Part 2: Datuk Azhar’s performance at MRT Corp and can he compete globally with FGV?

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DATUK AZHAR’S PERFORMANCE AT MRT CORP AND CAN HE COMPETE GLOBALLY WITH FGV?

 

In the first of this three-part series, an analysis was made of why Datuk Wira Azhar bin Abdul Hamid was appointed Chairman of Felda Global Ventures Bhd (FGV), when the experienced and honest Tan Sri Dato’ Seri Dr. Sulaiman Mahbob would have fit the bill better.

 

Not many Malaysian (or even the settlers) are aware of this, but the Government, with a so-called ‘golden share’ in FGV, has the right to appoint FGV’s Chairman and CEO as well one director, and it was said that FGV’s board of directors were kept in the dark over Datuk Azhar’s appointment.

 

So how does he come to be qualified for this role and will he succeed?

 

Among all the high-profile jobs that Datuk Azhar occupied in his long career, none was more prominent than his stint as CEO of MRT Corp between 2011 until 2014, which was the time when the Sungai Buloh-Kajang line was built.

 

But that achievement was marred when a construction site accident claimed the lives of three Bangladeshi men — a tragedy that Datuk Azhar took personal accountability over, resigning from his role. Not surprisingly, Malaysians were pleasantly stunned over this move, as they were not used to such acts of personal accountability from top-ranking officials.

 

“Exemplary leadership and courage,” one blogger wrote on his site. “Tabek Tuan,” another wrote. “This is how it should with the CEO or any company….MAS included. When things go wrong you take responsibility.”

 

But Malaysians have missed the point. Datuk Azhar’s resignation left MRT Corp high and dry when it needed him most. Why did he not stick around and conduct the necessary investigations? Especially when these tragedies occurred during his time as CEO?

 

When he was quizzed by the reporters he said, “some security measures were not followed by the subcontractors”, and that “if that really is the case, I will make sure MRT Corp never works with them again.” He also said that despite his pending departure from MRT, he would see the case through and ensure that the families of the deceased be given justice.

 

But, until today, three years later, nobody has taken the blame for the three deaths. And the question of ‘whose hands does the blood of those three Bangladesh nationals stain’ remain as yet unanswered.

 

If Datuk Azhar was unwilling (or unable?) to resolve something as material as not one, two or three deaths at a construction site where Health and Safety are the No.1 priorities, can he be therefore he trusted to conduct AND SEE THROUGH the necessary anti-fraud investigations so that FGV is put back on the right track?

 

LEADERSHIP VACUUM

 

With Group President and CEO Datuk Zakaria Arshad still out of commission due to the ongoing probe on deals done under FGV subsidiary Delima Oil Products Sdn Bhd, Datuk Azhar’s role becomes even more important.

 

He must be able to work together with the acting CEO, Datuk Khairil Anuar Aziz, formerly the chief operating officer (logistics & others sector), but who has been now named as the officer-in-charge to take over the duties and responsibilities of the suspended CEO.

 

Datuk Azhar must also navigate the ongoing volatility in global CPO prices and the current monsoon season, which almost always affects crop production. But will he able to navigate these challenges? He is coming into FGV at a time of great strife and pressure to recover its former glory days when it was first listed in 2012.

 

Morale among shareholders, staff and smallholders alike are at rock-bottom levels, which is a big headache for the government, because it is said that Felda farmers are the majority voters in at least 54 of the 222 parliamentary seats.

 

As elections are expected to take place by April 2018, the pressure is on for Datuk Azhar to perform.

DATUK AZHAR VS WILMAR’S KUOK KHOON HONG: WHO WINS?

 

With a combined 441,000 hectares of rubber and palm oil estates in Malaysia and Indonesia, 11 global refineries in the downstream palm segment and businesses in ten other markets including Indonesia, Pakistan, China and the US, FGV is a global business. But experience-wise, how does Datuk Azhar compare with his peers in these global multinationals?

 

FGV’s closest rival in Malaysia/ASEAN is the Singapore-listed Wilmar International, the largest producer of palm oil in the world, by virtue of the 242,403 hectares of palm oil plantations it owns in Malaysia and Indonesia, the same base of operations as FGV.

 

Datuk Azhar’s counterpart in Wilmar is Kuok Khoon Hong, the 66-year-old nephew of major owner Robert Kuok and also a billionaire himself, worth about $2.2 billion.

 

Datuk Azhar will lock horns in global agribusiness not with a manager of the business like himself but with someone who was brave enough to part ways with his uncle Robert Kuok by leaving the Kuok Group in 1991 to start Wilmar with the Indonesian businessman Martua Sitorus. Many who think Khoon Hong is instrumental in Wilmar because of his uncle will be surprised to find out that in fact, Robert Kuok was the one who bought into the company.

 

In 2007 it was Robert Kuok who bought a 32% share in Wilmar and has since has enjoyed its growth spurt into one of the world’s largest palm oil producers. Today, Wilmar is worth nearly SGD$20 billion and Robert Kuok’s share alone is worth nearly $8 billion, the single largest contributor to his net worth.

 

Can Datuk Azhar, fresh into his new job at FGV outsmart and outwit a billionaire Founder-Chairman of a global agribusiness giant?

 

DATUK AZHAR VS CARGILL’S DAVID MACLENNAN: WHO WINS?

 

FGV’s other big competitor outside of Malaysia is the privately owned and highly secretive company Cargill Incorporated, 90 percent owned by the Minnesota, USA-Cargill family, and which is the top palm oil producing company in Indonesia.

 

Cargill owns and operates two plantations in Indonesia, one of which (in Kalimantan province on Borneo island) has an acreage of 32,000 hectares, or around two-thirds the size of Singapore.

 

Founded in 1865, Cargill is now the largest privately held corporation in the United States in terms of revenue ($109.6 billion in 2017). Reports say that if it were to ever list its shares on the stock exchange, it would rank No. 15 on the Fortune 500, 169 PLACES HIGHER than Petronas, Malaysia’s largest company (2017 revenues: $49.5 billion).

 

Like FGV, Cargill is involved in processing, handling, shipping and marketing of a wide range of agricultural, food and energy products and services, including palm and sweeteners, among other edible oils.

 

Datuk Azhar’s counterpart in Cargill is a man named David MacLennan, who like Wilmar’s Kuok, is a longtime employee. MacLennan has sat on on Cargill’s board since 2008 and was previously its chief financial officer and chief operating officer.

 

But unlike Datuk Azhar, who has only ever worked in Malaysia, MacLennan, who has an MBA in finance from the University of Chicago, has held management positions in London, Geneva and Chicago, racking up experience in the futures and securities sector before joining agribusiness with Cargill.

 

Will Datuk Azhar, fresh into this new job at FGV, be able to outsmart and outwit a globally travelled, financially savvy Chairman of a business much, much larger than Malaysia’s largest company?

 

NO CHANCE BUT TO GO GLOBAL

 

It is clear to all FGV’s stakeholders that its future lies outside of Malaysia, but that is where the big boys lie in wait. FGV will have no choice but to compete head-on with the Cargills and Wilmars of this world.

 

Is Datuk Azhar the right man to tackle this massive challenge?

 

On the evidence presented thus far, the answer is apparent for all to see. In the third and final part of this series, an analysis of the laundry list of challenges Datuk Azhar will encounter in his role as Chairman of FGV in 2018.

 

(To be continued ..)

 

Submitted by: TruthPrevails

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