Prime Minister Anwar Ibrahim has confirmed a complete overhaul of Sapura Energy Bhd’s top management as a prerequisite for the government’s RM1.1 billion financial injection.
- Sapura Energy’s top management was completely replaced as a condition for the government injection
- Authorities are investigating possible misappropriation and financial misconduct within the company
- The funding is not a bailout nor a grant but structured as a capital loan, with expectations of repayment
- The funds will be used exclusively to repay around 2,000 vendors, 80% of whom are Bumiputera
- Allowing Sapura Energy to collapse could lead to reliance on foreign companies in Malaysia’s oil and gas sector
- Existing shareholders and financial creditors would not benefit from the funds
Anwar stressed that the move was not a bailout to rescue the company’s previous executives but a necessary step to ensure accountability and proper governance.
Leadership restructuring and investigations
Speaking at a monthly assembly with Finance Ministry staff in Putrajaya, Anwar stated that the government mandated the removal of Sapura Energy’s senior management before providing financial assistance.
“The senior management must all leave—that was our condition. They must be replaced with new leaders,” he asserted.
He added that investigations into possible misappropriation, abuse of power, or financial misconduct are ongoing. However, these inquiries are independent of the government’s involvement.
In a subsequent statement, Anwar confirmed that the previous major shareholders were no longer involved in the company’s management, which a professional team has now taken over.
Although he did not name individuals, former CEO Shahril Shamsuddin, who retired in 2021, was a key shareholder. His brother, Shahriman Shamsuddin, remains on the board of directors.
Ensuring transparency and accountability
Anwar referenced his 2022 debate with former Prime Minister Najib Abdul Razak, during which he opposed a proposed government bailout for Sapura Energy. At the time, he argued against intervention due to the absence of a forensic audit and excessive executive salaries.
To ensure transparency, the government engaged external auditors Ernst & Young to conduct a due diligence review before proceeding with the RM1.1 billion injection. The findings will be shared with enforcement agencies, including the Securities Commission, to determine if further action is necessary.
Government support for vendors, not executives
The financial injection, provided through Malaysia Development Holding Sdn Bhd (MDH), aims to settle debts owed to approximately 2,000 vendors rather than support Sapura Energy’s former leadership.
Anwar emphasised that the funds serve as a capital loan, not a grant, and should be repaid once the company stabilises under new management.
“Will this funding be ‘burned’ funds? No, because it is a loan meant to help Sapura Energy’s new leadership generate profits and repay the RM1.1 billion,” Anwar explained.
The company’s financial struggles began in the mid-2010s due to declining oil prices, leading to significant losses and mounting debt.
By 2019, Sapura Energy had reported consecutive annual losses, necessitating urgent financial intervention.
Addressing criticism and economic implications
Anwar dismissed criticism of the government’s decision, stating that failure to act would have negatively impacted vendors, 80% of whom are Bumiputera entrepreneurs.
He argued that the move was necessary to prevent their livelihoods from being jeopardised.
“If I don’t help, they say I am a traitor who no longer champions Bumiputera interests. If I do help, they say I am saving a failing company,” he said, refuting claims that the government’s actions favour wealthy business owners.
He also warned that allowing Sapura Energy to collapse would create a vacuum in the oil and gas downstream sector, forcing Malaysia to rely on foreign companies.
Capital loan, not bailout
The RM1.1 billion injection, structured as a capital loan, is expected to be repaid by Sapura Energy’s new management.
In a Bursa Malaysia filing, the company confirmed that the investment, facilitated through MDH—a special purpose vehicle under the Minister of Finance (Incorporated)—would be used solely to repay local vendors.
Major shareholder Permodalan Nasional Bhd also affirmed that existing shareholders and financial creditors would not benefit from the funds.
Communications Minister Fahmi Fadzil reiterated that this financial intervention differs from past bailouts, particularly those under former Prime Minister Dr Mahathir Mohamad’s administration, asserting that it is a strategic investment to stabilise the company while ensuring accountability.
With new management in place and stringent oversight, the government aims to support Sapura Energy’s recovery while safeguarding vendors’ interests and ensuring long-term sustainability.