FashionValet scandal: Everything we need to know

SHAH ALAM - FashionValet, a pioneer in Malaysia's e-commerce industry, has recently been embroiled in controversy.

Founded in 2013 by Datuk Fadzaruddin Shah Anuar and Datin Vivy Yusof, FashionValet initially gained recognition for its curated selection of local and international brands.

However, it soon faced significant financial struggles and controversies.

The recent developments around FashionValet, Khazanah Nasional Bhd, and Permodalan Nasional Bhd (PNB) have shed new light on the company’s trajectory.

Nov 5

FashionValet founders Vivy and Fadzaruddin were called to the Malaysian Anti-Corruption Commission (MACC) office to provide statements concerning significant investment losses involving public funds in FashionValet.

MACC Chief Commissioner Tan Sri Azam Baki confirmed their involvement among six individuals questioned following MACC raids on four locations, including the Finance Ministry (MoF), Khazanah, and PNB, linked to the RM43.9 million loss. The investigation proceeded under Section 18 of the MACC Act.

FashionValet faced financial difficulties, posting losses for five consecutive years before Khazanah and PNB invested in the company in 2018.

FashionValet's losses reportedly grew from RM166,793 in 2012 to RM10.7 million in 2017, reaching RM20.19 million in 2018.

Khazanah invested RM27 million for a 9 per cent stake, and PNB invested RM20 million to support the Bumiputera-owned e-commerce platform as a promising digital retail venture.

In a recent move, Khazanah and PNB sold their stakes to NXBT Partners Sdn Bhd, owned by TIME dotcom CEO Afzal Abdul Rahim, to ensure continued support for FashionValet.

As of Sept 30, NXBT held a 51 per cent stake, with Fadzaruddin and Vivy owning 17.7 per cent and 17 per cent respectively.

FashionValet's last financial report showed a net loss of RM34.5 million on revenue of RM112.8 million for 2022.

Nov 4

The anti-graft busters conducted raids at four locations, including FashionValet’s office, as part of its investigation into reported investment losses by Khazanah and PNB in the company.

A TikTok video posted by MACC showed officers conducting the raids to gather further details about the RM43.9 million public fund losses tied to FashionValet.

The investigation under Section 18 of the MACC Act 2009 highlighted public interest.

However, the specific locations of the raids were not disclosed.

Nov 2

Prime Minister Datuk Seri Anwar Ibrahim directed Khazanah to conduct an internal audit on its RM43.9 million investment loss in FashionValet.

As Khazanah’s Chairman, Anwar emphasised that this action aligned with his earlier announcement for the National Audit Department to audit 2,000 government-linked companies (GLCs) to enhance governance and accountability.

Anwar stressed for the need for an impartial investigation that applies equally to government and private companies.

To this, Azam confirmed that the investigation would be fair and professional, urging the public to refrain from speculations.

Nov 1

Vivy and Fadzaruddin announced their intention to resign, citing the need to support the company’s ongoing turnaround efforts.

They accepted responsibility for FashionValet’s recent challenges, attributing setbacks to overly ambitious expansion plans that failed to adapt to market changes.

The duo also expressed regret over the controversy surrounding Khazanah and PNB, who had invested RM47 million in the company in 2018.

In a statement posted on Instagram, they reflected on lessons learned from their expansion and expressed remorse for the impact on state-owned investors.

Addressing critics over their lifestyle, Vivy and Fadzaruddin clarified that they had attempted to project confidence to bolster the brand.

The couple apologised for the controversy, stating that Khazanah and PNB had always acted professionally and in their organisations' best interests.

They encouraged continued support for other local entrepreneurs.

Oct 31

Government spokesperson Fahmi Fadzil urged Khazanah, PNB, and FashionValet to clarify their investment losses, responding to public concerns amplified by social media content.

He encouraged allowing time for a fair response from all parties involved.

Oct 30

After the news went viral, Vivy responded to netizens’ demands for clarification on investment losses through an Instagram post.

She promised to address the issue "in due time" and cautioned against spreading false accusations.

Vivy shared a photo of herself receiving medical treatment, promising further health updates soon.

Oct 29

Khazanah and PNB exited their investment in FashionValet, selling their shares for RM3.1 million to NXBT Partners, a Bumiputera investment holding firm.

Both entities had initially invested RM47 million in 2018, aiming to support Malaysia’s digital retail sector and local entrepreneurship.

The MoF issued a statement clarifying that the exit, though a responsible move, resulted in minimal losses relative to Khazanah’s and PNB’s annual revenue.

The Covid-19 pandemic's impact had hindered FashionValet’s ability to raise new capital, influencing Khazanah’s decision to divest.

The coming weeks are anticipated to be crucial for determining FashionValet's future, as well as that of its founders and the ongoing investigations.