Remember the saying, “The higher you climb, the harder you fall”?

Sapura Energy, the oil and gas company experienced a meteoric rise during the 1980s and 1990s; but by 2015 trouble was brewing.

On 21 March 2022, The Edge reported that Sapura Energy’s shares were trading at 3.5 sen, down from a peak of RM4.48 in December 2013.

Perhaps, the saying “The higher you climb, the harder you fall” could also describe its corporate board members, with its star-studded cast of big names from Petronas Carigali, Royal Dutch Shell and other well-known companies.

These men were given the task of turning the company around. They failed.

Despite the continuing resurgence of crude oil prices (after the dip over five years ago) and the cash injection from Permodalan Nasional Berhad (PNB), why is Sapura underperforming?

On 21 March, the convicted felon Najib Abdul Razak suggested that the government bail out Sapura Energy to protect it from bankruptcy.

The rakyat are outraged by Najib’s suggestion.

PNB bailed out Sapura to the tune of RM2.68 billion in 2019, and acquired a 40% stake in the firm. Does it deserve a second bailout?

Astute observers may notice that this amount of money, RM2.68 billion, is similar to the sum (RM2.67 billion) Najib had allegedly channeled into his personal bank accounts from 1MDB.

Members of the rakyat are often the victims of company mismanagement and theft by those who should be looking after their welfare. Why should we throw more good money after bad?

After PNB, Sapura Energy’s second largest shareholder is its former president Shahril Shamsuddin, who controls 13.91% of the company.

Shahril had headed Sapura since July 2004 when it was still known as Crest Petroleum Bhd, a unit of Renong Bhd. Shahril had acquired Renong’s stake in Crest Petroleum.

The question which most members of the rakyat would like to ask is this, “Who will bail them out when they get into serious financial difficulties?”

The cost of living has skyrocketed and the rakyat are experiencing the damage done by the coronavirus pandemic. Will the government bail them out? As it is, many Malaysians are forced to claw into their meagre EPF savings just to survive.

The problems faced by millions of Malaysians are only just beginning. Many have suffered huge losses because of the pandemic.

Lives were changed forever, when family members who contracted coronavirus became very ill and could not work, or died. The loss is more acute when bread winners are affected.

Others will have been forced to close their businesses.

Those who are employees may find that their services have been terminated because their employers could not afford to have them on company payroll.

In December 2021, The Edge reported that brokerage firm UOB Kay Hian, “…changed its call on Sapura Energy to ‘sell’ from ‘hold’, and slashed its target price by 70% from 10 to three sen.”

It added that UOB was also assuming a “worst-case bankruptcy scenario”.

In response to this damning indictment of the firm’s performance, Sapura responded with various reasons, one of which was that the group was “facing short-term cash flow and liquidity issues, primarily exacerbated by the unprecedented Covid-19 pandemic.”

The firm also tried to reassure the market that every attempt was being undertaken to resolve these issues.

Why should we help a company which has been mismanaged for years?

As far as many Malaysians are aware, the problems at Sapura did not happen overnight. They were there well before the pandemic affected the whole world.

The most glaring problem apart from the personality clashes in Sapura is mismanagement.

Last year, The Edge reported that speculation was rife that Sapura’s shareholders were furious with the take home pay of the former president Shahril. He took home RM71.92 million in 2018 and RM84.24 million in 2017, which is high by Malaysian standards, but barely acceptable by global norms.

Anuar Taib, with his 30 years of experience in oil and gas in Sarawak Shell Bhd, became the CEO of Sapura Energy in March 2021. His task was to turn the company around.

Despite the cash injections, the change in members of the corporate board, a new management team, refinancing, selective bidding for jobs and a shift in business focus, Anuar failed to improve Sapura’s financial health.

He may or may not have been going round to the government with his begging bowl, but the question is still valid. Why should Sapura be bailed out yet again?

We are warned that if Sapura is not given financial help, 10,000 high-paying jobs and 4,500 vendors/suppliers will be affected, and Sapura’s valuable assets will have to be sold at a loss.

In addition, ASB investors will suffer, as will the EPF and local banks like Maybank, which is 50% owned by PNB.

In the run-up to GE15, Ismail Sabri faces a dilemma.

If he bails out Sapura, he risks upsetting the rakyat who are desperate for help.

Alternatively, if Ismail refuses to help Sapura, he risks upsetting the Malay electorate, because the majority of the jobless will be bumiputras, and the sub-contracting firms are bumiputra-owned.

Malaysians are fed up with GLC bailouts. Like MAS and MISC, the ordinary rakyat gained nothing from company mismanagement and political interference. Taxpayers’ money was confiscated to help the crony companies.

At a time when the rakyat are struggling, Malaysians are against government bailouts. It is not fair to the taxpayers.

Why should we help a company which has been mismanaged for years?

Their board members enjoyed fat salaries and huge perks when the company prospered. If bosses were reckless with the way they ran the company, why should the rakyat be forced to bail them out?

Crony companies see the bailout as a safety net, but what sort of provision will the government give to poor Ali, Ah Kow or Arumugam to see them through the tough times ahead?

Let the failing Sapura die a natural death!

Many Malaysian households are more deserving of help than one company.

Sources:

1. The Edge Markets: What went wrong at Sapura Energy
2. The Edge Markets: Will PNB invest more in Sapura Energy?
3. The Edge Markets: Sapura Energy 4Q net loss widens to record RM6.61b, full-year loss at RM8.9b
4. The Edge Markets: Sapura Energy in heavy trade after record 4Q losses, with analysts downgrading calls, TPs
5. The Edge Markets: Creditors in difficult position as cash-strapped Sapura Energy bites bullet again

(Mariam Mokhtar is a Freelance Writer.)