— Sakmongkol AK47
The Malaysian Insider
Dec 26, 2011

DEC 26 — Two upcoming events are being awaited with great anticipation:

(1) The outcome of an injunction application by a few settlers to stop the Felda Global Ventures listing, and;

(2) the January 5 extraordinary general meeting of Koperasi Permodalan Felda (KPF).

The outcome of the second event is a foregone conclusion. Chairman Isa Samad will get elected as the KPF chairman despite not having the qualifications to become an office bearer. He is not a settler nor is he a Felda employee. But the minister in charge of Felda has given his approval; what can people do? The minister is also the prime minister. He is lord over whoever lives in this land.

We must not be sidetracked by this sideshow involving the two-bit actor Isa Samad. The more pressing matter concerns the listing exercise.

Why the injunction? Why should four people extend energy and time and assume the risks of being called traitors and all that, to apply for an injunction? Greed can’t be the overriding objective. If it is, it’s more profitable for the four people to side with chairman Isa, who can be generous if he is pleased.

The object of the injunction is to stop FGV from taking over assets and shares belonging to KPF in Felda Holdings. These people believe that the 350,000 hectares of land that Felda took was actually meant for settlers.

All the assets owned by KPF in Felda Holdings will be leased to FGV for the next 99 years. They will no longer exercise control over the assets as their interests are all converted into shares. Felda Holdings is 51 per cent owned by settlers and 49 per cent owned by Felda Global.

They are willing to risk it all, because they believe settlers are being sold out.

This listing is the ultimate shortchanging of settlers. The first occurred when Felda withheld more than 300,000 hectares of land from being given to settlers. By assuming ownership of the land, Felda was able to become a planter itself.

So we have the peasant settler and the corporate settler. The corporate settlers have moved on to becoming fabulously rich while the peasant settler (Tun Razak’s regimented landless and jobless) has remained relatively behind. They get to enjoy the trickle down effects defined and determined by Felda who practically run the business on behalf and for the benefit of settlers.

The corporate settler sells CPO and busies itself in a wide range of downstream manufacturing and marketing activities. They were even able to go into various businesses out of the capital created from ownership of the land which was supposed to go to the landless and jobless.

The second took place, when Felda listed its sugar refining business. It made over RM 800 million out of that IPO. How much did KPF make by virtue of owning 20 per cent of the business? On paper it made, RM300 million?

How did Sabri Ahmad cull this figure? If KPF makes a paper gain of RM300 million and RM300 million is 20 per cent, then the whole gain is RM1.5 billion. But Sabri says Felda made RM800 million. Maybe it’s just a figure of speech. The point is, he wanted to say KPF made money albeit on paper. Does that raise the share value of KPF in Felda Holdings now that it made RM300 million paper gain?

If the injunction is successful, the proposed listing of Felda Global will be delayed. The listing will see the merger of Felda Holdings with Felda Global. The smaller partner in terms of equity, Felda Global is buying out KPF who has 51 per cent.

How is the nature of the transaction? Does it involve an offer by FGV to buy out KPF at a certain price, or will it involve just a share swap? You priced it with premium, fella; that’s why KPF is getting 61 per cent.

But the share price of the newly-listed entity is also at a premium. You can easily inflate the price of the would-be listed entity, paint glossy pictures, introduce exotic phrase such as unlocking value and so forth. With these, you will probably induce KPF representatives to believe they are getting a good deal.

KPF will get 61 per cent. That’s good, you say. Isa Samad goes around berating ungrateful settlers — apa lagi awak semua mahu, dari 51 per cent jadi 61 per cent?

But we ask in return: 61 per cent of how much? If 30 per cent of the shares are sold to the public, the settlers end up with 61 per cent of the remaining 70 per cent of the business.

That’s not all. Thirty per cent will be held by the public; the interests of settlers are converted into shares that are tradable in the market place. As with the track record of Bumiputera-held equities, you can bet that, chances are, the shares will be sold.

We have to go back to the primary source of dissatisfaction. The peasant settler has remained more or less the same. The corporate settler has made it big. The peasant settlers get palliatives, bonuses here and there. RM1,200 as a yearly bonus translates into RM100 per month. RM400 per year translate into RM30 per month — not even enough to buy a T-bone steak at Meatworks.

The peasant settler gets MRSM colleges, indoor stadiums, futsal stadiums and other social amenities but the value of these pale in comparison with the amenities and wealth-enhancing resources obtained by the corporate settler.

The corporate settler has moved on into oleo chemicals, downstream activities, hotels, sugar business, etc; why can’t the peasant settler be organised that same way?

The fundamental reason why this listing is being vehemently opposed is that people believe it’s a sellout and it’s the culmination of unconscionable acts by Felda. — sakmongkol.blogspot.com

* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).