Najib's son quits Harvest board amid talk of using stock market to raise funds for GE-13

UPDATED Amid talk that Prime Minister Najib Razak was stirring up the market for funds to finance an imminent general election and to pay off Umno warlords for their support, his 28-year-old son, Nazifuddin Najib, has resigned from the board of Harvest Court Industries Bhd

Although Nazifuddin was appointed to the Harvest board less than a month ago, he was previously on the boards of Sabah-linked firms Sagajuta and 1Green Enviro, two firms controlled by East Malaysian tycoon Raymond Chan Boon Siew.

The 39-year-old Chan controls about 15.7 per cent of Harvest Court, while filings to the stock exchange show that Nazifuddin holds nearly four million Harvest Court shares. All eyes are now on whether Nazifuddin is still a shareholder or has sold off for a tidy profit.

"It is a bit too late to damage control now. Harvest shares have risen like a phoenix from the ashes and it looks like it might fall flat again if Chan decides not to play white knight after all," a research director at a large brokerage toldMalaysia Chronicle.

"Whatever it is, it is disgraceful that Harvest was not only was speculated to such an extreme fashion but also caused a madness for other penny stocks - all because of the political link. You can say that it is rumour and retailers should be more educated and not so greedy. But what about our regulators. Should they not be stricter, and as for our politicians all the way to Najib at the very top, should they not have more ethics in the first place?"

Puzzled duo

Meanwhile, both Nazifuddin and Chan were reported by the Star to have pledged not to sell their Harvest shares. They also professed to be puzzled by the sharp uptrend in share price.

“We are just trying our best on our part not to let the market speculate, not to hurt any parties and just continue with what is the best possible direction. All the personalities are on board already and the projects in hand are enough to create certain amount of interest,” Nazifuddin told StarBiz.

"We did not sell during the euphoria. I kept my 15.7% and he (Nazifuddin) kept his 2.2%. We will stay put and will not quit. We do not want people to think that we will pocket gains and hive off our stakes in Harvest. We do not want people to create any stories and hype over the share price. We will not exit in the near future, which is two to three years as we are here to do a genuine business,” Chan said.

By 9.55am on Tuesday, the counter fell 42 sen to 98 sen on news of the Nazifuddin pullout. It was the biggest loser of the day.

From Dr M to Badawi and now Najib?

Shares in Harvest had racked up huge gains on news that Najib's son was on board and that Chan would inject assets from timber-based Sagajuta into Harvest. Earlier this month, Business Times reported that Sagajuta had almost RM1.2 billion worth of construction contracts.

The stock has gained over 400 per cent between November 1 and November 14. It is estimated that investors had spent as much as RM28 million over the past two trading days alone to buy Harvests share and warrants.

At Monday's closing, Nov 21, Harvest share price was still 300 per cent higher than what it was trading at early this month, which 40 sen, despite being "designated" last week.

There is little informationn about Nazifuddin, but he is one of the three children Najib had with first wife Tengku Puteri Zainah Tengku Eskandar. They were married in 1976 and divorced in 1987, paving the way for his second marriage to Rosmah Mansor, a former banker with whom he has two children - Mohd Norashman and Nooryana Najwa.

Nazifuddin is the second child from Najib's first marriage, and has two siblings - an older brother Mohd Nizar Najib and Puteri Norlisa Najib. The youth's entry into the corporate world in such a fashion conflicts with the hopes Malaysians had placed in Najib's government and economic transformation plans. The abuse also adds to fears that Minister in the PM's Department Idris Jala was right to predict that Malaysia would go bankrupt by 2019 if the Umno-led government continued with its reckless and imprudent ways.

After decades of cronyism, begun in a serious way by former premier Mahathir Mohamad and his sons and continued by the Badawi family, Malaysians and investors had hoped Najib would gut away the political links to the business world, which have spawned decades of endemic corruption. But that may be asking too much, said pundits, as that was how the top political families in Umno amassed wealth beyond imagination.

Even "designation" could not stop the syndicates-led frenzy

Meanwhile, analysts said if Chan's claim of wishing to inject assets into Harvest did indeed come true, then this would be a major boost for the ailing firm whose PN17 status from 2009 was lifted only in October this year.

By the first week of the following month, thanks to news of Nazifuddin's entry into the firm, Harvest shares had jumped to a 9-year-high - raising eyebrows all round the market and political arena as well. On Nov 8, the stock jumped 30.5 sen to RM1.18, while the warrants rose by 30 sen a piece to close at RM1.05.

The huge speculative frenzy caused by Nazifuddin's emergence in Harvest sparked a red-hot bull run on penny stocks in the Malaysian market, with retailers jumping in on rumours that Najib and other political leaders were bestowing huge government contracts to benefit firms in which they or their families had vested interests.

The Securities Commission was forced to issue a warning that it would monitor any excessive speculative trading, but it did not stop the syndicates in the market from pushing their advantage. Finally, Harvest was "designated", meaning that those who wished to buy the shares would have to pay cash upfront and hold the security for 3 days before exiting. The price than plunged, only to rebound again days later.

Harvest Court shares and its warrants faced heavy selling pressure in the final hour of trading on Monday, Nov 21. The share, which was traded as high as RM1.60 before lunch, ended the day four sen up at RM1.40. The warrants, which were traded higher most part of the day, closed 11 sen lower at RM1.04.

Malaysia Chronicle