Malaysia Orders Sovereign Fund Audit on Loss-Making Venture

Malaysian Prime Minister Anwar Ibrahim ordered sovereign wealth fund Khazanah Nasional Berhad to carry out an internal audit to investigate issues related to 43.9 million ringgit ($10 million) in investment losses.

This is to ensure all government-linked companies “fulfill the demands of their respective responsibilities and functions,” he said in a post on X on Saturday. The internal audit “doesn’t exclude” state-owned asset manager Permodalan Nasional Bhd. and other parties involved, he said in a follow-up post several hours later.

Anwar’s directive comes days after the Finance Ministry said the two entities invested a total of 47 million ringgit in online fashion retailer Fashion Valet Sdn. in 2018, and received an offer in late 2023 for their stakes. They eventually sold it for 3.1 million ringgit — a loss that matches the amount Anwar mentioned in his post.

The Malaysian Anti-Corruption Commission said Saturday it had opened an investigation paper on the issue of investment losses by Khazanah and PNB in a local online fashion business.

“The public is urged to allow space for the investigation to proceed and to avoid speculation or engage in ‘public trials’ against the parties involved,” MACC Chief Azam Baki said in the statement.

A MACC spokesperson confirmed that the probe was related to FashionValet, while a spokesperson from the Prime Minister’s Office said Anwar’s post was in response to the MACC investigation.

Supporting local tech entrepreneurs

Khazanah and PNB’s investment in FashionValet was aimed at supporting local tech entrepreneurs and digital retail firms, the Finance Ministry said in a written reply to parliamentary questions on Monday. The total loss from the sale is “very small” compared to the total income Khazanah and PNB generated that year, it added.

Khazanah in a statement Friday said FashionValet faced challenges exacerbated by Covid-19, and its divestment “represented a responsible exit” to transfer ownership to a party that could help guide the troubled company. NXBT Partners, which is “led by a seasoned Malaysian entrepreneur,” offered to buy existing shareholders’ stakes and inject capital into the firm, it said.

FashionValet’s co-founders, Fadzarudin Shah Anuar and Vivy Yusof, said in a statement Friday that they took full responsibility over the company’s losses and would resign.

“We attempted to expand the business too aggressively, and did not sufficiently plan for a rainy day,” they said.