‘Level Four Boys’ Head Honcho set for MRCB top job

Former Head of Policy in Prime Minister ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi’s office Dato’ Ahmad Zaki Zahid is set to be the next MRCB CEO. After the near humilating ouster of the Fifth Prime Minister, Zaki managed to arrange himself into a mainstream conglomerate which is into high end and premium property development and IPP.

The Star has the story:

Wednesday November 11, 2009

Who is the new man who is going to make more money for the EPF?

By TEE LIN SAY

PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) group managing director Shahril Ridza Ridzuan has been tipped to become chief investment officer (CIO) of the Employees Provident Fund (EPF), a post that has been left vacant since early this year.

According to sources, the announcement will be made as early as next week. Shahril, 39, will succeed Johari Muid.

MRCB executive director Datuk Ahmad Zaki Zahid looked set to take over the top position in the company, succeeding Shahril, sources said.

Zaki was appointed to the MRCB board in January 2005 and was redesignated as executive director in May this year.

Sources said Shahril’s appointment as CIO of the retirement savings fund, which currently has over RM350bil in its coffers, would help expand EPF’s investments beyond the traditional asset classes of Malaysian Government Securities, loans and bonds and equities.

Historically, property made up less than 1% of the fund’s total investment portfolio.

“It is hoped that Shahril, given his experience in turning around and driving the property group over the years, will be able to steer and expand the fund’s investment in property as well as private equity, areas it has long wanted to expand into,” one source said.

Observers say Shahril’s experience and track record of having turned around MRCB from a loss-making entity to a leading property and construction group and the visible success of the company’s flagship project KL Sentral development should hold him in good stead in his new job.

With an estimated gross development value of RM13.9bil upon completion in 2015, KL Sentral is the landmark development for MRCB, which currently has several ongoing projects with a total estimated gross development value of RM4.3bil.

MRCB’s majority shareholder is the EPF which has a 30.97% stake.

The EPF has generally invested a large portion of its money into fixed income, given that it is the safest option. But it has come at a price – returns or yields from fixed income has been relatively low.

As for equities, which makes up 20% to 25% of the fund’s investment portfolio, although the rewards can be relatively higher, so are the risks given the high volatility of equity prices.

With that in mind, the fund has been eager to expand its income by looking at alternative sources of investments while retaining capital preservation as its top priority.

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Zaki, a former Securities Commission man who later joined consulting firm Booze Allen Hamilton had his first stint in politics after the success of negotiating with Suqiu for the ’17 Demands’ back in 2000 and taken as Special Officer in Minister of Youth and Sports Office, then Dato’ Hishamuddin Hussein. Hishamuddin was also the UMNO Youth Chief. In 2002, PM ‘Flip-Flop’ Abdullah, then Deputy Prime Minister took him in as a Special Function Officer. After the landslide and thumping BN success of 2004 11th General Elections, PM ‘Flip-Flop’ Abdullah brought in son-in-law Khairy Jamaluddin as the Deputy Chief Secretary in Prime Minister’s Office and restructured the whole outfit, role and function. Hence, the creation the position of Head of Policy at PMO and they became very powerful as most decisions and policies are made by this outfit instead the Cabinet via advice from agencies such as EPU, ICU, MITI, NEAC etc.

The much talked about ‘Level Four Boys’ was born.

New policies such as economic corridors, particularly Iskandar Development Region (now Iskandar Malaysia) and Northern Corridor Economic Region was championed by Zaki. He envisaged the role and function of the State Economic Planning Units being ‘Federalised’ and co-ordinated by new form government outfits such as IRDA and NCIA, which get direct instructions and approval by his position, as the head policy adviser to then Prime Minister. For someone who has never been in macro management and planning especially for a nation which is the world’s 17th largest trading economy, this was incredibly risky game to play.

These economic corridors have spent hunreds of million tax payers money doing all sorts of planning and ‘blue prints’, which have yet proven to be anything worthwhile. This is because professionals from private sectors without any tangible and exposure to do macro management and planning are plucked in with ‘tall order to ‘Federalise’ SEPUs and bottomless pit coffers’ instructions. So far, little can be desired by these trial-and-error effort by professionals who thought they can do better but had to teach themselves first what they need to do, with an exorbitant cost.

It was reported that Petronas dished out RM 263 billion in taxes, dividends, royalties and other payments to the Federal Goverment and some state governments during PM ‘Flip-Flop’ Abdullah’s tenure should be considered. A very little and tangible can be seen with this spending and one often wonders where did the money go.

The nation must also be reminded that it was in Zaki’s time as policy adviser to PM ‘Flip-Flop’ Abdullah stewardship that decisions such as hiving off MV Agusta from Proton to an unknown buyer Gevi SpA at a mere One Euro (RM 4.60) was made (Gevi SpA eventually sold Husqavarna to BMW Motorad for a whopping Euro 93 million!). Malaysia also had a foreign policy shift to ‘lead a constructive engagement (meddle around and interfere) in a neighbour’s domestic politics’ when in Nov 2005 Head of Government ASEAN summit in KLCC Convention Centre led a charge to ‘discipline’ Myanmar into democratization.

Zaki, who was one of former Minister of Finance II (now Minister in charge of EPU) Tan Sri Nor Mohamed Yackop’s trusted man is now set to take over a property and power producing conglomerate MRCB. With a book order of over RM 13 billion with RM 4.3 billion just on the KL Sentral property alone, there is a lot that an ambitious and cunning professional could manipulate.  Especially if there is a ‘hidden agenda’. MRCB is the rakyat’s interest as 30.6% of its shares is owned by EPF.

MRCB today is a cash rich conglomerate. In an economic storm and glut, MRCB is cash rich enough to issue a rights issue and satisfy the dividend yield. Zaki, who has been known to ‘make deals’, is sitting on a ‘gold mine’. KL Sentral has been eyed by Singaporean property players such as Capital Land, as part of the “6,000 mile radius hinterland plan”.

Nor Mohamed as the Economic Adviser recruited bright young Malay professionals as a process to clean and beef up GLCs, post Anwar “Mat King Leather” Ibrahim era. Chartered Accountans like Azman Mokhtar (then Binafikir founder and present CEO Khazanah Holdings Bhd.), Mohamad Zainal Shaari (then partner PWC and now Deputy CEO Khazanah Holdings Bhd.), Abdul Wahid Omar (then UEM CEO, later Telekom Malaysia CEO and now Maybank CEO), Che Khalib (then KUB CEO and now TNB CEO), Abdul Rahman Ahmad (then Media Prima CEO and  now Ekuinas CEO) and Shahril Riza (then MRCB CEO) surfaced from the world of investment banking and debt and capital market to answer the ‘national service’ call. As Rahman remembers it well when he first met PM then Dato’ Seri Dr. Mahathir Mohamad for the new assignment, the warning was simply  “Don’t do side deals”.

Recently, Nor Mohamed hits the headlines again with the controversial decision of hiving off IJN to Sime Darby made public and later, another proposal with a privatisation agenda of for the national heart institute. On the proposal of privatisation of Plus Bhd., a statement made by Nor Mohamed was contradicted by PM Dato’ Seri Najib, even though he was then abroad.

This MRCB corporate move should be watched closely. For someone who has failed which led to PM ‘Flip-Flop’ Abdullah failed miserably must be remembered, so that a conglomerate like MRCB is not being made taken advantage of. So much can be gained from a very wealthy conglomerate like MRCB, which at the moment is a ‘gold mine’.

Published in: on November 11, 2009 at 11:20  Comments (36)