and Avoice were called watchdog citizen bloggers. In my view u are just Malays that took budaya kerengge to the next level.
Haiya
So many smart aleck wannabes showing off their high IQ konon …
[…] many of her executives still remain with the company because of Hassan. It is ashamed that when the ‘horse is changed midstream’, the momentum of these great successes will erode. Malaysians will be where ‘the buck […]
actually hassan at the end pon dah ada isu , staff mula jittery, ….elok dia berhenti tapi penganti tu mesti setaraf atau lebih…….
[…] Penyusunan dan penstrukturan dalaman semula Petronas dalam minggu ini mungkin akan memberikan ‘… (counter productive), sekiranya moral majoriti professional dikalangan orang Melayu dalam syarikat milik penuh Kerajaan ini dicalari. […]
petronas has got good manpower…it only need good leader, you take hassa away ok lah, hassan dah lama,cukup lah, dia mula burn out dan dah assemmble crony…jadi carilah yang baru..betul2 bagus….tengku razaliegh can be appointed executive chairman and he may like it …nostagia bagi dia ….
[…] This was one of the three issues Tun Dr. Mahathir raised with Prime Minister Najib in the first one-on-one engagement after swearing in as the Sixth Prime Minister in April 2009. The Fourth Prime Minister specifically warned Prime Minister Najib against the appointment of Ong into Petronas. […]