FashionValet Controversy Explained: Vivy Yusof's Resignation, Khazanah & PNB's Involvement
From millions of ringgit in losses, to selling pre-loved luxury handbags, here's everything you might have missed.
By Laila Zain — 05 Nov 2024, 02:33 PM
Founded in 2010 by Vivy Yusof and her husband, Fadzarudin Anuar, FashionValet started as one of the first Malaysian e-commerce platforms to focus on modest fashion and local designers
Over the years, it became a key player in the regional fashion industry. The company's growth was further bolstered in 2018, when it secured RM27 million from Khazanah Nasional and RM20 million from Permodalan Nasional Berhad (PNB) in a follow-up round of funding.
These investments were part of a plan to fuel FashionValet's expansion into new markets, helping it compete in the growing e-commerce space in Southeast Asia.
Recently, news of huge financial losses for FashionValet, followed by Vivy and Fadza's resignation, as well as questions surrounding Khazanah and PNB's role, have sparked nationwide controversy.
Confused about the issue? Let's break it down in simple terms!
Khazanah and PNB are two big government-linked investment companies (GLICs) that put a total of RM47 million into FashionValet to buy small ownership stakes six years ago
By the end of 2023, both GLICs divested their stakes. This means they sold their shares and no longer owned a part of FashionValet.
On 28 October 2024, Puchong MP Yeo Bee Yin raised questions about the losses incurred by FashionValet in parliament. She sought detailed information regarding the investment transactions involving Khazanah and PNB after reports surfaced about their significant losses from the sale of their stakes in the e-commerce platform.
In a written response, the Finance Ministry replied that Khazanah and PNB had received RM3.1 million from the sale of shares in FashionValet.
That is a loss of around RM44 million or approximately 93.4%.
Despite the losses, the Finance Ministry stated that the figure is negligible compared to the GLICs overall income for that year
Following Khazanah and PNB's exit, FashionValet underwent a significant change in ownership when NXBT Partners acquired a majority stake in the company in January 2024.
NXBT Partners is an investment holding company controlled by Afzal Abdul Rahim, the CEO of TIME dotCom Bhd, as reported by FMT.
Last week, Prime Minister Datuk Seri Anwar Ibrahim ordered Khazanah to carry out an internal audit regarding its FashionValet investment due to the heavy losses of public funds
Additionally, Communications Minister Fahmi Fadzil publicly called for Khazanah and PNB to address these losses, emphasising the need for transparency.
"Since public money is involved, naturally people are asking questions. We are also starting to see content revealing what may have been going on... in the public interest, I believe they should issue a statement," Fahmi said, as quoted by Channel News Asia.
On 1 November, Vivy and Fadza announced their resignation following public criticism over the company's significant financial losses
In a follow up Instagram post, Vivy explained the circumstances that led to the couple's decision to step away from the business and relinquish their positions.
Taking responsibility for FashionValet's heavy losses, the couple shared that they made the mistake of expanding the business too aggressively by adding too many retail stores, scaling the team, and investing in their own technology stack.
Without a contingency plan, once the pandemic hit in 2020, the couple found themselves exposed and had to shut down their e-commerce platform in a bid to conserve finances. Instead, they focused on growing their in-house brands, Lilit and dUCK.
The couple go on to apologise to their key investors, Khazanah and PNB, especially for the controversy that has erupted since.
However, the couple's apology has been met with distrust and suspicion from the public, further fueling discontent towards Khazanah and PNB
In the midst of the controversy, Vivy posted on her personal Instagram page that she was selling her luxury handbags
Vivy shared photos of dozens of luxury handbags in her personal collection. In a note, she wrote that after 20 years of purchasing bags with her "hard earned money", she was selling most of them, with part of the proceeds going to Palestinian causes.
Both the original Instagram post and the dedicated Instagram account to sell the bags, @vivy_preloved, have since been deleted.
Usually, it wouldn't be a big deal for a celebrity or influencer to sell pre-loved luxury items. However, given the current situation, many commenters were shocked to see how vast and expensive Vivy's collection was.
Commenters were split in their opinions of Vivy's decision to sell her bags.
Some argued that her personal items should not be conflated with the financial troubles of FashionValet, and that she meant well as she intended to donate the proceeds to charity.
Conversely, others expressed their frustration, pointing out the stark contrast between her affluent lifestyle and the millions in losses recorded by FashionValet. Many questioned how Vivy was able to afford such a lavish collection while her company consistently posted losses.
This further led to demanding accountability for the substantial funds invested by Khazanah and PNB, asking where the money went and why an entrepreneur like Vivy appears to be financially insulated from the company's struggles.
Former Damansara MP Tony Pua has come to the defence of Khazanah, arguing that such setbacks are common in the venture capital sector
Pua cautioned against the harsh criticism directed at Khazanah, suggesting that it may discourage future business risk-taking and ultimately hinder Malaysia's potential to nurture successful startups.
While acknowledging the losses associated with FashionValet, Pua insisted that critics have yet to provide substantial evidence of wrongdoing or mismanagement within the company. He expressed concern that the ongoing scrutiny of Khazanah and its founders could create a negative effect, prompting emerging businesses to relocate outside of Malaysia.
"Does it mean that there's no wrongdoing or mismanagement in Fashion Valet? We don't know, perhaps there may be. But those who have criticised so far haven't raised any evidence of such. Everyone is just regurgitating the 90%+ losses in the investment," Pua said on his Facebook page.
Meanwhile, the Malaysian Anti-Corruption Commission (MACC) has confiscated several financial documents from the Finance Ministry, Khazanah, and FashionValet Sdn Bhd in a raid on 4 November
According to FMT, MACC announced that the agency opened an investigation under Section 18 of the MACC Act 2009, which pertains to the submission of false claims and carries severe penalties upon conviction.
The investigation began following the agency's searches of multiple locations linked to FashionValet, including its headquarters in Bangsar.
The confiscated documents will be reviewed as part of the anti-graft agency's investigation into the RM43.9 million loss in Khazanah and PNB's investment.
