Proton may have made a multi-billion ringgit blunder by selling its stake in Italian luxury motorcycle maker MV Agusta, said its former chief executive Mahaleel Ariff.

Mahaleel said that the purchase of Agusta's Husqvarna-brand and its factory by German luxury automobile giant BMW last month was proof that the 'old' Proton management had made the right choice.

Husqvarna is one of three top Agusta's superbike brand - the other two are MV Agusta and Cagiva.

Under Mahaleel's stewardship, Proton coughed up 70 million euros (RM330 million) for a 57.75 percent stake in MV Agusta in 2004.

Following a change in Proton leadership, the entire stake was sold for a token sum of one euro (RM4.7) to little known company Italian company Gevi SpA.

Mahaleel told malaysiakini that BMW paid 93 million euros (RM420 million) to secure Husqvarna, which roughly makes up one-third of Agusta. This figure could not be independently verified by malaysiakini .

He claimed that the remaining two brands and two factories belonging to Agusta was valued between 100 million to 150 million euro (RM470 million to RM700 million).

Mahaleel said nothing had been done to increase the value of Agusta since Proton sold its stake as there were "no sales increase, no new products nor new patents".

"Put it simply, it was worse off when it was sold to BMW and yet they paid 93 million euros... (the present Proton management) on the other hand, sold the whole thing - three factories, three brands - for just one euro," lamented Mahaleel today.

It was a good deal

Quizzed about Proton management's claims that Agusta was debt-ridden, Mahaleel said the Proton management then had manage to negotiate for a good deal then.

"When Proton bought MV Agusta, the debt was about 170 to 180 million euros (RM800-RM850 million). We negotiated and reduced the debt by about 40 percent. So the (remaining) debt was about 110 million euro (RM520 million). The debt was frozen for three years, which we then had to pay gradually.

"So that's why we bought Agusta so cheap. We paid about 70 million euros (RM330 million) and the remaining debt is shared by all shareholders. Proton only 54 percent shareholder. We share roughly half the debt," he added.

Quoting BMW motorcycle division chief Herbert Diess' reason for acquiring Husqvarna - an off-road motorbike - Mahaleel said Proton had initially acquired the stake in Agusta because the latter had three distinct brands and a worldwide distribution network.

Reuters on July 20 quoted Diess describing Husqvarna as a brand targeted towards younger customers and the off-road and supermotor sector.

"This transaction also provides us with direct access to a worldwide sales network in the off-road segment," said Diess.

Mahaleel said Proton and Lotus were already two brands, but lacked the worldwide sales network which Agusta could offer.

"With an international network and five brands, we become a global company. That is why we bought MV Agusta," said Mahaleel.

Heads must roll

Mahaleel said the individuals in charge of selling the stake in Agusta has a lot to answer for in view of the latest developments.

"The government and Proton management said Agusta was useless. But BMW is a very successful company. Why did they buy something which Proton say is no good? Are they more stupid than we are?" he asked.

According to Mahaleel, Proton was advised by Credit Suisse First Boston while BMW was advised by Progman Group and Borghesi Colombo and Associates. Both are esteemed investment advisors.

"But why did have vastly different recommendations?" he added.

Mahaleel is often remembered as the chief executive who turned Proton into the black during his seven-year tenure.

His contract was not extended on July 25, 2005. It was believed that the move was due to his close links with former Prime Minister Dr Mahathir Mohamad who retired in November 2003.

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