KUALA LUMPUR - Prime Minister Anwar Ibrahim has come under heavy fire after his government injected RM1.1 billion (S$330 million) into Sapura Energy on March 11, having previously criticised calls to bail out the former petroleum giant.
The opposition and ordinary Malaysians alike have mocked the premier over the subscription of Sapura’s convertible loan stocks by a finance ministry-owned vehicle, pointing out how the then opposition leader had in 2022 been strongly against a bailout without a forensic audit to identify mismanagement in the oil and gas firm that is now saddled with RM16 billion in liabilities.
“What are the merits and rationale of channeling RM1.1 billion to an uncompetitive company facing losses?” said Kelantan-based lawmaker Syahir Sulaiman in a March 12 press statement.
The MP and shadow economy minister also questioned whether the funding meant to pay off debts to local vendors was approved by Cabinet.
Malaysia’s Cabinet includes Economy Minister Rafizi Ramli, deputy president of Datuk Seri Anwar’s Parti Keadilan Rakyat, and leaders of the Democratic Action Party (DAP), a key component of the Anwar-led ruling Pakatan Harapan coalition that has been vehemently against bailing out Sapura Energy.
But Mr Anwar, who is also finance minister, hit back at critics on March 13, denying that the fund injection was a bailout and claiming that critics would have attacked him no matter the decision made over Sapura Energy, which has been accumulating losses since 2018.
He said it was a difficult choice for him to make, given his long opposition towards government bailouts of private firms. However, he said this situation was different and that he expected Sapura Energy’s new management to eventually repay the government in full.
“Out of the approximately 2,000 vendors, 80 per cent of them are Bumiputera. How can they be punished? If I don’t help them, they (critics) will say Anwar is a traitor who no longer champions the bumiputera, he’s just a mouthpiece for DAP,” the premier said at the finance ministry’s monthly assembly in Putrajaya.
He was referring to constant allegations from right-wing Malay nationalist groups that the Chinese-led DAP is against pro-Malay Muslim policies including affirmative action for bumiputera, an umbrella term grouping together the Malay majority with indigenous minority tribes.
“When we help, they say we’re saving rich tycoons. But every sen will go to vendors who have worked but not been paid,” he added, warning that if Sapura Energy were to fold, the country’s entire energy downstream sector would only be operated by foreign firms.
He insisted that an audit has been conducted by Ernst & Young (EY) and that previous management, “whose incomes were in the millions”, has been replaced while investigations into any wrongdoing are ongoing.
But analysts say that Mr Anwar and his allies will have an uphill battle to control the narrative due to their previous opposition to a bailout and how the premier has constantly accused the “ultra-rich” of hoarding wealth by abusing subsidies and dodging taxes.
“The opposition will simply paint it as a black-and-white case of bailout versus no bailout. Unless the government can fully explain why spending RM1.1 billion to save these vendors is crucial, it will be viewed with the same scepticism as other billion-dollar scandals where no one of great importance is punished,” Viewfinder Global Affairs managing director Adib Zalkapli told The Straits Times.
Sapura Energy first hit financial turmoil in the mid-2010s when oil prices began to fall. And its external auditor EY has repeatedly expressed apprehension as to whether the company can continue as a going concern.
The firm in February secured approval for a debt restructuring plan, as it struggles to exit Practice Note 17 status, a Bursa Malaysia categorisation of companies under financial distress.
The company has been in the limelight since 2018, when an RM4 billion recapitalisation effort was largely subscribed by state-run fund manager and now its largest shareholder Permodalan Nasional Berhad (PNB), a move also billed as a bailout by critics.
For the financial year ended Jan 31, 2018, Sapura Energy announced an annual loss of RM2.5 billion, yet its chief executive and president Shahril Shamsuddin took home RM72 million that year and more than RM80 million in each of the four previous years.
At its peak in December 2013, Sapura Energy had a market capitalisation of nearly RM29 billion, placing it among the world’s top five oil and gas service providers. By 2021, the year Tan Sri Shahril stepped down as CEO, it was worth about RM700 million and continues to trade at around the same value today.
For the financial year ended Jan 31, 2022, the firm declared a whopping RM9 billion loss, its biggest ever.
Some observers believe that Sapura is too big to fail, as aside from the knock-on impact to the oil and gas industry, RM4 billion in PNB funds and RM10 billion in loans within the financial system would be at stake, as well as over 10,000 jobs.
Mr Shahril’s package has been a highly-politicised issue due to the stakes owned by PNB - which manages the savings of over 15 million Malaysians - as well as the pension funds for both private and public employees.
He sued Mr Rafizi in 2022 over claims that Sapura paid him well in excess of RM1 billion since 2009, after including rental and intellectual property fees paid to firms linked to the then CEO.
However, Mr Shahril, who contended that his total remuneration was around RM486 million from 2013 to his retirement, settled with Mr Rafizi out of court in 2024.
Shannon Teoh is The Straits Times’ bureau chief for Malaysia, where he has reported on various beats since 1998.
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