FGV to file insurance claim over fraud at unit

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV), the world’s largest crude palm oil producer, which yesterday outlined a rationalisation plan for the group in the new year, said it is finalising paperwork to file an insurance claim for fraud at subsidiary Felda Iffco Gida Sanayi (FIG), and is looking to secure Roundtable on Sustainable Palm Oil (RPSO) certification for at least 16 mills for 2017.
As of Dec 28, 2016, FGV and parent Federal Land Development Authority (Felda) have separate membership registrations at the RSPO.
“We look forward to have at least 16 mill complexes RSPO certified in 2017 which will open us to those markets that require sustainability standards. We anticipate more premiums from sustainable palm oil, especially CPKO-related (crude palm kernel oil) products that fetch better value at this point. We also plan to have another 22 mill complexes ready for audit in 2017,” FGV president and CEO Datuk Zakaria Arshad said in a statement.
He explained that insurance compensation for FIG would go a long way in reimbursing losses at the subsidiary, quantified at RM57 million, as it awaits an official report from a forensic audit.
Zakaria, who has been at the helm of FGV for nine months, in outlining the challenges which have plagued the group during his tenure so far, said the group’s financial and share price performances were much affected by severe El Nino weather, the possibility of it taking an interest in Indonesia’s PT Eagle High Plantation, its RSPO withdrawal and its financial losses in FIG.
FGV shares ended 2016 at RM1.55 each.
In an effort to allay shareholders’ concerns, FGV has set out a strategic plan for the group in 2017, which will see it, among others, divest itself of, or find partners for, loss-making assets and businesses; potentially sell interests in its trading, marketing and logistics businesses and review joint-venture terms with key strategic partners.
Zakaria said the review of its joint ventures will ensure, among others, equitable power sharing at the operational and corporate levels, joint products and market development, roadmap on technology transfer as well as provide exposure to its human capital in global environment.
In addition, selection criteria for future strategic partners have been tightened.
In a nod to better governance, FGV announced a review of its organisational structure and business model to achieve better reporting alignment and accountability, mitigation against commodity and currency volatility as well as closer oversight of associated businesses.
All these efforts, along with the board’s approval of several internal policies to ensure the highest level of integrity, transparency and accountability, are upheld by the employees throughout the group. The relevant subjects include gift, entertainment and hospitality and asset & personal interest declaration policies, which were designed to address issues of conflict of interest for directors and employees.
Zakaria said the worst is behind him and given the right motivation, structure and resources to implement initiatives outlined, FGV is on track for sustainable success.