(Petaling Jaya, Monday): In the public interest, Proton Holdings Bhd should explain how BMW can acquire Husqvarna Motorcycles for an undisclosed sum from MV Agusta. Husqvarna is famous for building rugged, off-road bikes. According to Reuters report dated 20 July 2007, Husqvarna first made motorcycles in Sweden in 1903 and belonged to MV Agusta. Proton Holdings Bhd (Proton) acquired MV Agusta for 70 million euros ($96.7 million) in 2004 and sold early last year for the token sum of 1 euro. 

Public interest requires a full accounting from Proton on how BMW can pay an undisclosed sum for one of the many units of MV Augusta whilst Proton sold off the entire MV Agustaa for only one euro. Proton chairman Datuk Mohd Azlan Hashim  admitted that Proton lost about RM500 million at the time of acquisition of MV Agusta comprising of the purchase amount of RM367.6 million and the additional provisions relating to MV Agusta in the accounts of the Proton group for the financial year 2005/06 of RM136.2 million. 

Proton’s 57.57 percent stake in MV Agusta was disposed of to GEVI SpA, a special purpose vehicle, for a nominal sum of one euro. The important question is why Proton could dispose off MV Agusta in 2006 for one euro and made losses of RM 500 million in a short space of a year whereas one year later in 2007, BMW can pay cash to buy a unit of MV Agusta for an undisclosed sum. 

Something is very wrong that Proton can lose money where others can find profits. Such unchecked bleeding can be seen in Proton’s failure to meet its key performance indicators (KPIs) for the fiscal year ended March 31 (FY07) as revenue dropped 37% to RM4.9 billion from RM7.8 billion in FY06.  Proton incurred a net loss of RM591.4mil against a profit of RM 46.7 million previously. Its cash on hand fell 34 % to RM 461 million. 

What is more worrying is that sales fell 40% from 183,824 units to 110,358 units last year, a drop in market share to 32 per cent from more than 60 per cent in 2000.  How can Proton expect to survive with such poor sales when its overseas market is a loss-making operation? Such a steep loss in market share is almost irretrievable. 

To lose up to RM 500 million in less than one year had caused anger amongst Malaysians including former Prime Minister Tun Dr Mahathir Mohamad and former Proton CEO Tengku Mahaleel, who felt their credibility, honesty and integrity questioned because they supported the purchase of Agusta. Both men clearly wanted personal vindication for spending RM 367.6 million to buy Agusta and the purchase of BMW ON 20.7.2007 for a unit of MV Agustaa will not placate them but instead inflame their anger at what they see as unjustified villification.  

Malaysians have paid much in tens of billions of ringgit for giving protection to Proton in terms of huge investment outlay by the government, paying very high prices for more efficient, economical and better engineered foreign cars through high excise and import duties and even paying higher prices for Proton manufactured cars here than those Proton cars sold overseas.  

As Khazanah Malaysia, the Malaysian government's investment arm, holds about 42.74 %t of Proton and Malaysian investors are the majority shareholders, public interest requires an answer in the interests of  good corporate governance and social responsibility.