The fate of Petronas

Petronas is a sensitive subject. It is the pride and joy of Malaysians. One of a few Malaysian companies that could make into Fortune 500. It is a Malaysian company where it should think about Malaysians first. Obviously, people would not want Petronas to flounder after achieving so much. That is why, Petronas would receive so much criticisms if it is perceived as being mismanaged or abusing the people’s trust.

Hence, when rumours broke out last year about Petronas going to be ransacked, almost everyone jumped out from their shoes and raised the alarm.

This year is no different, albeit in a much more muffled setting. I guess news like this should not be overblown as it will give the new PM extra headache in his first 100 days of being the Premier.

But I have a few questions to highlight should this not a done deal already.

First, to explore on the media statement of Lim Kit Siang last week. It stated:

Najib should clarify once and for all whether former Home Minister, Datuk Seri Syed Hamid Albar has been appointed Petronas Chairman and if so, explain why a person deemed unfit to continue as Cabinet Minister as to be dropped in the recent reshuffle should be considered proper material as Petronas Chairman.

Furthermore, whether Omar Ong, one of the Putrajaya “Level Four” boys of former Prime Minister, Datuk Seri Abdullah Ahmad Badawi has been appointed non-executive director of Petronas, with a view to his future appointment as Petronas CEO and replacement of Tan Sri Hassan Merican next year – as well as the basis and criteria for such an appointment.

I guess his points are valid. Thus this article is written so that the PM and the public, and the BOD of Petronas should know what the issues that will surface should those points are not verified.

The first point is a clear cut misgiving towards the said politician. But the second point is very vague. How could Lim Kit Siang know the machinations of what the PM’s inner circles are planning? Does he know something we do not?

Since there was a little commotion in the blogosphere involving the alleged appointment of one Mr Mohd. Omar Bin Mustapha as the Non Executive Director of Petronas, I guess we all need to know a little bit more on the issues here.

Indeed, what are the basis and criteria for such an appointment? What had Mohd Omar done to receive such an appointment? Is it because of his track records? Is it because of his close proximity to the PM? By the way, he was the Special Assistant to Najib  when he was the DPM. These are two strongest aspects that need to be studied.

From risk management point of view, if the impact of the latter overshadows his track records, then it will not augur well for Petronas.

Should someone who is perceived to have the ears of the PM, or someone that the PM is smitten with (not in sexual kind of way of course) be appointed as the director of Petronas, naturally all board decisions will subconsciously be based on what this person will deliberate.

There will be a subliminal need by the rest of the board to agree with whatever he says as he will have the reputation as the PM’s right hand man.

It is human psychology. And I tend to agree with what a commentator said here. In most parts he/she is correct although he/she was wrong when he said Omar is the current Special Officer of Najib.

But to the understanding of many, Omar is construed as having an extremely close relationship with Najib as an unofficial advisor.

The gist of that commentary gave a valid question – is it prudent to have someone so close to Najib as the director of a Petronas where such appointment may open up avenues to abuse the position?

Is there any risk mitigating plans to overcome this potential risk in the future? Can the rest of the board members be trusted to be thoroughly objective in their decision making process for the sake of our country?

Hopefully, the board had enough foresight to see any oncoming backlash ahead.

I am sure Omar is a highly dedicated and brilliant person. But will Petronas benefit from his experiences and network? Obviously, it is up to the board / PM to decide on this appointment. We are just giving input of the matter.

Speaking about experiences, Ethos Consulting developed the National Automotive Policy (NAP) in 2006 whereby as the result of its specific policy instruments (surge in AP approvals, new excise duty structure, availability of grants for local and foreign car manufacturers etc) had greatly diminished Proton’s legacy as the leading brand in Malaysian automotive industry. But Omar could not have been involved in the development of the NAP as he was working under Najib directly back then.

Ethos also is  commonly known to be involved in many government sponsored projects  such as the trillion dollar economic corridors, the proposed takeover of IJN by Sime Darby, development of KPIs in a couple of GLCs, Felda’s divestment of assets and many others.

The list is impressive and not many consulting company can boast of having secure critical governmental projects  within a short span of its operating life.

But the board of Petronas should be wary of the network reach of Ethos when one of its director is one Ian Craig Buchanan.

Buchanan is the Senior Executive Adviser of Booz Allen Hamilton.

Booz Allen Hamilton meanwhile is the leading US strategy and technology consulting firm which advises on the defense and security policy of the US.

Unless there is a massive ‘chinese wall’ and water-tight non disclosure agreements in place, the board should not be too hasty in letting a conduit to a foreign think tank be too close within the gates of the biggest breadwinner of Malaysian government.

From risk management point of view, this board will have to decide on one of the crucial decision it has to make this year. We hope that there will be enough angles that are covered during the meeting to decide on this. Is his appointment really in view of him being the future Petronas CEO? Again, the public does want to know the basis and the criteria for such appointment.

In the mean time, let us wish the board members a good weekend ahead.