Azman Mokhtar Must Go (Part 1)

I have been monitoring the recent pandemonium surrounding our aviation industry concerning very top level personnel which is rather embarrassing and unprecedented in terms of its sheer implications.

My last article regarding an apparent share swap between Air Asia and Malaysia Airlines (“MAS”) turned out to be an outright management takeover of MAS by Air Asia as time moves on.

Right from the outset, there is something really wrong with the deal but the market was somewhat pacified when Tan Sri Azman Mokhtar assured Malaysians that MAS will not be taken over by Air Asia. The justification of the deal was that it will help the floundering MAS.

But the manner the deal was executed raised many eyebrows.

Khazanah had to fork out tax payers’ money to buy Air Asia’s over-priced shares which, few months before the share swap deal was announced on August 9th, was escalating sky high in the regions of more than RM4.

Juxtaposing this with the share price of MAS which went in a downward spiral a few months before the deal to be around RM1.60, allegations of insider’s trading and share price manipulation emerged.

MAS and Air Asia’s share counters were suspended on the 8th August but the suspension came too late and was seen as just a formality as the little Napoleons in Khazanah had made the final preparations of the share swap and it was beyond the point of no return at that time. True enough, the share swap was announced on 9th August amidst all the speculation and mystery.

In the end, Tune Air Sdn Bhd which controls Air Asia, bought 20% of cheap MAS shares while tax payers had to buy the much higher Air Asia shares. To make matters worse, the share price of Air Asia dropped the very next day thus the tax payers lost more money barely 24 hours after the deal was announced.

As Khazanah lost money over the deal, the new shareholders of MAS; Tony Fernandes and Kamaruddin Meranun gained more money as MAS shares jumped to RM1.79; 19 sen more than the price they had to pay to get the 20% stake.

The share swap enables Tony Fernandes and his partner to be executive directors of MAS while non of MAS’ Board of Directors were elected as Air Asia’s director. As the result, Air Asia now has the ability to learn about MAS’ business plans on yearly, monthly, weekly or daily basis while MAS has no clue on what Air Asia might do. One wonders how this can help MAS in the long run.

Tony himself was quoted in newspapers saying that the share swap is not a merger but an alignment of both companies’ shareholders. In his own words – “this is not a merger; it is a shareholder alignment”.

Therefore, why is MAS being unfairly disadvantaged from the start?

Furthermore, soon after the deal was announced and inked, the first conflict of interest occurred when MAS had to fork out RM18 million ringgit and give it to QPR; a lowly football club owned by Tony Fernandes.

Basically, MAS was made to give millions of ringgit to one of its directors in exchange of 11 jerseys with MAS logo printed on it.

MAS is not Berjaya, Genting UK or YTL. It is owned by the government and ultimately owned by the people. MAS suffered more than RM700 million losses in the first half of 2011 and still can afford to pay and enrich one of its director by another RM18 million.

What irked me the most is that Air Asia will only fork out RM12 million for the RM30 million advertising deal. A deal which was brokered and price set by Tony himself.

For Air Asia, it is the case of getting money from Tony’s right pocket and putting it into his left. But for MAS, they were screwed from the beginning.

All this happened under the watchful eye of Azman Mokhtar. His partner in the form of Danny Yusof made to look like Tony’s chief khadam and had to fly all the way to England to witness the official signing of giving away MAS’ precious fund to Tony.

Note that Genting spent only RM17 million to sponsor an even bigger club, Aston Villa which undoubtedly, after all is said and done, made Danny Yusof, the executive director of MAS, an idiot.

In any other instances which all experts of corporate governance will agree, the whole board of directors of MAS will be hauled up and made to answer in Parliament on the blatant misappropriation of funds of a GLC. Heads should roll.

Imagine, if money from a GLC was given to another company belonged to its new director in exchange of something which is terribly overpriced.

It is wrong on two counts; the over inflated price, and the conflict of interests that involved. By right, Tony Fernandes and Kamarudin Meranun should have either resigned from MAS’ Board or from QPR’s for the deal to happen.

But what did the boss of Khazanah do?

Azman Mokhtar claimed that the QPR sponsorship is a good deal. From which part of the abyss he would have made that call, I can never fathom.

What is so good about it when RM18 million is used to sponsor home jerseys which could only be seen by 18,500 spectators in QPR’s small stadium while Air Asia which only had to fork out RM12 million has its logo in the away jerseys which can be seen by up to 60,000 spectators if they play much bigger teams?

Will this benefit MAS, or does it benefit Air Asia more?

Azman Mokhtar is the tumour that is infecting Khazanah Nasional ever since he was appointed to lead the corporation while his misjudgments and bad decisions are diseases that have been plaguing the government’s investment arm all this while.

After Khazanah lost RM18 billion worth of investments made in 2008, Azman Mokhtar is still being trusted to play with tax payers’ money while the government has no control over him. In fact, for this huge loss, his contract was extended for another 3 years!

To be continued..