Saturday, February 13, 2010

Mahathir Attacks Proton Holdings Again

FOR an 84-year-old, Mahathir Mohamad certainly knows how to dish it out.

On Tuesday, the former Malaysian prime minister (1981-2003) returned to one of his pet bugbears: his grievance with national carmaker Proton Holdings, which had sold an expensive Italian motorcycle maker MV Agusta for one euro.

Writing in his blog, Dr Mahathir quoted the February edition of the magazine Robb Report. 'Since acquiring MV Agusta for more than US$100 million in 2008, Harley-Davidson has helped revitalise the 65-year-old Italian brand.'

Dr Mahathir has never hidden his distaste for Proton's management under his successor Abdullah Ahmad Badawi. Mr Abdullah had removed Tengku Mahaleel Ariff as Proton's chief executive, something that the former premier did not agree with. In addition, he was incensed with Proton's sale of MV Agusta - a purchase which he encouraged, as premier, as improving Proton's technological capability.

'People might just remember that Proton sold its share of MV Agusta for one euro (RM4) to some unknown Italian, who subsequently sold a part of the company to Harley-Davidson for the sum stated above (more than US$100 million, equal to more than RM340 million),' Dr Mahathir wrote.

He didn't stop there. 'We may also remember that the remaining part of MV Agusta was sold to BMW for about the same price - that is, more than RM340 million,' he continued.

'So we sold for RM4 something that the buyer, the mysterious Italian, sold for more than RM680 million,' said the ex-premier. 'We may also know that Proton bought a part of MV Agusta for approximately RM560 million.'

'The previous management of Proton claimed that it had saved millions of ringgit by selling its share for RM4,' said Dr Mahathir, who is ostensibly adviser to the car company. 'I am designated as adviser to Proton but during the period of the previous management, it was the management who advised me that the sale had been carried out. Obviously, the duty of the adviser was to be advised and not to advise.'

Proton Holdings has never really given a satisfactory explanation of its disposal of MV Agusta. When Dr Mahathir first began carping on the issue back in 2005, Proton defended itself by contending that there were no synergies between MV Agusta and Proton as a carmaker.

Describing continued criticism over the sale and change in management announced by Proton in July 2005 as 'uninformed speculation', the national car company said - in a tacit reference to Dr Mahathir - that there was 'a refusal among some to acknowledge explanations provided earlier'.

'There were no operational, engineering and technological synergies between Agusta and Proton,' said the car company in 2007. 'This has been independently confirmed by Proton's appointed advisers. Proton manufactures cars for the masses while Agusta manufactures motorcycles.'

Proton bought a 57.75 per cent stake in MV Agusta in December 2004 for 70 million euro. Its management then sold the stake to Italy's GEVI Spa, which also assumed the motorcycle maker's 107 million euro debt.

'In the event MV Agusta falls into bankruptcy,' the car company said, 'Proton would have been subject to a contingent liability for an amount of up to RM923.1 million.'

Unfortunately, Dr Mahathir was never convinced.


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