KUALA LUMPUR, March 26 — With Malaysia still under the cloud of the 1MDB financial scandal, the government has to make another tough decision on whether or not to bail out heavily indebted oil-and-gas company Sapura Energy Bhd which is facing insolvency.
Whichever way it decides, the government’s choice will have an effect on its reputation and that of its policies, according to a Singapore newspaper.
The Straits Times (ST) said that if Putrajaya decides to help cover Sapura’s billions of debt, this could “backfire” as Malaysians have become cognisant of corruption in the wake of the 1MDB scandal.
“The problems at Sapura Energy also spotlight the pitfalls facing large state-owned funds, such as PNB, that are often subject to government dictates to invest in companies controlled by ethnic Malay businessmen under the longstanding government policy aimed at boosting the community's corporate ownership in the national economy,” the newspaper’s regional correspondent Leslie Lopez said in an analysis published yesterday.
However, Malaysia’s national oil company Petronas yesterday rubbished speculation that it was in “talks with the government on a proposal to take a significant stake” in Sapura.
Sapura’s net loss was at RM8.9 billion for the financial year that ended on January 31, 2022, which is far higher than the net loss of RM160.87 million recorded a year ago. Its total debt now stands at US$2.44 billion (RM10.27 billion).
In 2018, Permodalan Nasional Bhd (PNB) — which manages savings of the Bumiputera community and is the parent of investment vehicles such as Amanah Saham Nasional Berhad (ASNB) — paid RM2.68 billion in a deal that increased its shareholding in Sapura from 12.6 per cent to 40 per cent.
After Sapura’s latest losses were published, former prime minister Datuk Seri Najib Razak — who has been found guilty of misappropriating funds from SRC International Sdn Bhd, a former 1MDB subsidiary — urged the government to protect the company from bankruptcy.
The Pekan MP who is currently standing trial for misappropriating funds from 1MDB suggested that the government either provide loans or instruct Petroliam Nasional Bhd (Petronas) or Khazanah Nasional to take over ownership of PNB’s stake.
“If Sapura goes bankrupt, 10.6 million Amanah Saham Bumiputera (ASB) investors will suffer direct losses of RM4 billion.
“PNB, the Employees Provident Fund and other provident funds will face indirect losses due to debts of RM10 billion owed to local banks, such as Maybank, of which PNB owns 50 per cent,” Najib wrote on Facebook last week, adding that some 10,000 people would lose their jobs at Sapura.
In response, former Pandan MP Rafizi Ramli who announced his return to active politics last week, called the suggestion “perverse Najibonomics” and said that the bailout would only benefit a handful of elites when the money could be better spent helping Malaysian businesses reeling from the Covid-19 pandemic.
The ST article highlighted that Tan Sri Shahril Shamsuddin was Sapura’s president and group chief executive officer during the PNB buy-in, and although he since stepped down, he and his brother still owned some 12 per cent of the company.
