The Nor Yakcop-Khazanah debacle in Pantai: Part 1

Oversight and over exuberance is nothing new to Tan Sri Nor Mohamed Yakcop, but luck has always been on his side. That luck must run out fast before the nation have to incur more costly mistake from his misadventures.

Not long after resigning from his job at Bank Negara together with the late Tan Sri Jaafar Huessein due to the humongous foreign exchange losses from his own indiscipline and excesses in trading (but he blamed others including Dr Mahathir privately), he joined the Abrar Group.

He became the group’s public figure for whatever reason for their takeover of Mun Loong Berhad. That placed him with a position and public presence. It also helped to lift him back to prominance. The problem was he was rising higher and higher to the level of incompetence.

Words are Najib is reshuffling cabinet soon. Hopefully this time former sprinter Mumtaz Jaafar will stop 'running' as Nor Yakcop's lobbyist. No more Mumtaz, please. This is for the nation's sake.

The much needed break

The Abrar Group was a clueless group of Malay boys with a confused political economic agenda. From the words of Malaysian student studying in the US in the 90s, they were managing some mysterious Arab funds. They were armed with doctoral degrees and immediately had access to manage fund out of Connectibut, US.

It is theoretically impossible to beat the S&P 500 without taking excessive risk. Abrar's Wan Hasni dan Rahim Ghouse decided to return and invest the money in Malaysia.

Mun Loong was supposed to be their public listed vehicle to consolidate businesses they acquired. They were acquiring businesses in no orderly and strategic fashion - from plywood factory, Canadian satellite company to prawn farming. They had no inherent management expertise. Without experiance but thinking big, management was typically command and control style with corporate headoffice mindset. In a matter of time, they failed.

Nor Yakcop left Mun Loong to the boys to sort the mess with bankers, shareholders, and investors. Gone was his plan to be a corporate player. Then, the financial crisis came in 1998. He was brought was brought to meet then Prime Minister Dr Mahathir to assist in solving the crisis.


Dr Mahathir understood that it takes a thief to catch a thief. Thats how he described foreign exchange traders. Nor Yakcop may have failed in his market dabbling, but he knew sufficiently how the market operates and the big boys in the game. Yes, as described in Edwin Lefevre's investment classic, Reminiscences of a Stock Operator, the foreign exchange market too was a game where knowing the rule book is insufficient.

He was appointed as Adviser of Bank Negara. From there, he was elevated to Ministerial status and appointed to Senatorial position. Under Tun Abdullah administration, he became Minister of Finance II. Originally the plan was to maintain him in cabinet with the task to restructure and consolidate the Government companies into Khazanah, but he managed to stay longer after Abdullah's departure.

The shortcut to disaster

Part of his task was to create a new pool of “young” CEOs. The keyword was young. Experience, expertise and capability came second to young. Company succession plans were thrown out the window. The cardinal rule of thumb in choosing CEOs - operational experience, planning capability and understanding finance - were made irrelevant.

The way was to get kids from branded ‘schools’ (meaning Universities) and those with impressive resumes, preferably consulting experience.

The first few identified for that program were Rosman at Malaysia Airport, and Abd. Rahman and Shahril at MRCB. Then came names like Azman Mokhtar for Khazanah, Wahid Omar for Telekom (now Maybank), Cik Khalib for TNB, etc.

Some did a good job but most of these CEOs suffer due to lop-sided experience. Not to mention, ego and arrogance of youth and lack of finess. They are mostly accountants and naturally are figuratively minded book keepers. Too few anong them went through the ranks to acquire sufficient operational experience in planning, managing and problem solving in the day-to-day running of organisation.

These theoretical and rhetorical minds were bad in decision making, weak in problem solving and negotiating, and manage by ‘outsourcing’ - assigning to their top executives or consulting firms.

Before even introducing the background of the Pantai debacle, the reason the several part series on Nor Yakcop-Khazanah debacle at Pantai begin with a lecture on basic strategy implementation is to show the root of the problem lies within the maxim I was seldom scolded for in the early part of my career. Never be the blind leading the blind.

Blind leading the blind

The Parkway acquisition of Pantai was representative of such endemic problem. Nor Yakcop had went beyond his scope of expertise. A non starter in the corporate world is leading the government's corporate reorgaanisation plan. He had to depend on boys like of Tan Sri Azman Mokhtar to be his walking dog in the corporate jungle.

Azman Mokhtar was too inexperiance to lead Khazanah. He was picked there for Binafikir's Wide Asset Unbundling for MAS which was a mere hyped. It was basically an undergraduate corporate finance 'cookbook recipe' called sell and lease back. The Pantai disaster can be partly blamed to Pak Lah's slumbered intervention. Basically, Azman failed to find the creative, and rightly prioritised solution to such delicate problems like Pantai. It was a clear case of the blind leading the blind.

This lies the skewed Malaysian ways of always putting the wrong people at the wrong positions. If today's overzealousness is with accountants typified as company record keeper, at one time it was with lawyers. Lawyers’ role in any organisation are limited to legal matter and naturally supportive in nature, but are given such prominent roles. Such is not practise abroad but it is only in Malaysia such things happen.

The Pantai debacle was also a serious oversight by the Minister in charge. There was a prevalent lackadaisical attitude by the Khazanah CEO for not giving and being sufficiently shrewd to give national interest foremost priority. That gave rise till today the suspicion they were compromised.

In other countries, the Minister and CEO would have resigned for such serious oversight but here we allowed them to continue to make more mistakes. It seems the KPI they instituted in their organisation doesn’t apply to them.

In the case of Azman Mokhtar, words are his golden parachute is too costly for Government to drop him. Government will drop other CEOs without proper compensation but not Azman. Come renewal time, he will find ways to make himself indispensable to renew his contracts.

The serious mistakes of both Nor Yakcop and Azman Mokhtar will be elaborated further in the ensuing series.

Edited: 7:30 PM