Agusta Was A Good Investment, Says Mahathir
Bernama – 1 April 2006
KUALA LUMPUR - Former Prime Minister, Tun Dr Mahathir Mohamad, is standing by his stance that the buying of the 57.57 percent stake in the Italian motorbike maker, MV Agusta Motors SpA, was indeed a good investment decision.

But the disposal was due to the lack of engineering knowledge, he said.

"They don't understand the automotive industry. So they thought it was a bad investment."

Dr Mahathir said that motorbike companies have a lot of engineering knowledge and that is why Honda, which used to produce the Honda Cup 50 cc motorcycle, is today associated with some of the best cars in the world.

"It is possible for a motorcycle companies to contribute to the development of motorcars. That is why Proton bought Agusta, it was an investment in a company that produces the best bikes in the world."

Agusta motorcycle has been rated as the motorcycle of the year for Europe, which is proof that it is not so ignorant about engineering, he told reporters when asked on the recent remark by the Proton Board that M.V Agusta was a bad investment decision and did not have any synergy with the national carmaker.

In 2004, Proton through its wholly-owned subsidiary Proton Capital Sdn Bhd acquired 57.57 percent stake in Agusta for 70 million Euro. It recently disposed the entire stake to GEVI SpA, a special purpose vehicle for a nominal sum of one Euro.

"Proton was founded as an engineering company, but when you learn how to build a car then you learn how to produce a lot of things, such as engineering products. And that is what Proton has done, and I think the acquisition of Agusta, to me, was a very good decision," he said.

The decision to purchase Agusta was not made by the board or by the chief executive officer but it when through a very tedious process of being studied by everyone including Khazanah and "they agreed that we should purchase Agusta."

On the other hand, the decision to sell it for one Euro, doesn't reflect a very knowledgeable management, "you lose this money and Proton is going to continuously lose money. Before (this) we never lost money", Dr Mahathir, who has never been known to mince his words, said.

He said Proton's financial position then was very strong that it build its new complex for RM1.8 billion without borrowing any money from the government or banks and when the former chief executive officer, Tan Sri Tengku Mahaleel Tengku Ariff was sacked, he left behind RM2 billion cash.

"(Now) we want to know how much Proton is making?" Dr Mahathir asked.

Proton's chairman, Datuk Mohd Azlan Hashim, meanwhile was reported to have said that Agusta was a family run company and it produced niche products.

As for technology, Azlan had said that Agusta itself was sourcing 1,000 cc engines from Japan's Suzuki as it did not have such capability.

To this, Mahathir retorted: "But so was Honda (family owned). There is no doubt that Agusta has the capacity to design engine and produce engine. If they source anything from the others, it is a question of economy of scale.

"Once it's big you can produce your own engine. They have the engineering capability. I have seen it myself," said Dr Mahathir.

Asked whether Proton Board had informed him about the reason for disposing the company as he was the advisor, he said, "You ask for advise before you make a decision not after. That is informing."
Source: Bernama | www.bernama.com