KUALA LUMPUR, Aug 12 ― Khazanah Nasional’s proposed privatisation of Malaysia Airlines will remove shareholder oversight and see things “go very wrong” for the ailing flag carrier, said a critical Tun Dr Mahathir Mohamad.
Expressing misgivings over the sovereign wealth fund’s claims that the privatisation was necessary to carry out an overhaul of MAS, the former prime minister said Khazanah could have done so previously as it has been in full control all this while.
“So why should anyone believe that with 100 per cent control Khazanah will not keep on losing,” asked Dr Mahathir in the latest post on his blog Che Det.
“In fact with no one to check and give concerned criticism as when there were minority shareholders, MAS can go very wrong indeed.”
He pointed out that even with 70 per cent equity that essentially gave Khazanah “almost absolute” control, MAS had required some RM10 billion in capital injections by the government over the last decade.
The airline has also lost over RM4 billion in the previous three years.
Saying that Khazanah was essentially a government controlled, Dr Mahathir pointed out that such bodies were rarely concerned with profitability needed to sustain a business.
“The Government is about spending money. Any shortages (or losses) can be overcome by increasing taxes or borrowing money,” said the the man credited with driving Malaysia’s privatisation initiative during his 22 years as prime minister.
“The way money is being spent nowadays doesn’t indicate the kind of careful financial management and scrutiny that MAS would require in order to turn around.”
“We are going to see a lot of new people who will receive huge salaries, allowances and bonuses and not much else. That I believe is how Khazanah operates,” he said.
Dr Mahathir also cast doubt on a previous turnaround in 2002 that saw MAS register profit, noting that this was done through asset stripping.
He also questioned why MAS’s owners have been afraid of terminating an “unusually” long contract with a catering contractor whose fortunes have soared even as MAS struggled.
Malaysian Airline System Bhd (MAS) will be delisted after sovereign wealth fund Khazanah Nasional offered to buy out minority shareholders in a restructuring plan for the national carrier that suffered two disasters this year.
Khazanah will pay 27 sen a share for a total of RM1.38 billion to buy the remaining 30.6 per cent it doesn’t own, it said in a statement last week.
The carrier is struggling to stem losses and repair its image after the downing of flight MH17 in Ukraine last month compounded woes from the disappearance of a jet in March.
MAS has grappled with increased competition and higher costs even before flight MH370 vanished, as low-cost rivals flooded the region with planes and drove down fares.
