Malaysia’s 157.2 billion ringgit (US$39 billion) sovereign wealth fund Khazanah Nasional Bhd’s managing director and its entire board offered to resign in the biggest management shake-up at state-linked firms since the new government took charge.
Sources said that Khazanah executives met on Tuesday, when the entire board submitted undated resignation letters to Malaysian Prime Minister Mahathir Mohamad.
The decision was taken due to pressure from the government, especially after Mahathir’s public comments calling for a change in Khazanah’s leadership and business direction, the sources said.
“There’s a realization that things could not continue as they were,” said one source familiar with the matter who did not want to be identified.
Since his win in the May 9 polls, Mahathir has booted out top executives at state-linked firms and agencies, and instructed his government to revamp companies it controls.
He replaced the central bank governor and the chief of Malaysia’s largest fund management firm in the past few weeks, both appointed by scandal-hit former Malaysian prime minister Najib Razak.
Khazanah said in a statement yesterday that the government would make a final decision on the fund’s leadership “in order to facilitate a smooth and orderly transition under the new government.”
The board “feels it appropriate to offer the new government the discretion and reaffirm the prerogative to form the new board,” it said.
Khazanah’s portfolio of more than 100 companies includes core holdings such as Malaysia’s second-biggest bank, CIMB Group Holdings Bhd, utility group Tenaga Nasional Bhd and telecom firm Axiata Bhd.
Khazanah managing director Azman Mokhtar, whose term expires in the first half of next year, has hinted before that he might not seek an extension of his contract. Azman has led the fund for 14 years.
Speaking in parliament shortly after Khazanah’s announcement, Malaysian Minister of Finance Lim Guan Eng (林冠英) told reporters that Mahathir would decide on the matter now.
“I think it was a wise decision to leave the decision to the prime minister,” he said, adding that Azman and the board’s position was not discussed by the Cabinet.
Talk about management changes at more state-linked companies, including Khazanah, has been swirling for the past few weeks.
Mahathir’s coalition took office after voters rejected Najib’s long-ruling party in May and has since promised big structural reforms at state-linked firms and agencies in an effort to boost governance and accountability.
Najib is now being investigated over the multibillion dollar scandal at state fund 1Malaysia Development Berhad (1MDB).
Funds from deals with Khazanah were used by the previous government to meet some liabilities of the debt-laden 1MDB, although the fund has said it had no control over the utilization of those funds.
Najib was on Khazanah’s board, but quit after the election.
His brother, Nazir Razak, who is also the chairman of Malaysia’s second largest bank CIMB, remained on the board.
Khazanah took Malaysia Airlines private in 2014 as part of a 6 billion ringgit plan, months after one of the airline’s planes went missing en route to Beijing and another was shot down over Ukraine.
The fund has also made overseas investments, including a stake in Alibaba Group Holding Ltd (阿里巴巴), ahead of the e-commerce group’s blockbuster IPO in 2014.
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