KUALA LUMPUR, Aug 21 — The Public Accounts Committee (PAC) has listed Khazanah Nasional Bhd’s high-risk strategy, the Covid-19 pandemic, and shifting consumer habits behind the RM43.9m investment losses from fashion brand FashionValet Sdn Bhd.
The Parliamentary committee chairman Datuk Mas Ermieyati Samsudin said Khazanah also lacked a standard operating procedure (SOP) for reviewing losses from divested investments that exceeded thresholds.
“A misalignment was noted between Khazanah’s mandate to generate commercial returns, which may require greater global market exposure, and its role as a national development instrument subject to government-driven priorities,” New Straits Times quoted her telling a press conference.
It then recommended Khazanah to adopt an SOP for post-mortem reviews of failed investments, with findings presented to the Board Audit Committee and Board of Directors.
In February, the PAC had then called Finance Ministry’s Government Investment Companies Division deputy secretary-general Afidah Azwa Abdul Aziz, Khazanah managing director Datuk Amirul Feisal Wan Zahir, and chief investment officer Datuk Hisham Hamdan to testify.
In October last year, Khazanah and Permodalan Nasional Bhd (PNB) said they only received RM3.1 million from the sale of their shares in FashionValet.
In a written response to the Dewan Rakyat, the Finance Ministry described the sale as a responsible exit for Khazanah and PNB, transferring their stakes to strategic investors.
In 2018, Khazanah and PNB invested a combined RM47 million in FashionValet, with Khazanah contributing RM27 million and PNB RM20 million, to acquire minority stakes.
Following an investigation by the Malaysian Anti-Corruption Commission, FashionValet founders Datin Vivy Sofinas Yusof and her husband Datuk Fadzarudin Shah Anuar were charged with criminal breach of trust.
They were accused of misappropriating investment funds entrusted to them by Khazanah and PNB by transferring RM8 million from FashionValet Sdn Bhd’s company account to 30 Maple Sdn Bhd without the approval of FashionValet’s board of directors.
They also pleaded not guilty to an alternative charge of jointly and dishonestly misusing company property, namely, RM8 million in investment funds from Khazanah and PNB belonging to FashionValet.
The trial will begin in April 2026.
KUALA LUMPUR: Khazanah Nasional Bhd’s investment in FashionValet, although subjected to due diligence, failed due to its high-risk omnichannel strategy, external market shocks brought on by the Covid-19 pandemic, and shifts in post-pandemic consumer behaviour.
Public Accounts Committee (PAC) chairman Datuk Mas Ermieyati Samsudin also said that Khazanah did not have a standard operating procedure (SOP) for conducting post-mortem analyses on divested investments that recorded losses beyond a material threshold.
This was among the five key findings outlined in PAC’s report on domestic investments by Khazanah Nasional Bhd, under the Finance Ministry, which was tabled in the Dewan Rakyat.
She said another finding was that Khazanah had a layered internal governance process for investment screening and approval.
“Oversight by the Finance Ministry was found to be strategic in nature and did not interfere with day-to-day commercial operations, in line with good governance practices.
“A misalignment was noted between Khazanah’s mandate to generate commercial returns, which may require greater global market exposure, and its role as a national development instrument subject to government-driven priorities.
“Meanwhile, Khazanah’s venture capital (VC) investment strategy through the ‘Fund-of-Funds’ approach is appropriate to achieve its objective of catalysing the domestic innovation ecosystem, despite its inherently high-risk nature,” she said at a press conference in the Dewan Rakyat.
Mas Ermieyati said the proceedings were conducted to review and assess Khazanah’s domestic investment strategies, governance, and the Finance Ministry’s role as its main shareholder in ensuring that investments aligned with Khazanah’s mandate and national interests.
She added that PAC initiated the proceedings following losses incurred from Khazanah’s investment in FashionValet, which sparked concerns over the governance and management of its domestic investments.
On Feb 20, PAC convened on the matter and summoned Finance Ministry’s Government Investment Companies Division deputy secretary-general Afidah Azwa Abdul Aziz, Khazanah managing director Datuk Amirul Feisal Wan Zahir, and Khazanah chief investment officer Datuk Hisham Hamdan.
In light of its findings, PAC made four recommendations, including that Khazanah proactively and continuously educate the public on its VC strategies and opportunities, particularly the high-risk nature of the model.
“Annual reports, press releases, and other communication platforms should be used to explain the rationale behind its portfolio approach and to set realistic expectations, as investment failures are a natural part of an innovation-driven strategy.
“Khazanah should establish an SOP for conducting post-mortem analyses of all divested investments that incur material losses.
“These reports, which should outline the causes of failure, process weaknesses (if any), and improvement measures, must be presented to the Board Audit Committee and the Board of Directors to ensure accountability and institutional learning,” she said.
She added that Khazanah should also strengthen its risk management framework by incorporating more comprehensive scenario analyses for non-financial market shocks, such as disruptive technological changes, pandemics, geopolitical shifts, and changes in social sentiment.
This, Mas Ermieyati said, would enable more agile restructuring or divestment when the fundamentals of an investment change drastically.
She also said Khazanah’s quarterly reports to the Finance Ministry should go beyond financial metrics to include broader assessments of overall investment performance.
