KUALA LUMPUR (Reuters) - The chairman of Felda Global Ventures Holdings Bhd (FGV) (FGVH.KL) stepped down on Monday - a move Malaysia's government said would preserve the integrity of investigations into the firm's CEO and other executives that he had initiated.
FGV, the world's third-largest palm plantation group, has plunged into turmoil after Chairman Mohamad Isa Abdul Samad asked Chief Executive Zakaria Arshad to quit.
Zakaria refused to leave but he and three other executives were later suspended by FGV's board as it investigates transactions at its Delima Oil Products subsidiary.
The crisis at FGV - whose biggest shareholder is the state-owned Federal Land Development Authority (Felda) - could hurt Prime Minister Najib Razak, who government sources say is expected to call elections later this year.
FGV's shareholders, many of them small landowners, form a key vote bank for Najib's ruling alliance in battleground states and some smallholder groups have expressed concerns about the management battle and called for the chairman to step down.
CEO Zakaria has denied wrongdoing and also called on the country's anti-graft body to conduct its own investigation into FGV.
In addition to FGV's own internal probe and the investigation by the Malaysian Anti-Corruption Commission (MACC), the government has also appointed a former cabinet minister to look into the suspensions.
The Prime Minister's office said that based on the former cabinet minister's findings, it had decided to transfer Isa to a government agency.
He will be replaced by Sulaiman Mahbob, who will be acting chairman effective immediately. Sulaiman has previously served on the boards of state energy firm Petroliam Nasional Berhad [PETR.UL] and Felda.
The statement from the prime minister's office also said the decline in the financial performance of FGV and Felda warranted a comprehensive business review and noted that a review had started late last year.
Shares of FGV were last up 3.4 percent at 1.82 ringgit per share on Monday.
Reporting by Emily Chow, A. Ananthalakshmi; Editing by Edwina Gibbs