KUALA LUMPUR: After the failed FashionValet investment, the Finance Ministry says government-linked investment companies (GLICs) will strengthen governance and risk management to prevent similar losses.
“With regard to investments in FashionValet by Khazanah Nasional Bhd (Khazanah) and Permodalan Nasional Bhd (PNB), these were managed as part of a broader portfolio whose performance is assessed on an overall basis, not on individual investments alone,” the ministry said in a written reply dated Nov 6.
It said early-stage investments, including venture capital, inherently carry high risks but also offer the potential for significant returns.
The Public Accounts Committee previously held proceedings with Khazanah on the impairment losses related to FashionValet.
It found that while the investments by Khazanah and PNB were unsuccessful, both institutions had carried out reasonable due diligence.
However, FashionValet was hit by internal factors, particularly its risky omnichannel strategy, as well as external pressures, including the Covid-19 pandemic and shifts in consumer behaviour in the post-pandemic period.
The ministry said lessons from the FashionValet experience would guide Khazanah and PNB in strengthening investment accountability, including due diligence, rational decision- making and fair valuation and returns.
It said venture capital investments remain important in stimulating innovation, nurturing start-ups and building Malaysia’s long-term competitiveness.
“The success of such investments should be evaluated based on overall portfolio performance while ensuring robust governance and clear accountability,” it said.
GLICs, including Khazanah and PNB, will continue enhancing governance, particularly in investment evaluation and continuous monitoring.
The ministry stressed that the government views losses involving companies linked to GLICs seriously.
It said board members and senior management are required to fulfil their fiduciary duties to protect company interests from losses arising from misconduct or negligence under the Companies Act 2016.
“If found guilty, directors or management may face disciplinary action or prosecution, including for breach of trust or failure to fulfil fiduciary responsibilities,” it said.
The written reply was in response to Kepong MP Lim Lip Eng, who asked what action was taken against individuals in GLICs found to have caused losses through negligence or misconduct, including in the FashionValet case.
On Dec 5, 2024, Datin Vivy Yusof and her husband Datuk Fadzarudin Shah Anuar were jointly charged with fraudulently making a transfer of RM8mil from FashionValet Sdn Bhd to 30 Maple Sdn Bhd without the approval of FashionValet’s board of directors.
