FameleeMart Bhd is a medium sized retailer of imported groceries with 100 outlets opened throughout Malaysia. As a publicly listed company on the Bursa, it has implemented a growth strategy based on the constant acquisition of a number of smaller companies within the same industry. The shareholders have no qualms and are pleased with the growth trend of FameleeMart , but a significant slowdown in sales has resulted in falling of operating profits, dividends and, as a result, its share price. FameleeMart had been founded by Roland Lex, a famous entrepreneur, who has assured the shareholders that his vast experience in this industry will see the company through bad times. He takes charge of the company, acting as both Chairman and Chief Executive in the Board of Directors. His style of management is dominant and his decisions are rarely challenged at board level. He does not see the need for any independent non-executive directors to be on the board. Shareholders were already asking questions on his lavish and often controversial lifestyle, which is often made public by the press. Due to the downturn in the company's operating profit, some of his investing decisions have been scrutinised by the investors and regulators and there are, speculations that FameleeMart's share price had been maintained through premature disclosure of proposed acquisitions and evidence of insider trading. Roland had gained a personal fortune through the acquisitions, which had, on occasion, been questioned at the Shareholders' Annual General Meeting. His dominant style of doing things, have been perceived by the sharcholders as arrogance as he continue to ignore their questions. Recently, it has been highlighted in the financial press that the external auditors appointed by FameleeMart, some 15 years ago, were also providing business consultancy services on his acquisition strategy and on strategy used to finance the deals. This has raised concern among the regulators and the shareholders. Required (a) Explain the nature of the agency problem that exists in FameleeMart.