Malaysian Prime Minister Anwar orders sovereign fund audit of loss-making venture

PUTRAJAYA – Malaysian Prime Minister Anwar Ibrahim has ordered sovereign wealth fund Khazanah Nasional Berhad to conduct an internal audit to investigate issues related to investment losses amounting to RM43.9 million (S$13 million).

This is aimed at ensuring that all government-linked companies “fulfill the requirements of their respective responsibilities and functions,” he said in a post published on November 2 on X. The internal audit “does not exclude” state-owned asset manager Permodalan Nasional Bhd and other parties involved – he announced in another post a few hours later.

Datuk Seri Anwar’s directive comes days after the Ministry of Finance said the two entities invested a total of RM47 million in online clothing retailer FashionValet in 2018 and received an offer to acquire their shares in late 2023. They eventually sold it for RM3.1 million – a loss equal to the amount Mr Anwar mentioned in his post.

The Malaysian Anti-Corruption Commission said on November 2 that it had initiated an investigation into investment losses incurred by Khazanah and PNB in ​​the local online fashion business.

“The public is urged to allow the investigation to continue and to avoid speculation or engaging in ‘public trials’ against the parties involved,” MACC head Azam Baki said in a statement.

A spokesman for the Prime Minister’s Office said Anwar’s post was in response to the MACC investigation. A MACC spokesman did not immediately respond to a request to identify the company outside normal business hours.

Khazanah and PNB’s investment in FashionValet was aimed at supporting local technology entrepreneurs and digital retail companies, the Ministry of Finance said in a written response to parliamentary questions on October 28. The total loss on sale is “very small” compared to the total income Khazanah and PNB generated this year, he added.

Khazanah, in a Nov. 1 statement, said FashionValet faced challenges exacerbated by Covid-19 and its divestiture “represented a responsible exit” to transfer ownership to a party that could help steer the struggling company. NXBT Partners, “led by an experienced Malaysian entrepreneur”, offered to buy back the shares of existing shareholders and inject capital into the company, the company said.

“We tried to expand too aggressively and didn’t plan enough for a rainy day,” they said. BLOOMBERG