Mirzan Mahathir’s corporate travails

MIRZAN Mahathir’s ouster as SBI Offshore Ltd chairman has cast a spotlight on the business dealings of the eldest son of former prime minister Dr Mahathir Mohamad, who in his heyday was seen as a “savvy entrepreneur.”

Mirzan has business dealings across a wide range of industries and sectors, including companies registered in the British Virgin Islands (BVI). Yet he has been under the radar save for sporadic instances that touch on his investments or ventures like that of Singapore Exchange-listed SBI or when his name surfaced in the Panama Papers.

But it seems the tycoon has hit a few snags. Based on the list provided by SBI, most of Mirzan’s Malaysian private vehicles, where he is either a director or director/shareholder, have been swimming in red. 

This includes his major investment company Crescent Capital Sdn Bhd which had been struggling to break into the black from financial years 2014 to 2018 posting net losses after tax of RM981,844, RM936,194, RM1.15 mil, RM1.75 mil and RM649,258 respectively.

To be sure, for a businessman of his stature, this is not an exhaustive list of Malaysian holdings, but the SBI disclosure acts as a point of reference. 

Mirzan first drew significant attention in 1996 when he turned Konsortium Perkapalan Bhd (KPB) from a small and sleepy freight-forwarding concern to a major force in local hauling and shipping. 

Now-defunct publication Asiaweek dubbed him, then 37 years old, a “savvy entrepreneur” in its article “Out of Dad’s Shadow: Mirzan Mahathir builds a business empire”.

Two years later, when the Asian financial crisis peaked, Mirzan would be rescued by MISC Bhd, the shipping arm of Petroliam Nasional Bhd. MISC acquired KPB for US$220 mil. 

The move provoked accusations of a bailout since Mirzan revealed that the sale would reduce his company’s debt to almost zero. Also, his father, Mahathir, was then the prime minister. But MISC denied such claims with then chairman Hassan Marican calling it a “fair deal”.

Indeed, Mirzan’s “distinguished lineage” (to quote the Asiaweek article) always got in the way. This always created a divide in opinions as to whether Mirzan was a man of his own or relied on the influence of his father.

But the Mahathir name has not spared him from the challenges of navigating the region’s tough business landscape, with the SBI episode being the latest.  

According to the Singapore-based offshore services company, Mirzan, 62, was voted out at its annual general meeting on June 19 with 70.05% voting against his reappointment. He was told to step down immediately. But he still retains a significant stake in the company at 11% which he bought for RM18 mil in 2014 through his BVI unit CE Ventures Offshore Ltd. 

And this ouster came after the Singapore Exchange Regulation (SGX RegCo) ordered a special audit by an independent reviewer on the sale of the factory by SBI for 18 million yuan, about half of its purchase price of 32 million yuan. 

The acquisition was done prior to Mirzan taking up the chairman post in SBI. Based on issues raised in the audit, SGX RegCo said it will look into any potential listing rule breaches. 

When the findings were made public on June 14, Mirzan told business publication The Edge that he didn’t know the circumstances of the acquisition which was done before his emergence in SBI but “we were trying to sell this property.”

His other major corporate stint comes by way of his directorship on Petron Corp, which is listed on the Philippines Stock Exchange. He is also a shareholder of the oil and gas (O&G) giant, controlled by Filipino conglomerate San Miguel Group, as per company by-laws. 

But Petron has yet to see better days. According to its 2019 annual report, Petron posted a net loss of 745,000,000 pesos (RM64 mil) after profits shrank from 16.59 bil pesos in 2017 and 7.56 bil pesos in 2018.

The O&G group also has a presence in Malaysia through Bursa-listed Petron Malaysia Refining & Marketing Bhd. But Mirzan is neither a shareholder nor a director of the company. In fact, Mirzan’s last involvement with a Bursa company was Gets Global Bhd. He resigned as the company’s director on Aug 27 last year. 

And the last time Mirzan became the subject of the local scuttlebutt was when San Miguel president and chief operating officer Ramon Ang expressed interest in acquiring state-owned assets in Malaysia on June 14, 2018. 

This was when Mahathir returned as prime minister after leading Pakatan Harapan to victory during the May 9 general election that year. Mahathir back then said his government was looking to sell assets in the name of paring the country’s debt. 

According to corporate insiders, Mirzan has his eyes on the technology sector and is less aggressive in the O&G business. 

But while his next major corporate move remains to be seen, it’s worth asking whether his next venture could eclipse the success he had in the 90s – this time, in an era where his father, Mahathir, is no longer the political strongman he once was. – July 1, 2020

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