PAC Chairman Dato’ Nur Jazlan Mohamed almost got it right for blaming ‘consultants’ for the ‘Malaysia Airlines-AirAsia share-swap’ deal which eventually proven failed and now, a business catestrophe for the national carrier. The ‘consultants’ in this deal is CIMB CEO Dato’ Seri Nazir “Jay” Razak.
PAC chief blames Khazanah for lack of oversight in MAS-AirAsia deal gone wrong
BY RANJIT SINGH
SEPTEMBER 09, 2013
LATEST UPDATE: SEPTEMBER 09, 2013 05:44 PM
Nur Jazlan is the member of parliament for Pulai. The Malaysian Insider pic by Nazir Sufari, September 9, 2013.
Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed (pic) today reprimanded Khazanah Nasional for its role in the Malaysian Airlines-AirAsia share swap deal which resulted in both carriers being fined RM10 million each by the Malaysian Competition Commission (MyCC) last week.
In a statement today, Nur Jazlan said that Khazanah and other government-linked companies (GLCs) should not rely solely on consultants for advise. He said the consultants were only motivated by profit and had at times overlooked the laws governing a transaction.
The state asset manager holds a 69% stake in Malaysia Airlines (MAS). In 2011, MAS and low-cost carrier AirAsia entered into a share swap deal which saw cross holdings by both entities. MAS would hold a 10% stake in AirAsia while AirAsia‘s stake in MAS would be 20.5%.
The deal was later rescinded after the MAS Employees Union (MASEU) opposed the deal claiming it would result in job losses at MAS.
Last week, the MyCC decided that the deal was monopolistic and both MAS and AirAsia were fined RM10 million each.
Nur Jazlan was speaking to reporters after attending a briefing by Auditor-General (AG) Tan Sri Ambrin Buang at his office in Putrajaya today.
He also said that the Auditor-General’s report for 2012 was ready to be tabled in Parliament but the members of PAC have not yet been appointed.
He pointed out that since this was the first year that the AG‘s office was auditing Khazanah and its subsidiaries, he expected high standard of corporate governance to be practised by the national sovereign fund.
“Khazanah is the custodian of around RM80 billion of public funds and its stewardship must meet the highest standard of corporate governance,” said Nur Jazlan.
He also said that the PAC would conduct surprise visits to ministries, governments agencies, government-owned companies (GOCs) and GLCs to ensure that funds allocated were utilised accordingly. – September 9, 2013.
The deal was engineered by non other than Khazanah Nasional Bhd MD Tan Sri Azman “Amokh'” Mokhtar, Malaysia Airlines Director Mohamed Rashdan “Danny” Yusuf and AirAsia CEO Tony Fernandes where as Jay Razak as the adviser, pieced up the ‘share-swap’ agreement.
It is believed that CIMB made a handsome fee for the ‘share-swap’ deal.
They were the four who acted on behalf of their respective organizations in the capacity of stewards with controlling shareholding and committed national carrier Malaysia Airlines for a ‘share-swap’ and Co-operation Collaborative Framework (CCF) with AirAsia. That resulted to the Malaysian Competition Commission issuing a fine against Malaysia Airlines and AirAsia for a princely sum of RM10m each.
It is clear Malaysia Airlines was a reluctant partner in the ‘share-swap’ and CCF because the national carrier was forced down their throat by Khazanah to accept Fernandes and his partner Kamaruddin Meranun as directors in the BoD. Things changed there on.
The duo were members of the Executive Committee and operational decisions are made in the small club of Malaysia Airlines new bosses. Executives with lesser airlines operation experience, mainly from AirAsia were brought in quickly and slotted into strategic positions and they began to do changes, like killing off Firefly Jet service, handing over routes like KUL-Bandung to AirAsia and killing other routes like to Johanesburg, Capetown, Buenos Aries, New York and Dubaii entirely.
The Pulai MP should in time uncover decisions to milk Malaysia Airlines dry more than existing extensive losses position. These include making the GLC a sucker by the GBP3 million sponsorship on Fernandes’s private venture in EPL’s lowest-rung-of-the-table Queen’s Park Rangers and the ‘internal directive’ for Malaysia Airlines to take over A330s jets which AirAsia X ordered but unable to utilized as they were cutting down their European routes.
The decision to commit national carrier for the ‘share-swap’ and CCF was at shareholders level, which Khazanah Nasional Holdings’ call as the 69% controlling shareholding party. Malaysia Airlines was just executing what the shareholders agreed and later what their own BoD decided.
PAC should act to protect Khazanah from making irresponsible decisions from really unscrupulous personalities and reprimand them if such decisions were already made. This is for the all the deals that Federal Government investment and commercial arms committed the respective GLCs into.
In all, the principle of demanding that Amokh, Tony, Danny and Jay Razak take responsibility and personally pay up for the RM10m fine imposed on Malaysia Airlines is just a fair call.