While acknowledging former Damansara MP Tony Pua’s contention that profits and losses are part and parcel of venture capital investments, Bandar Kuching MP Dr Kelvin Yii said there were red flags in Fashion Valet from the outset, such as a lack of accountability and monitoring despite years of losses.
“(There were) no Khazanah or PNB personnel on (Fashion Valet’s) board, which could have managed the loss at the beginning and added value to the company,” Yii said in a posting on X today.
He said huge sums of money cannot be injected and allowed to be managed without oversight under the guise of “high-risk venture capital investment”.
Yii also pointed to the company’s initial inflated valuation, which he said Khazanah once pegged at RM300 million, noting that “this may or may not be justified, but that itself deserves some explanation and accountability”.
“If it’s purely an angel investor, then fine, but this involves GLC or GLIC funds,” he said.
While recognising some merit in Pua’s arguments, he said there must be an investigation focused on governance and accountability instead of an emotional “witch hunt” that could stifle future venture capital ecosystems.
In a Facebook post last night, Pua argued that criticism against Fashion Valet has been particularly “misguided and unfair”, primarily focusing on the percentage of losses while ignoring the broader context of venture capital.
Pua, who was also political secretary to the finance minister from 2018 to 2020, said the venture capital landscape is inherently risky, with more failures than successes.
“(In) the venture capital game (one) is to expect that out of 10 investments, three or four will be disasters – like Fashion Valet, three or four will just about cover cost, while two or three make spectacular returns,” he said.
In a written parliamentary reply last week, the finance ministry said sovereign wealth fund Khazanah invested RM27 million, and asset manager PNB another RM20 million, for minority stakes in Fashion Valet in 2018.
However, they lost RM43.9 million after selling their stake for RM3.1 million at the end of last year to NXBT Partners, an investment holding company controlled by Afzal Abdul Rahim, the CEO of TIME dotCom Bhd.
Earlier today, the Malaysian Anti-Corruption Commission confirmed that four witnesses from Khazanah, PNB and the finance ministry have been called for questioning. It said Fashion Valet founders Vivy Yusof and Fadzarudin Anuar will be summoned today.
Last Friday, Vivy and Fadzarudin said they would be stepping down from their management posts in the company to take full responsibility for the losses incurred by Khazanah and PNB.