Three questions over Bursa chairperson change

By Emmanuel Samarathisa

SO it’s official: Tan Sri Abdul Wahid Omar is the new non-executive chairman of stock exchange Bursa Malaysia Bhd. And out goes Datuk Shireen Ann Zaharah Muhiudeen.

While such changes are normal as there is a new government in power through Prime Minister Tan Sri Muhyiddin Yassin and his Perikatan Nasional, the manner in which the changes have occurred at Bursa deserves some scrutiny.

Here are three questions:

1. What were the “governance issues” that Shireen was guilty of?

The Securities Commission (SC) issued a damning statement to The Star and The Edge yesterday that Shireen had been given the sack due to governance issues.

Here’s the statement as quoted by these publications in full (at publication time, FocusM has not received replies to queries from the SC):

“As provided for in the Capital Markets and Services Act 2007 (CMSA), the power to appoint and remove a public interest director and chairman of Bursa Malaysia rests with the Minister of Finance. In exercising this power, the minister consults with the SC before arriving at his decision.

“The consultation in this instance revolved around governance issues and the current Bursa chairman’s fit and properness to continue holding the position. Following our consultation, we believe the minister has decided to revoke Datuk Shireen Ann Zaharah Muhiuddin’s appointment.”

What the SC is implying here is that there had been a compromise in Shireen’s ability to execute her duty as chairman and that the governance structures of Bursa are weak. These are serious allegations, especially as the SC invoked the CMSA’s fit-and-proper guidelines.

Also there had been no investigations, at the time of writing, into Shireen’s tenure as chairman. The corridors of power have been silent.

When asked by FocusM to elaborate on these “issues”, a spokesperson from the Ministry of Finance (MoF) declined to comment.

So we are left in the dark despite the fact that MoF, Bursa and SC have a fiduciary duty to shareholders and Malaysians at large.

2. Why is Shireen silent?

In this case, silence is not golden. Given the potentially defamatory remarks made against her, Shireen has to come out and defend herself, because she runs an asset management company, Corston-Smith Asset Management Sdn Bhd.

While she did resign as a director of the company, in compliance with CMSA requirements, she remained a controlling shareholder. Did she benefit from insider trading? We don’t know.

Also, she was supposed to be on the board of sovereign wealth fund Khazanah Nasional Bhd while holding onto her chairmanship at Bursa. Seemingly it was put on hold. Why?

Shireen has to come out publicly given her reputation for being a corporate governance expert and an activist investor. Also because she held public office.

All that she has said so far is a quote in Bursa’s statement today about those changes: “I would like to welcome Tan Sri Abdul Wahid Omar to the Board of the Exchange. I am confident that under his leadership, Bursa Malaysia will continue to flourish as a dynamic and competitive Exchange in the global marketplace.

“During my time here, I have had the privilege to work with a great team. I would also like to thank all Warga Bursa, our partners and investors for their trust and support. I wish Bursa Malaysia all the very best for the future.”

It’s as if the SC statement yesterday had become a footnote in a matter of 24 hours.

3. Why is Wahid the new Bursa chairman?

Wahid may be a seasoned corporate man who has plied his trade mostly in government-linked corporations. Among his notable stints include being chairman of Permodalan Nasional Bhd until 2018, where he resigned just days after the 14th general election.

But recall that he was part of the seven-member investment panel of civil servants’ pensions fund Kumpulan Wang Persaraan Diperbadankan (KWAP) that approved of the RM2 bil loan to SRC International Sdn Bhd, then an RM2 dollar company with zero track record.

Worse, Wahid couldn’t even muster the courage to stop a questionable transaction that involved the retirement savings of civil servants, even when it was crystal clear to a junior KWAP officer.

Amirul Imran Ahmat, then assistant vice-president of KWAP’s Fixed Income Department and who prepared the investment panel papers, said he had to amend the dates on some of the documents because his department was pressed to expedite the loan applications.

At the SRC trial last year, Amirul testified that SRC did not provide sufficient documents to support the loan applications and that he was of the view that they should not be approved.

This bit about Wahid, buckling under political pressure, will be something the CMSA fit-and-proper guidelines will never be able to capture. And that is concerning because he now oversees an institution that regulates the Malaysian capital market dominated by government-linked companies.

The sad part is, there are always other candidates to choose from. And it is going to be an awkward yet important moment if Wahid takes the stand to detail his decisions in greenlighting the loan to SRC. – April 17, 2020

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