QUESTION TIME | Is Shahrir Samad fit to be chairperson of the Federal Land Development Authority or Felda? No. Simply because he is a politician, and as such has several axes to grind. On top of that he has very little experience with business - one cannot find a more unsuitable candidate to run a government business than a politician - even an ex-politician.

While Felda, which started in the 1950s as a scheme to open up land for settlers, is rather political with a reported up to 50 parliamentary seats within its settlements, at the heart it is a business as well - it buys and processes output from settlers, mainly oil palm fresh fruit bunches.

Shahrir’s appointment as chairperson of Felda in January comes some one-and-a-half years after he admitted receiving RM1 million from Prime Minister Najib Abdul Razak.

“To whom else can I ask financial assistance for administration expenses if not from the party president himself,” he said when commenting on an article by Sarawak Report which claimed he had received funds from Najib.

Telling as the admission was, nothing more was heard from that - no investigation, nothing. That he can ask the party president for money and get it sent to his account for “administration expenses” is okay.

Shahrir must be close to the PM to be appointed chairperson of Felda, replacing Isa Abdul Samad, who was once suspended from Umno for money politics. Isa however remains chairperson of listed Felda Global Ventures Holdings or FGV. Felda effectively held about 31 percent of FGV as at March 18 last year, according to FGV’s 2015 annual report.

In a recent interview with The Star, Shahrir said that he wanted greater returns from FGV and another Felda company Felda Investment Corp (FIC) in which Felda had invested RM2 billion.

According to him, FGV contributes about RM300 million to Felda annually, including RM250mil under a land lease agreement while the returns from the FIC are a far cry from what other government-owned funds are contributing.

Shahrir said that he wanted to see FGV go back to its core competency in managing plantations and improving returns to its shareholders.

“The returns can be improved. We used to own the plantations (currently held by FGV) and we know what kind of returns that can be given to the shareholders. They have to look at ways to improve. They can collaborate with other plantation companies to increase profits. As the major shareholder we want to see better returns.”

A major indictment

This is actually a major indictment of the chairperson of FGV, Isa. There is more in store for Isa.

On the FIC, Shahrir said that the RM2 billion invested, was not giving the desired returns after three years of underperformance since being incorporated in 2013. For that entire period Isa was chairperson of Felda. FIC has investments in hotels, properties and listed-companies.

So upset was Shahrir with this that he made changes to the board of FIC and asked the previous board to resign due to the company’s disappointing performance. He did no such thing for FGV, though.

Yes, it’s true, FGV had been going on a buying spree ever since it was listed in 2012 and pretty much used up most of the RM4.5 billion it raised in June 2012 from its initial public offering (IPO) as this article from KINIBIZ shows.

By the time FGV made its proposal for its most controversial deal some two years later, it had just RM446 million left, barely 10 percent of its IPO proceeds. If FGV was to have gone ahead with its purchase of a non-controlling 37 percent stake in Indonesia’s Eagle High Plantations for a massive US$680 million or about RM3 billion, it would have had to borrow money!

But as the KINIBIZ article pointed out, there was a huge backlash against the proposed purchase, which was being bought at a huge premium of 70 percent to the then market price which had already been inflated by earlier questionable deals. Following the announcement, FGV shares fell by as much as 40 percent.

Despite Prime Minister Najib’s urging that the deal was a good one, FGV eventually withdrew from the deal but guess who took it over, yes Felda. And guess who is supporting the deal - yes, Shahrir - the same Shahrir who wants Felda’s investments via FGV and FIC to give better returns!

True, Felda is paying significantly less, but still a substantial US$505 million, about a quarter lower at some RM2.26 billion. It is still a huge premium to the market price of over 50 percent, and as pointed out previously a share price that had already been inflated by deals.

What is interesting is who Felda is buying from - the Rajawali group of Indonesia. Peter Sondakh is the founder and owner of the Rajawali group, and is also the ninth richest man in Indonesia, according to Forbes...