Sapura the biggest offshore construction company in Asia and its controversy
Sapura is the biggest offshore construction company in Asia and the second-largest globally. It is the biggest rig owner in Asia outside of China, and a significant domestic producer of oil and gas in Malaysia.
Additionally, the company is the largest owner of tender rigs in the world, with seven semi-submersible tender assist rigs and seven conventional tender assist rigs in its fleet, acquired from Seadrill for the princely sum of US$2.9 billion in 2013.
However, in the calendar year 2021, only half of the rig fleet is operational.
In mid-march of 2022, Sapura reported a loss of USD $2.1 billion for FY2021. It’s the largest loss to date.
This revelation brings about its total accumulated losses to USD $3.7 billion.
So what went wrong in Sapura?
Pundits in the industry point to a lack of liquidity as the issue. They bring up plenty of evidence. One of which is when Sapura decides to withdraw from the Yunlin offshore wind farm installation project in Taiwan. Sapura cited “material breach of contract” on the part of the client, Yunmeng Wind Power. They’re currently in arbitration with the client in Germany. Another bit of evidence is the Indian state-owned Oil and Natural Gas Corporation (ONGC), stepping in to make direct payments to Sapura sub-contractor to recover an offshore jacket. The subcontractor, in this case, was Vietnam’s PetroVietnam Technical Services Corporation (PTSC). Apparently, Sapura owed PTSC but was unable to pay them, thus why ONGC stepped in.
CEO thinks otherwise
Sapura Energy’s Chief Executive (CEO), Datuk Anuar Taib believes the problem is deeper. He explained how Sapura has won many bids in the past, however, failed to mitigate risks for increases in costs and other buffers. “We need to start looking at not only winning (bids) but also whether a contract is onerous, are the terms too difficult? It is less important to talk about your bid book. It is more important to look at risks that you need to mitigate once you turn it into an order book,” he says during an interview with a Malaysian media outlet. “Of course, I could also choose to blame everything on my predecessors, but what’s the point? I have 10,000 people who work for Sapura Energy’s best interests”, he added. Could the predecessor he be referring to be Tan Sri Shahril, the founder and long-time CEO of Sapura?
Netizens weigh in on former CEO’s salary
Shareholders of Sapura Energy were unhappy over Shahril’s salary. They perceived it to be high. He took home RM71.92 million in FY2018 and RM84.24 million in FY2017. According to global standards, these are reasonable. However, they are high from a Malaysian perspective especially according to Malaysian netizens. It does not matter to them that Tan Sri Shahril is the founder and built Sapura Energy.
Malaysian social media is rife with news of the extravagant salary of the former CEO. Netizens are complaining that Sapura will turn into another failed GLC (government-linked company). Netizens are claiming that their tax should not be used to prop up Sapura. When the former PM Najib weighed in on the issue, netizens swiftly chided him and blamed him for the debacle which is factually untrue as Najib ceased being PM in 2018.
Former chairman of Sapura, Jalil Rasheed even twitted that Petronas should not be used to bail out Sapura. Strange, coming from a former chairman of Sapura. After all, he was chairman of Sapura from October 2019 to June 2020. He would have had plenty of time to bring these matters up then.
More than meets the eye
In December 2019 the government-linked investment company Permodalan Nasional Bhd (PNB) bought up to 40% of Sapura. Thus turning Sapura into a GLC. Prior to that, Sapura was simply a listed company. As with other listed companies, the board would determine the salary of their CEO, Chairman etc. Sapura was making a profit up till FY2017 and recorded losses in FY2018. Thus it is strange that PNB would want to invest in Sapura when it was recording its first loss.
Questions arise again on Jalil Rasheed’s appointments in PNB and Sapura
What is even stranger is the CEO of PNB at the time they bought up the 40% stake in Sapura was Jalil Rashid. He also became Chairman of Sapura in January 2020.
Netizens are now digging deeper and opening up PNB’s decision in December 2019 with fingers now pointing at Jalil Rasheed.
In August of 2019, PNB appointed Jalil Rasheed as their new CEO. Jalil was only 38 at that time thus making him their youngest ever CEO. It was a controversial appointment with netizens making unfounded claims of Jalil Rasheed’s ties to twice Malaysia’s former PM, Tun Dr Mahathir Mohamed.
He abruptly left both positions (Sapura chairman and PNB CEO) in June 2020. He cited harassment as his reason for leaving. However, upon checking, no police report was ever made by him. In July 2020, the prestigious London School of Economics and Political Science (LSE) informed the Malaysian parliament that he never graduated from their school. Sources now claim he left when he became aware of Malaysia’s SC (Securities Commission) inquiries into his educational background.
He went into hiatus and emerged a year later as the new CEO of Berjaya Corp. His role there lasted only slightly more than a year.
He is currently the President of the Board of a football team in Bosnia and Herzegovina.
