The FashionValet Controversy Explained: From Successful Launch To Criminal Breach Of Trust

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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!

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%.

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.

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.

In a now-deleted 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.

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.

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.

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.

According to MACC chief commissioner Tan Sri Azam Baki, the anti-graft body had already recorded statements from four key individuals connected to Khazanah, PNB, and the Finance Ministry.

Vivy and Fadzarudin's session centred on their role in managing the company during the period when the losses were recorded. The investigation also examined potential violations under Section 18 of the MACC Act 2009, which pertains to false or misleading financial claims.

In addition to the seizure of goods, MACC also froze both the couple's personal and company bank accounts.

On the day the raid took place, Vivy and Fadza arrived at the MACC headquarters at 1pm to provide their statements. MACC officers later escorted them to their residence at around 5.30pm.

The raid, led by a team of 12 MACC officers and accompanied by the couple's legal counsel, reportedly lasted for over two hours, concluding at approximately 8pm that day.

Vivy and Fadza would go on to give their statements to MACC for six days, as reported by The Star.

The couple is accused of conspiring to commit CBT involving funds entrusted to them by government-linked companies, Khazanah Nasional Berhad and Permodalan Nasional Berhad (PNB).

They allegedly transferred RM8 million from FashionValet's bank account to 30 Maple Sdn Bhd without the approval of FashionValet's board of directors.

30 Maple, which operates the luxury headscarf brand dUCK, is also owned by the couple.

The alleged offence occurred at the Public Bank Berhad branch in Bukit Damansara on 21 August 2018.

Vivy and Fadza have pleaded not guilty to the charges.

The court granted bail at RM100,000 and required the couple to report to the Kuala Lumpur MACC office monthly.

The judge also ordered the couple to surrender their passports to the court and warned them not to harass or influence any witnesses related to the case.

The case is set for mention on 22 January 2025.