Saturday, May 30, 2009

Khazanah begins reshuffling GLC chiefs

KUALA LUMPUR, May 28 — Malaysian Insider

Tenaga Nasional finance chief Datuk Mohd Izzaddin Idris has been named chief executive officer for infastructure group UEM from July 1 as state asset manager Khazanah Nasional Berhad kicked off a reshuffle of top executives in its stable of companies.

Sources said more changes are expected at the top echelons of other government-linked-companies including telecoms provider Telekom Malaysia Berhad and possibly within the sovereign wealth fund itself.

“Datuk Seri Najib Razak wants to put in people with the right expertise to manage these companies. He wants even the chairmen to work, not warm their seats,” a source told The Malaysian Insider.

As the investment holding arm of the government, Khazanah has stakes in more than 50 companies with assets valued in excess of RM60 billion including Tenaga Nasional Berhad, CIMB Group, Proton Holdings Berhad, PLUS Expressway Berhad, Malaysia Airlines System Berhad, Malaysia Airport Berhad, UEM World Berhad, UEM Builders Berhad, and Time dotcom Berhad.

Izzadin has been the chief financial officer and senior vice-president (Group Finance) of Tenaga Nasional Berhad since September 2004. His resignation is effective June 30, Tenaga said in a statement.

Izzaddin will succeed Datuk Ahmad Pardas Senin, who is retiring. UEM chairman Tan Sri Ahmad Tajuddin Ali said with Izzaddin’s wealth of experience, the board was confident that he would be able to contribute towards the UEM Group’’s sustainable growth and success.

UEM, which built the North-South Highway now managed by PLUS Berhad, is one of Malaysia’s biggest infrastructure companies under Khazanah’s control.

Khazanah, which recorded a 53 per cent increase in aggregate earnings in the last five years, was recently questioned by the Public Accounts Committee (PAC) about its finances and investments now topped up by more than RM10 billion in public funds

That fresh amount, excluding off-budget allocations and compensations to its companies and the EPF’s RM5 billion loan to fund manager Valuecap Sdn Bhd, has raised concerns about the usage of public funds as lawmakers feel the money can be used better elsewhere.

Khazanah had received RM10 billion from the RM60 billion second stimulus package announced last March.

The package also included an off-budget allocation of RM2 billion for a low-cost carrier terminal within KLIA and RM250 million to expand the Penang International Airport, both to be built by Khazanah’s

Malaysia Airports Berhad, apart from RM480 million compensation to national highway operator PLUS to not raise toll charges.

In a report on March 13, Khazanah disclosed that the top 20 GLCs (G-20) aggregate earnings in 2008 was 53 per cent higher at RM14.69 billion against RM9.6 billion in 2004 when it launched the GLC transformation programme under new managing director Azman.

However, it was below the RM19.3 billion achieved in 2007 when the global economic crisis began.

The sovereign wealth fund had also touted growth and transformation in several GLCs including Telekom Malaysia Berhad, TM International Berhad (renamed Axiata Berhad), Malaysia Airlines, UEM Berhad and several others.

It disclosed that total G-20 shareholder returns outperformed the KL composite Index by a compounded annual growth rate of 4.8 per cent since it the transformation programme with return on equity growing to 10.4 per cent in 2008 from 8.2 per cent in 2004, peaking at 14.6 per cent in 2007.

But Bagan MP Lim Guan Eng, a qualified accountant, told parliament Khazanah’s performance had not been encouraging despite the economic storm, saying its records showed that in 2008, Khazanah’s portfolio fell RM17.8 billion with overall Realisable Asset Value (RAV) deteriorating to RM70.4 billion on December 31 from RM88.2 billion on May 31 2008.

“What is more frightening is the net worth – RAV less total liabilities – stood at RM 33.7 billion at Dec 31 against RM 53.1 billion at May 31 2008. That is a reduction of Rm19.4 billion or a drop of 36.5 per cent in just six months,” said Lim, who is also the Penang chief minister.

The DAP secretary-general also said Khazanah’s equity investments has been poor with RM5 billion wasted in silicon maker Silterra Corp, apart from the sale of MV Agusta by Proton Holdings for one euro in 2006 after buying it in 2004 for RM368 million in 2004. He noted MV Agusta was later sold for RM800 million to BMW and Harley-Davidson Motorcycles.

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