PAC points to Covid-19, flawed approach in Khazanah’s RM43.9m FashionValet losses

KUALA LUMPUR, Aug 21 — The Public Accounts Committee’s (PAC) scrutiny of Khazanah Nasional Bhd’s RM43.9 million losses from FashionValet has exposed not only the challenges of high-risk investments but also gaps in governance and risk management.

PAC chair Datuk Mas Ermieyati Samsudin said Khazanah’s investment, though subjected to due diligence, faltered due to its omnichannel retail strategy, compounded by the Covid-19 pandemic and changing consumer behaviour. But more telling was the absence of a structured post-mortem process to evaluate major losses — a gap that hindered institutional learning.

The report noted a “misalignment” in Khazanah’s dual role: tasked with generating commercial returns while simultaneously acting as a national development instrument. This tension, PAC warned, makes Khazanah vulnerable to political and market pressures.

Although the Finance Ministry provided only strategic oversight without interfering in day-to-day operations, PAC’s findings suggest Khazanah needs a more robust framework. Recommendations include creating a formal SOP for post-mortem reviews of failed investments, strengthening scenario analyses for non-financial shocks such as pandemics and geopolitical disruptions, and communicating more transparently about the risks of its venture capital approach.

The case of FashionValet, now further clouded by corruption charges against its founders, has raised broader concerns about public trust in sovereign investment strategies. PAC’s recommendations reflect the need for Khazanah to balance innovation-driven investments with accountability, ensuring lessons from losses feed back into future decision-making.

Ultimately, the FashionValet episode serves as a cautionary tale: sovereign wealth funds must not only bet on innovation but also institutionalise resilience when those bets fail.