Posts Tagged ‘Felda scandal

12
Apr
19

Felda White Paper: 8 questionable deals

The 8 dodgy deals that put Felda in dire straits

WHITE PAPER | The government today tabled a White Paper on the sustainability of Felda in the Dewan Rakyat which, among others, detailed several questionable deals that have pushed the organisation’s finances to a critical state as it struggles to pay settlers.

Starting out as an entity to help poverty-stricken bumiputera through plantation schemes, Felda, under the stewardship of former Umno vice president Mohd Isa Abdul Samad, went on a global splurging spree through its investment arm Felda Investment Corporation Sdn Bhd (FIC).

Here are a list of those questionable deals and a summary of what went wrong, according to the White Paper. They are based on a forensic audit by the firm Ernst & Young.

1. Grand Plaza Kensington: FIC paid RM75m, got RM20,500 worth in return

Park City Grand Plaza Kensington is a hotel located in central London, which FIC claimed it purchased for 60 million pounds (RM321 million) in 2014.

In reality, the hotel was purchased for 46 million pounds (RM246 million) and the remaining 14 million pounds (RM75 million) was for the benefit of certain individuals through a structure designed to make it appear as though FIC paid 60 million pounds for the hotel.

For starters, no agreement existed between the seller of Park City Grand Plaza Kensington and FIC.

Instead, a Malaysian-owned British Virgin Islands (BVI) company, referred to as “Company I” in the White Paper, purchased the hotel for 46 million pounds on Sept 12, 2014.

Subsequently, this unnamed Malaysian then transferred the shares of Company I worth US$5,000 (RM20,500) to two FIC directors at the time for 14 million pounds on Oct 13, 2014.

The ownership of the Park City Grand Plaza Kensington (purchased for 46 million pounds) and Company I shares worth US$5,000 (purchased for 14 million pounds) was only transferred to FIC in 2015, after its name was changed to FIC London Hotel (Private Limited).

This was despite FIC claiming in its financial statement that those assets were already in its possession since 2014.

“FIC suffered 14 million pounds losses from buying Company I shares which were in the name of two former (then) FIC directors without the FIC board’s approval for 14 million pounds, even though it was only worth US$5,000.

“Following the questionable purchase, FIC has lodged a report with the MACC for further investigation,” it said.

Furthermore, a 2015 valuation found that the value of the Park City Grand Plaza Kensington had slid to 26 million pounds (RM139 million).

The purchase was never tabled for approval by the main Felda board. It was only informed by FIC three months later.

2. Grand Plaza Service Apartments – RM76.5m goes missing

FIC, through FIC UK Properties Sdn Bhd (FUPSB), purchased the four-star Grand Plaza Serviced Apartments from one “Company D” and its sister operator “Company E” for 98 million pounds (RM524 million) on July 31, 2013.

However, upon checking Company D’s financial reports, which also included details of Company E, it was discovered the two companies only received 83.7 million pounds (RM448 million).

“This means that the difference of 14.3 million pounds from the transaction cannot be traced,” said the White Paper.

Since then, the Grand Plaza Serviced Apartments’ performance had deteriorated, causing FUPSB to maintain its operations at a loss.

It also meant that FUPSB was unable to repay the loan it got from Felda as an advance for purchasing the real estate. FUPSB was later forced to take out a 48 million pounds (RM257 million) loan from a financial institution to repay Felda.

To date, Felda foots RM19.82 million in losses a year to operate the Grand Plaza Serviced Apartments.

3. Eagle High – No guarantee of recovering RM2.07b

In December 2015, the Felda board approved the purchase of “exchangeable bonds” that later became a 37 percent stake in Indonesia’s Eagle High Plantations Tbk (EHP) for US$505.4 million (RM2.07 billion). The sales and purchase agreement was signed on Dec 23, 2016.

The purchase was made through FIC Properties Sdn Bhd (FPSB) from a “Company A1” as referred by the White Paper.

It noted that the Finance Ministry, at the time led by former prime minister Najib Abdul Razak, was also involved in the deal by providing “strategic advice and suggestions on investment structure”.

The purchase price of US$505.4 million meant Felda was buying the EHP stake at US$0.043 per share, even though they were worth US$0.0098 on the open market at the time the board first gave its approval.

In other words, the shares had an open market value of just US$115.2 million (RM472 million).

“This meant that Felda agreed to buy the EHP share at 344.12 percent higher than the shares’ market price at the time,” said the White Paper.

Furthermore, it said all of EHP’s shares had been used by Company A1 as collateral for loans from Credit Suisse.

It added that Bank Negara Malaysia had also raised questions about the deal.

“Despite knowing the risks involved, the Felda board of directors approved the investment without additional due diligence and without justification in the meeting minutes over the rationale of the decision,” it said.

However, the deal also included an option that would allow Felda to recoup the full US$505.4 million, on top of a return of six percent per annum.

Najib had used this as a defence against critics of the deal, uploading the White Paper’s acknowledgement of the put option on Facebook, which he highlighted in red.

Ironically, in the paragraph immediate after, the White Paper said there was no evidence that Felda had carried out a credit risk evaluation of Company A1 to ensure that it is capable of repaying in the event Felda exercised the put option.

The White Paper also noted that Felda received a corporate guarantee of US$371 million from a “Company A2” on the purchase the EHP shares, but again, it did not conduct a credit evaluation.

It said a forensic audit found Company A2 to be only worth US$343.8 million, despite the US$371 million guarantee.

4. Vertical City: Felda risks RM1.5b in losses

The Kuala Lumpur Vertical City (KLVC) is a proposed integrated development on Felda’s 20-acre land along Jalan Semarak, Kuala Lumpur.

FIC entered into an agreement with what the White Paper called “Company F” for this development.

In 2017, it was widely reported that Company F, after receiving power of attorney, proceeded to sell Felda’s land to itself and another “Company G” between Dec 2, 2015 and Nov 7, 2016 without Felda’s knowledge.

The White Paper provided further insight into the scandal, stating that the FIC management had knowledge of the matter since July 2016, but did not take any action. The Felda board only discovered the matter eight months after the transaction.

Representing Felda without its knowledge of the sale, Company F priced the land at RM270 million even though it was valued at RM618 million.

Furthermore, it asked for 10 percent of the RM270 million sale price to be paid to Felda, while the remaining 90 percent would be pocketed by Company F.

The sales and purchase agreements, organised by Company F, claimed Felda had no intention to appoint its own lawyers.

Apart from the land controversy, Felda had also agreed to rent 700,000 square feet of office space for 20 years in the development by Company F, even though its needs can only fill up 3.6 percent of the space.

“The lease agreement caused FIC to be exposed to the risk of suffering losses in rental income of at least RM1.5 billion over 20 years,” it said.

…more
Eight dodgy Felda deals under the microscope
10 April 2019 – Malaysiakini

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05
Feb
18

Why is Felda still in business with company in shady land deal, ask settlers

Why is Felda still in business with company in shady land deal, ask settlers

WHY is Felda still doing business with a company that was involved in suspicious dealings that nearly resulted in the land reform authority losing ownership of prime land in Jalan Semarak, Kuala Lumpur?

This was the question posed by Felda settlers’ group, Anak, as
allegations surfaced that the agency will lose ownership of the land despite a settlement last week.

Anak, a group of second generation Felda settlers, said the agency must explain why it was going ahead with a mega project with the same company that allegedly gained ownership of the land via a shady deal.

Anak president Mazlan Aliman said Felda itself had claimed that there were elements of fraud in the 2015 land transfer deal involving former Felda officials and Synergy Promenade Sdn Bhd (SPSB).

“The company has been accused by Felda of being involved in fraud,” Mazlan told The Malaysian Insight.

“But the company is allowed to continue with the KLVC (Kuala Lumpur Vertical City) project. A project which (Felda chairman) Shahrir Samad himself opposed.

“So when Felda said that the issue had been settled and it had regained ownership of the land, it caused confusion and was the butt of jokes,” Mazlan said.

Felda lodged police reports last December alleging that the ownership of 16 plots of land in Jalan Semarak, Kuala Lumpur, worth RM270 million, had been transferred in a suspicious transaction in 2015.

The transfer, for which Felda did not receive a single sen, was made to SPSB, the appointed developer of KLVC.

…more
Why is Felda still in business with company in shady land deal, ask settlers
24 Jan 2018 – TMI

04
Feb
18

The unanswered questions behind Felda’s Jalan Semarak deal

The unanswered questions behind Felda’s Jalan Semarak deal

IN a surprise move last week, the company at the centre of Felda’s latest scandal volunteered to hand over plots of land it received in a suspicious deal two years ago.

But instead of bringing the issue to a close, this sparked more burning questions from Felda’s critics, such as Pandan MP Rafizi Ramli and Anak, a group representing Felda settlers.

Ownership of the 16 plots of land, worth RM270 million, was transferred to Synergy Promenade Sdn Bhd (SPSB). The firm was appointed by Felda to build the Kuala Lumpur Vertical City (KLVC) project on the lots in Jalan Semarak.

The transaction was considered dubious by legal experts as normally, a developer is only hired to build the project while ownership remains with the original owner.

Felda did not receive a single sen in the land transfer.

Following a flurry of police reports and assurances of an investigation from the government, SPSB said last week it would return ownership of the land to Felda at no cost.

Arguably, the biggest question still is:

* Are heads going to roll over the transfer?

This is because, as Felda chairman Shahrir Samad said, the transfer was known and approved by members of Felda’s board and officers in subsidiary Felda Investment Corporation (FIC).

But critics have also said senior government officials would have known about the transfer given that Felda is such an important agency and the land concerned was government-owned.

From the offset, Shahrir said there were elements of fraud in the deal and lodged a police report over it.

To date, police have questioned several individuals, including Mohd Isa Samad, the Felda chairman at the time of the deal.

* Who are Abd Rahman Soltan and Noraini Soltan?

Rafizi said these two are the registered as owners of SPSB, according to the firm’s 2015 financial statements filed with the Companies Commission in October 2017.

Each had shares amounting to RM7.5 million respectively in the company as of December 2015.

According to its financial statements, the little-known company’s assets included a luxury car worth about RM615,000, computers (RM9,000) and office equipment (RM13,000), Rafizi said.

The statements also revealed that both directors had about RM100 million in the Pilgrim Fund’s Board (Tabung Haji) and a bank.

* How did SPSB, a little known developer, manage to get ownership of the land in the first place? How did it land the plum KLVC project?

Rafizi alleged that SPSB’s records show that the company did not register any land as its assets. But what it does have is RM100 million in cash in Tabung Haji and the bank.

He asked whether the directors transferred ownership of the Jalan Semarak land to themselves and used it as collateral to get a RM100 million bank loan.

* Why is Felda still in business with SPSB?

Shahrir said the KLVC project will continue even with the police probe hanging over the entire issue. He said the terms of the project would be renegotiated.

Under the current agreement, Felda would get a minimum guaranteed return of RM500 million or 10% of the project’s gross development value, whichever is higher.

But Anak president Mazlan Aliman asked why Felda is still in business with SPSB.

The firm allegedly misused the power of attorney given to it – when it was appointed as KLVC’s developer – to transfer ownership of the land to itself.

According to Mazlan, even if SPSB decided to return ownership of the land, why would Felda want to continue dealing with such a company.

…more
The unanswered questions behind Felda’s Jalan Semarak deal
25 Jan 2018 – TMI

20
Jan
18

2017 in review for Felda – a need for change

2017 in review for Felda – a need for change

LETTER | Transparency International Malaysia (TI-M) is concerned with the ongoing and seemingly endless saga of malpractice, corruption and breach of trust and duty cases lately affecting Felda – the last case reported being the questionable Felda “Semarak” land transfer deal.

In fact, the year 2017 can be perhaps be named as the “Felda Year” for the series of news of happenings which has caught the attention of us average Malaysians.

It appears that it is not only Felda investors (including the hardworking settlers and planters) and the public who are not happy with these cases – discontent seems to be seen from even within the Umno and BN circles.

It is believed that besides Khazanah and Permodalan Nasional Berhad (PNB) groups of companies, the government-linked company (GLC) sector is the biggest source of threat to financial stability due to their being closely linked to political parties, and fraught with lack of good governance and transparency. There are also allegations and suspicion of widespread favouritism, cronyism and corruption in such corporate entities.

Lately, Felda Global Ventures Holdings Bhd (FGV) has taken drastic action by appointing professional subject matter experts to strengthen the composition of the FGV board and senior management.

But to actually make a change, there must be true and fearless intent to make sincerity and integrity an integral part of the corporate culture by setting the “tone at the top”.

To recap the sad narrative – the year 2017 started with the hopeful appointment of a new chairperson. The appointment was supposedly in line with the government’s desire to strengthen and solidify Felda’s leadership. Such noble intentions were very quickly called into question.

In April, Felda Investment Corporation Properties Sdn Bhd (FICP), a special purpose vehicle of Felda, acquired 37 percent of loss-making PT Eagle High Plantation Tbk. Settlers, analysts and investors showed their disapproval towards this acquisition done at a very high premium with a price that lacked financial and commercial justification.

A few months later, Felda’s current chairperson said Felda was merely an “intermediary” for the Malaysian government in the acquisition. Is this how Felda is to be viewed – an intermediary of the government?

Subsequently in June 2017, there was a management crisis at FGV where the MACC investigated several company officials for alleged corruption and abuse of power. The prime minister’s office also got involved, asking a former cabinet minister to look into the suspension of FGV’s top executives.

Its CEO denied wrongdoing and refused to step down as instructed by the then chairperson.

Shortly afterwards, FGV announced the resignation of the chairperson Mohd Isa Samad from the company and its subsidiaries and later was appointed the acting Land Public Transport Commission (Spad) chairperson. His appointment has continued to raise eyebrows amongst the public, bearing in mind his questionable “track record” in Felda.

In August, MACC arrested the said former FGV chairperson in a corruption investigation into FICP’s purchases of two hotels in London and Kuching between 2013 and 2015, said to be above their market value. Until today there has been no decision made yet on this case.

Later in Dec 2017, to cap the end of an eventful year for Felda, it was reported that there was a transfer of title for Felda’s 16-hectare land (the old Felda headquarters, Anjung Felda and Wisma Felda) at Jalan Semarak in Kuala Lumpur for which Felda did not receive a single sen.

The present Felda chairperson was reported to have described the matter as a “dubious deal” and discovered it in Jan 2016. On Dec 23, 2017, the prime minister vowed action to be taken against any negligence or misconduct in the land ownership transfer.

Due to the seriousness of the scandal, the prime minister should impose a deadline on the police and the Attorney-General’s Chambers to complete investigations on this “dubious deal” which has taken such a long time to surface. They must take action without fear and favour.

To be sure the rakyat are watching and will judge to see whether all these current cases will be allowed to proceed with due legal process, or whether they will take a sudden turn and end up like other lost cases which were announced with much fanfare, only to end with a whimper. If this happens, the rakyat will surely suspect a “cover-up” and abuse of legal process and failure of the rule of law.

…more
2017 in review for Felda – a need for change
4 Jan 2017 – malaysiakini

19
Jan
18

Turkey Of The Year: Why did FELDA buy 37% of Eagle High?

Turkey Of The Year: Why did FELDA buy 37% of Eagle High?

IT came as a surprise when the Federal Land Development Authority (FELDA) was reported to be in talks to acquire a 37% stake in PT Eagle High Plantations Tbk from Tan Sri Peter Sondakh’s Rajawali group. The deal was concluded for US$505.4 million or RM2.26 billion in April.

While FELDA attempted to justify the purchase — among other things, saying it got a 30% discount from Rajawali — most market watchers, analysts and industry players questioned the merits of the deal.

After all, FELDA’s 33% unit Felda Global Ventures Holdings Bhd (FGV) had scrapped plans to buy the same block of shares upon the advice of two separate advisers, Bank of America and JP Morgan, for a variety of reasons. So why buy an asset its own unit had walked away from?

Apart from that, Peter Sondakh is known to be well connected in Malaysia, giving rise to talk that the deal may have been politically motivated.

To recap, in June 2015, FGV signed a heads of agreement with Rajawali to acquire a 37% block in Eagle High for US$680 million in a mix of cash and shares.

In 2015, the average crude palm oil (CPO) was RM2,258 per tonne, compared to RM2,670 so far this year — which indicates the offer to FGV would have been overpriced if a 30% discount was given after a rise in the CPO price.

The fact that it was FELDA Investment Corp (FIC) Properties Sdn Bhd — originally mandated to acquire non-plantation assets — that acquired the shares also raised eyebrows. Most would think FGV would be the natural choice to invest in plantation and agriculture-related assets.

So, did FIC Properties step in because FGV was advised against buying Eagle High?

The US$505.4 million for the 37% stake works out to IDR580 a share — a whopping 95% premium to Eagle High’s closing price at the time. With Eagle High now trading below IDR180, it means FELDA is sitting on a paper loss in excess of US$326 million.

Now, eight months after the acquisition, Eagle High’s market capitalisation is just below US$420 million, which means FELDA’s 37% is valued at just US$155.4 million — less than one-third what it paid.

Attempts by FELDA chairman Tan Sri Shahrir Samad to suggest that FELDA was an intermediary for the Malaysian government did not come across as a strong justification for the acqusition.

“We are representing the government of Malaysia on two levels — the management and board of directors of Eagle High,” he said in August.

FELDA officials also explained that the acquisition was made with government funding, which raised the question as to whether the agency would have been able to obtain the funding on its own.

But what is not clear is why this acquisition is so important that FELDA had to pay more than RM2 billion for it via a loan from the government?

…more
Turkey Of The Year: Why did FELDA buy 37% of Eagle High?
January 01, 2018 – theedgemarkets.com

12
Jan
18

Clear signs of fraud in Felda land deal

Clear signs of fraud in Felda land deal

THERE are clear signs of fraud in Felda’s Jalan Semarak land deal, said a top property lawyer, as investigations intensify into how the beleaguered agency lost ownership of a prime piece of land in the heart of Kuala Lumpur.

Malaysian property lawyers (HartaGuam) deputy president Salkukhairi Abd Shukor said this was because the developer of the four parcels of land had abused the power of attorney granted to it by Felda.

The developer, appointed by Felda subsidiary Felda Investment Corporation (FIC), transferred ownership of the land to Synergy Promenade Sdn Bhd in which it had an interest.

The transfer of ownership did not have to occur as the developer had only been appointed by Felda to build Kuala Lumpur Vertical City (KLVC), said Salkukhairi.

KLVC is being built on land that houses Felda’s old headquarters and two of its buildings, Anjung Felda and Wisma Felda. Once completed, the project is supposed to include the agency’s iconic tower, known as KLVC Tower1A.

Another sign of fraud was the claim that no money changed hands during the alleged transfer, he said.

“According to Felda chairman (Shahrir Samad), Felda has up to this point not received a sen from the transfer.

“How could a land owner transfer ownership without any value consideration? That’s where I believe the fraud is,” Salkukhairi told The Malaysian Insight.

It has been reported that the land, which totals 66,000 sq m in central Kuala Lumpur, was worth RM270 million when its ownership was transferred.

However, Shahrir reportedly said Felda did not gain a sen from the transaction which occurred in December 2015.

The decision to appoint KLVC’s developer and to give it power of attorney was done by FIC in June 2014.

However, FIC only informed the Felda board of the decision three months later and asked for retrospective approval.

Police have opened investigations into the allegations and plan to haul up former Felda chairman Mohd Isa Samad for questioning.

Isa was both Felda and FIC chairman while the deal took place.

…more
Clear signs of fraud in Felda land deal
28 Dec 2017 – TMI

10
Jan
18

Company in Felda land transfer scandal is interior design company

Shadow cast over ID company in Felda land transfer

KUALA LUMPUR, Dec 27— Questions are being raised about the development experience of local company Synergy Promenade Sdn Bhd, reported to have taken over ownership of the Jalan Semarak land here from the Federal Land Development Authority (Felda).

Malay daily Berita Harian cited an unnamed source claiming that Synergy Promenade is an interior design company with experience in handling some interior projects in Menara Felda and Istana Negara, but none in managing development projects.

“There is no reason for the land to be transferred to Synergy Promenade. Granted the full power of attorney (PA), the company already has enough power to do the development works on behalf of Felda.

“Synergy Promenade holds the PA only as an agent while Felda is the principal so that it could get the development order (DO). So, why would the land need to be transferred to the company?” the source was quoted saying.

According to the source, Synergy Promenade should have only imposed a third-party charge on the land as it had already acquired the DO as well as a lease agreement with Felda Investment Corp (FIC) for a large section of the tower that was to be built.

The source said the third party charge can be collected from the project itself and not from the land, as the company is responsible to fund the project.

The source claimed that in order for banks to approve loans to the company or the project, Synergy Promenade should have a credit worthiness and value to the bank.

Berita Harian also reported that Synergy Promenade was registered on June 15, 2006, and recorded its activities as property developer and construction contractor, general contractor, and general business.

The newspaper added that its checks showed no project developments had been carried out by Synergy Promenade.

…more
Shadow cast over ID company in Felda land transfer
December 27, 2017 – MMO




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All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?

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