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Capital Markets

Petronas: The politics debate

One of the most popular debates on the Malaysian blogosphere is about political intervention in Petronas. An example is the venom that accompanied the appointment of Sheryl Stothard into the corporate affairs team; Stothard had previously been a senior figure in Parti Rakyat Malaysia, a political party.

An interesting twist, though, came as Hassan Merican’s successor was being debated, and it came from Tengku Razaleigh Hamzah, a former Malaysian finance minister who was also the founding chairman of Petronas. Tengku knows Petronas as well as anyone, and his points on corporate governance and separation of commerce and government were revealing about the unique institution Petronas has become.

"The question of a tussle of wills between the board of Petronas and the prime minister does not arise," he wrote in a contributed article to the Malaysian Insider publication. "The Articles of Association governing Petronas give the prime minister the absolute power to appoint and remove every single member of the board and management. The prime minister has the right to appoint or remove anyone, from the president and chief executive officer down to the company drivers."

He added: "It is puzzling that appeals are being made for the prime minister not to interfere in the composition of the board of Petronas, when it is in fact his duty and sole prerogative to appoint members of the board who will help him in his function of overseeing the running of this wholly state-owned enterprise and seeing to the disposal of the wealth that it generates."

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