Volkswagen’s bombshell less than a fortnight after officially-inspired story  that the strategic tie-up with Europe’s largest carmaker on the cards evidence that something very amiss with Proton management

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Media Statement (2)
by Lim Kit Siang  
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(Parliament, Saturday): Something is very amiss with the Proton management that it could be  caught unaware by the Volkswagen AG decision to abort plans for a strategic tie-up with the national carmaker.

This is all the more strange  as it was only a fortnight ago that an officially-inspired report was carried by the national news agency, Bernama,  that the alliance between Volkswagen AG and Proton were  on the cards  with Europe’s largest car dropping the condition for a controlling stake in Proton as a precondition for a strategic joint venture.

With the market pumped up with renewed hopes that Proton would be able to quickly seal a deal with Volkswagen A.G., the announcement by Volkswagen chief executive Bernd Pischetsrieder in Michigan on Thursday that the alliance which had been under negotiation for the past year had collapsed was a bombshell, with the counter in the Kuala Lumpur Stock Exchange  hitting an intra-day low of RM5.10 yesterday, down RM1.25 or 19.7 per cent from Thursday’s close,  wiping out RM384 million of the market value of Proton at the end of trading when it closed at RM5.65.

If the Volkswagen announcement came like a “bolt out of the blue”, it would have equally come as a shock to the Prime Minister and the top Finance Ministry including Khazanah officials.  How could the whole government, headed by the Prime Minister, be taken for a ride by the Proton management, whether by omission or commission?

Was the spin a fortnight ago that the strategic tie-up  between Proton and Volkswagen was almost ready for a wrap-up purely conceived to counter the adverse publicity arising from the refusal of the Proton management to be accountable and transparent about its RM510 million losses, resulting from its disposal of its 57.57 per cent stake in the Italian motor-cycle unit M.V. Agusta to Italy’s Gevi SpA for RM4.48 (one Euro) which it had acquired for 70 million euros or RM367.68 million only a year ago?

Former Prime Minister, Tun Dr. Mahathir Mohamad had posed questions to Proton. I had posed questions to Proton and to the former Prime Minister.  All concerned Malaysians were disappointed and outraged when Proton came out with a terse statement a week ago that it has nothing more to say about its divestment of MV Agusta SpA. 

It was unfortunate that the Prime Minister, Datuk Seri Abdullah Ahmad Badawi did not direct Proton to be conscious of its responsibilities of good corporate governance to fully account for the MV Agusta sale for one euro, as he is now asking Proton to issue a statement to  explain why the proposed collaboration with Volkswagen had fallen through.

(14/01/2006)