The time has come for Shahrir to get back on board

SO far, Tan Sri Shahrir Abdul Samad has distanced himself from the management and board of Felda Global Ventures Holdings Bhd (FGV) since assuming the position of Federal Land Development Authority (Felda) chairman in January this year.

He took over from Tan Sri Mohd Isa Abdul Samad, a heavyweight in Umno, who currently is the chairman of FGV and involved in an open battle against group president and chief executive officer Datuk Zakaria Arshad.

But the time has come for Shahrir to get involved with the ongoing boardroom rumble in FGV.

He cannot ignore it, given the fact that investors are losing confidence in FGV – evident from its 5.7% fall in share price, wiping out RM401mil in market capitalisation.

The MACC has also said that it would act on the call by Zakaria to investigate the plantation group.

Felda is the single largest shareholder in FGV with a 34% stake. Shahrir, as chairman, has little choice but to act if he wants to protect Felda’s investments.

So the next two weeks will be a crucial time for Shahrir and all eyes will be on him to see how he handles the crisis. So far it has been reported that the wily Johor Baru Umno MP has said he was caught by surprise over Zakaria being told to resign from FGV.

Two months ago, Shahrir had said that he wanted the assets of Felda to give better returns and did not hide the fact that he was not happy with the performance of FGV.

The question is how he would handle the issue of Zakaria leaving FGV without hitting a nerve among Felda settlers.

Zakaria is an “anak Felda” from Negri Sembilan. He was handpicked by the board, led by Isa, to take over as CEO from Datuk Mohd Emir Mavani Abdullah in April last year.

Like any new CEO would do, Zakaria began opening the books, cutting costs and curbing excessive spending at the company. He is also against some investments by the board into areas not related to FGV’s basic plantation business.

Among them is an additional investment of £100mil (RM550.6mil) over the next few years into the Felda Cambridge Nanocarbons project, a venture that is bleeding.

The cost-cutting and curtailing of investments into non-plantation-related activities have not gone down well and are said to have soured Zakaria’s relationship with Isa.

Isa has come out to state that Zakaria has been told to go on a leave of absence pending an investigation involving one of FGV’s subsidiaries.

Shahrir, being head of Felda, is answerable to the Government and 112,000 Felda settlers. He has to ensure income is maintained or improved yearly.

In 2016, the total income of the settlers amounted to RM3.97bil but Shahrir feels there was a need to sweat the assets further for better returns.

FGV contributes about RM300mil to Felda annually, including RM250mil under a land lease agreement.

In total, Felda gets less than RM2bil from its investments and is short of the RM3bil required per annum for its programmes. Over the next two years, Shahrir is looking at taking up some borrowings, backed by the wealth of assets that Felda owns.

He is also looking into divesting some of the group’s assets, such as hotels in London owned via Felda Investment Corp.

When FGV was listed in 2012, it was sitting pretty on a cash pile of more than RM5bil. However, between 2013 and early 2016, FGV under CEO Mohd Emir Mavani completed seven acquisitions, forking out RM4bil.

That cash pile has disappeared. The stock today is a pale shadow of itself some five years ago.

Speculation is rife of new shareholders coming in at FGV to lift its sagging fortunes. The names included the likes of Matsua Sitorus, the co-founder of Wilmar, an established plantation owner in Indonesia.

Now, with the battle within FGV, will the potential new shareholder still be keen?

Shahrir’s strongest asset when he came to Felda was that he had no baggage and no political ambitions. However, he obviously has some major fixing to do at FGV.

Felda and Shahrir can no longer possibly be watching on the sidelines as its major investment goes through the biggest crisis since its listing.