PKR’s Rafizi Ramli said the financial problems plaguing Sapura Energy Bhd are not uncommon in the global business world and as such, they can follow previous examples in solving the issue instead of relying on a government bailout.
The newly-appointed leadership of Sapura Energy consists of distinguished professionals and Rafizi is confident that they are trying their best for the company’s recovery without resorting to using public funds as had been suggested by former prime minister Najib Abdul Razak.
“Because the crisis faced by Sapura Energy is not unique, we also know the solutions taken by the other companies throughout the world who have successfully recovered the companies concerned.
“Under the new Sapura Energy leadership which is lined with distinguished professional leaders in the country, I am confident they are trying their best to save Sapura Energy without dragging in the rakyat’s money as Najib has been pushing for,” Rafizi said in a statement today.
The former Pandan MP said that after careful analysis to identify the root cause of Sapura Energy’s financial problems, he discovered that it is because there was too much emphasis on winning projects to boost the prices of their shares which will, in turn, see an increase in the remuneration of the executive officers.
Share prices
“When the salaries and bonuses of the executive directors rely on the level of Sapura Energy’s share prices, of course, the management of the company is more motivated to increase the prices of their shares as soon as possible.
“The higher the share prices, the bigger the salary and bonus payouts.
“This encouraged Sapura Energy to bid for projects at lower prices or without measuring their capabilities to complete the projects in line with the contract so that Sapura Energy could announce it has won the project bids to the world. The more projects it announces, the higher the share prices,” Rafizi explained.
However, to finance these projects they won, Sapura Energy kept taking on more debt and eventually, the cash flow was not enough to sustain the costs and debt payments.
“This is not a problem unique to Sapura Energy. Hundreds of giant companies all over the world have faced cash flow crises like this since 50 years ago.
“If Najib is someone who reads and is proficient in finance management, he should know about this,” Rafizi said.
Highly capable
He then pointed out that the new chairperson of Sapura Energy’s board of directors is Shamsul Azhar Abbas, formerly the president and chief executive officer (CEO) of Petronas, who has led the country’s oil and gas industry since the 1980s.
Other new leaders in Sapura Energy include former Shell Malaysia chairperson Mohd Anuar Taib who was leading Petronas’ upstream oil and gas business as its executive vice president before joining Sapura Energy.
There is also Megat Zaharuddin Megat Mohd Nor who was formerly the CEO of Shell for this region as well as the chairperson for Maybank and Felda before he was appointed as the new Sapura Energy senior board member.
Rafizi said the accumulated years of experience of these three respected leaders in the industry is over 100 years.
“They are smarter and have expertise in their fields compared to Najib. They never claimed to be so dumb that they can be cheated of billions of ringgit by a boy named Jho Low.
“More importantly, they are known to be professional and honest. They accept Permodalan Nasional Bhd’s (PNB) request to save Sapura Energy because they are patriots, even though they could have just retired, compared to Najib who does not want to retire even though he has been sentenced to jail for robbing the rakyat’s pension fund,” Rafizi said.
Concrete steps
The new leadership of Sapura Energy is already taking concrete steps to resolve the company’s financial issues, he said, most of which are in line with suggestions he has received from industry experts.
Among the steps include gaining the power to negotiate the restructuring of their debt payment to their creditors and vendors, announcing its withdrawal from the beleaguered Yunneng Wind Power project in Taiwan, focusing on 59 specific projects through a rationalisation plan called ‘Reset Plan’ as well as announcing the formation of a special task force led by the CEO and five board members to come up with a recovery plan.
“The professionals, led by these expert national leaders should be given space to carry out their duties without any political interference.
“What’s worse is that Najib’s cunning behaviour of wanting to politicise the issue of Sapura Energy’s cash flow issue in order to gain the support of the people does not actually help them (the professionals).
“I urge the people of Malaysia to place their trust on these leaders, instead of Najib whose management record has made the country poorer and things worse for the people,” Rafizi said.
Najib had previously urged for a government bailout for Sapura Energy, saying that allowing the company to go bankrupt would translate to a loss of RM4 billion for PNB, which is a government-controlled trust fund.
In September 2018, PNB had increased its stake in Sapura Energy to 40 percent, up from 12.16 percent.
Rafizi had later accused Najib of prioritising the business elite in suggesting that the government bailout Sapura Energy.
A subsidiary of conglomerate Sapura Group, Sapura Energy has been making losses since 2019. For the financial year ending Jan 31, 2022, Sapura Energy posted a loss of RM8.9 billion.
Three of Sapura Energy’s subsidiaries have been served with winding-up petitions earlier in March. - Mkini
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