Before we move further, let us look at the issue from other perspective for a bit and go straight to the real issue here.
On top of the pile, is the Prime Minister, Dato’ Sri Najib Tun Razak who is also overseeing Khazanah Nasional by virtue of him being the Minister of Finance as well.
Since he could be either impotent in dealing or maybe oblivious towards Azman Mokhtar’s many, many failures and shady deals, it is high time the Prime Minister takes a serious look into the affairs of his subordinates. Or at the very least, have the temerity to veer Khazanah Nasional into proper direction and whip it into shape.
Before this issue causes Barisan Nasional to lose more votes (who would want a government which do not punish non performance among its top brass and governmental institutions?), the office of the Prime Minister and the Minister of Finance must be seen as stringent in following its own tagline. Unless of course, the word ‘performance’ in “People First, Performance Now” connotes a different meaning altogether.
Because based on blog reports on mismanagement by Khazanah, it is unprecedented that a Managing Director of a GLC couldn’t manage some of the wealth of this country properly and yet be rewarded for his services to this nation.
Take on recent incident recently – the MAS/AirAsia shareswap. Never mind that the deal is so unfair towards MAS, but what is more glaring are the subsequent actions taken by the besieged MAS which defy any logic.
The latest misjudgment is the termination of 8 routes by MAS; among others, to Rome, Dubai, Buenos Aires and Surabaya.
Reason cited is ‘to rationalise unprofitable routes’.
We don’t have to tell the ordinary people on the streets on how difficult it was to get those routes in the first place. With so much money being pumped to market and promote those routes, it is certainly not the best way in dealing with an already competitive industry.
The dip in MAS’ reputation for dropping these routes will eat up their market share, if not already.
Wouldn’t it better if they had focused on passenger mile optimisation whereby apart from operational cost reductions, they must emphasise on selling the premium seats and reduce non-revenue no-shows. In other words, more aggressive marketing and selling! When was the last time you saw MAS advertisement on TV?
First class and business class seats are important yield boosters. As it is, there are not many first class and business class seats in MAS routes. God forbid if they were to drop London or Paris routes in the near future. That would be a catastrophe. But another airlines’ erroneous decision would be another’s gain.
The long haul AirAsia X could take over from these routes all to itself.
Actually if AirAsia is really sincere, they can start selling its tickets to passengers going to routes that MAS flies which AirAsia does not. Like a code sharing system. Meaning, they share the revenue with MAS taking the bigger bulk of it.
MAS abandoning those routes altogether is simply outrageous! To think that MAS does have other code sharing partners to begin with and the fact that MAS and AirAsia own each other’s shares but not having any code sharing venture is ludicrous.
One of the biggest and mind boggling operational cost is the flight catering cost. All know that the sole supplier for passengers’ food on board of MAS flight is LSG Skychef – Brahim Sdn Bhd; a company owned by Tun Abdullah Ahmad Badawi’s brother.
This company was awarded a really long contract to supply on board catering for MAS all the way to 2028! With costs quoted at stratospheric levels, it is bleeding MAS in hundreds of millions on yearly basis. Who is responsible for not looking into this contract and renegotiate a better one?
If they do not have the willpower or enough testosterone to negotiate the prices down, at the very least, the owner of MAS should have terminated this contract for its unfair prices and open another tender to acquire another supplier with more reasonable arrangement.
But they are not doing that. What they did was:
1) advertise in a small English Premier League club
3) letting many experienced staff go
4) allowing Tony Fernandes making a fool of MAS and Khazanah
5) abandon highly sought after routes
Whose fault is it?
Bear in mind, Azman Mokhtar and his partner in crime, Danny Yusof were the ones responsible for the Wide Asset Unbundling (“WAU”) back in 2002 which at that point of time promised everyone to be THE strategy to save MAS.
Fast forward to the future, we know that WAU was a failure. All the double degrees attained from Oxbridge by Danny Yusof or years of experience being a consultant by Azman Mokhtar couldn’t save MAS the first time. What makes them think they can save MAS the second time?
So we are back to square one. In fact, MAS’ position right after the shareswap is even worse than years before the WAU. Now, MAS is in the hands of its competitor – Air Asia.
Even having a Chief Operating Officer in the form of Mohd Zainal Shaari, another consultant, which was brought into Khazanah from PricewaterhouseCoopers can’t seem to save us from further losing money.
The most favourite word of a consultant (and investment banker) is corporate restructuring.
Restructure this and that. Hoping for a synergy of sorts. But restructuring a business on paper via equity transfers are not the only solution to make a business more viable. Any businessmen would know that. But the bosses in Khazanah are not businessmen. Trying to meddle in operations when you have close to zero knowledge about the business is a disaster waiting to happen.
How could Danny Yusof be appointed as the Group Deputy CEO of MAS in charge of operations when he left a trail of failures behind him? He did not do well in Aseambanker (he is not an investment banker); he was in charge of the restructuring of RapidKL of which the Operational Agreement he concocted made RapidKL even worse (he is not a public transport expert); RapidKL had to be restructured again in 2009 before it could sink even deeper.
And now he is trusted to manage MAS’ operations? Is he an aviation expert?
Do you know that MAS has no Chief Financial Officer for the longest time? How could a national carrier operate without a CFO? Not only that, the position of Head of Communication is vacant. No wonder MAS is floundering financially and publicly, its image is not all good.
This is not the first time Khazanah making disastrous decisions. In the first part of this article, it was mentioned that Khazanah lost RM18 billion worth of investments in 2008. They suffered losses when their tuna fishing venture lost RM120 million. In the Parkway Holdings fiasco, they lost RM935 million faster than David Copperfield could say “Hey presto!”.
Rumours are also circling that they are suffering losses in Malaysia Agrifood Corporation Berhad (“MAFC”) – an agriculture venture they cooked up a few years ago.
The mother of all debacle would be the KTM land deal in Tanjung Pagar. After Azman Mokhtar boasted that the deal he pioneered with Singapore was a breakthrough and that the deal is fair and good for Malaysia, he embarrassed Malaysians when Khazanah did not do enough homework and was terribly inefficient in its dealings with Temasek Holdings.
Basically what happened was, under the deal negotiated by Azman, Malaysia will swap the KTM land in Tanjong Pagar for land parcels in affluent Marina South and Ophir-Rochor. The greedy Khazanah probably was swayed with the 60-40 ownership of said land parcels and overlooked a development fee charged by Singapore.
In other words, Malaysians have to pay up to RM1 billion in the form of development fee due to Azman’s sheer inability to negotiate a better position for us. To put it bluntly, Azman successfully negotiated a money losing deal for Malaysia.
Azman Mokhtar had indeed overstayed his position in Khazanah Nasional.
All these string of failures and what did the government do?
They gave Azman Mokhtar a Tan Sri-ship and extended his contract.
People First, Performance Now.
(To be continued)