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Zakaria’s resignation ‘slightly positive’ for FGV

PETALING JAYA: The resignation of FGV Holdings Bhd’s president and chief executive officer (CEO) Datuk Zakaria Arshad will pave the way for its turnaround initiatives, according to CIMB Research.

It viewed the resignation as “slightly positive” for FGV, but expected short-term uncertainty on the company’s share price.

“Low crude palm oil prices and concerns over the start-up losses from the group’s new sugar refinery in Johor will likely limit its share price upside in the near term,” CIMB said in a recent report. Shares in FGV rose four sen or 2.7% to RM1.55 in line with the improvement in the broader market yesterday.

On Tuesday, FGV announced that Zakaria had tendered his resignation as the group president and CEO after being suspended last Thursday.

On Sept 13, FGV said Zakaria was suspended from his duties as group president and CEO pending further notifications by the board.

The announcement came a day after the company said that he was no longer the Minister of Finance Inc’s nominee in FGV.

Zakaria’s resignation came hot on the heels of the recent disclosure by the FGV chairman that the group’s top management was being investigated over the company’s poor financial performance.

Zakaria’s tenure as group president and CEO was initially until March next year. He was suspended in June last year on investigations into alleged irregularities in certain transactions between FGV subsidiary Delima Oil Products Sdn Bhd and Afghan company Safitex Trading LLC.

He returned to his position on Oct 6, 2017, after more than four months of being on leave of absence.

CIMB pointed out that the plan to turn around FGV, the world’s third-largest palm plantation operator, would take time and required additional funding to undertake the exercise.

Notably, FGV said the ongoing forensic investigation into transactions and investments of its past management would likely be concluded by year-end.

It was reported that the investigations involved six transactions and/or investment decisions, which began in January this year, and that some investigations involved overseas transactions.

Four investigations have been completed and the “findings are adverse”.

Source: TheStar