KUALA LUMPUR, June 21 ― Felda Global Ventures Holdings Berhad (FGV) is facing obstacles in running as a business due to the "heavy political presence” within its board and from its main shareholder, G25 claimed today.

The group of retired Malay senior civil servants added that the world’s third-largest palm oil plantations operator was hard-put to implement good governance policies due to political appointees occupying influential positions within its parent company Felda.

"With big government sitting on top of both the statutory body and the operating company, FGV is in a double jeopardy situation. Changing the board chairman and directors is only part of the solution,” the group said in a statement.

It added that despite their qualifications, political appointees to government-linked companies will always be associated with politics and party patronage, resulting in perceptions of cronyism.

"The chairmanships and board positions in these bodies are treated as political rewards for the boys,” it said, naming as examples of other GLCs in similar straits as Bumiputera empowerment agency Majlis Amanah Rakyat, the Rubber Industry Smallholders' Development Authority and the Federal Land Consolidation and Rehabilitation Authority.

G25 also that the government-initiated GLC Transformation Programme (GLCT) was aimed to remove ministerial control and political influence on business and was being strictly observed in the Khazanah Group of companies.

"The government should extend this important governance principle to all statutory agencies and their business corporations to disqualify politically linked persons from sitting in any of their boards,so they can operate in a professional manner, with clear checks and balance in the decision making process at both the board as well as at the management level,” it said.

The 10-year GLCT, completed in 2015, was anchored on three guiding principles; performance-oriented, national development foundation and governance and shareholder management.

Among others, it is aimed at enhancing the effectiveness of company boards, strengthen company directors' capabilities and to review and revamp procurement.

"It is a universal truth that the government is not suited to run businesses, especially in a competitive market.

"It is also a fact that when government related companies operating in commercial business seek loans from the banking system, the banks are often reluctant to lend them money because of the ‘moral hazard’ and require such loans to be fully covered by collateral or government guarantee letters,” it said.

As a result, G25 said the debts non-financial public enterprises of such companies had snowballed over the years.

It added that if the debts of all these companies were to be collected at the same time, the financial system would collapse and subsequently plunge Malaysia into another economic crisis.

It added that currently, government guaranteed loans have reached 15 per cent of the Gross Domestic Product.

"It is essential that the government learns from the experience of the political tussle in FGV and the financial failures in several government owned enterprises over the past three decades to begin divesting its holdings and loosen its control over the economy,” the group said.

Tan Sri Dr Sulaiman Mahbob was named acting FGV chairman to replace Tan Sri Isa Samad who resigned yesterday and will be moving to the Land Public Transport Authority.

Isa is currently providing his statement on alleged transaction payment irregularities at the Malaysian Anti-Corruption Commission headquarters in Putrajaya.