BNM reviews controversial RM2b land purchase

Officers involved in the deal opt to take a leave of absence pending the probe


The central bank has embarked on an internal probe over the controversial RM2 billion land purchased from the government, of which the proceeds were linked to debt settlements of the troubled 1Malaysia Development Fund (1MDB).

The 22.58ha land, which was purchased by Bank Negara Malaysia (BNM) from the Ministry of Finance (MoF) for about RM2 billion, had stirred public scrutiny as the deal was concluded when the former Barisan Nasional government had to seek funds to pay 1MDB’s debt.

BNM, in a statement yesterday, said it had in August 2018 commissioned a review by an independent party in relation to the purchase of the land known as Lot 41, which is contiguous to BNM’s Sasana Kijang complex.

“The review is still ongoing. To facilitate the internal review, relevant officers of BNM have opted to take a leave of absence,” said the central bank.

It is believed that the officers entrusted to conclude the land deal are senior officers or at the assistant governor level.

A source within the government told The Malaysian Reserve that there were transparency issues over the RM2 billion land deal.

The source also did not dismiss the possibility that the land could eventually be sold as part of the Pakatan Harapan government’s non-strategic assets unbundling to raise funds and plug the gaping financial hole faced by Putrajaya.

The sale of the land, said the source, would make sense if BNM does not have a real need for the asset.

BNM paid RM823 per sq ft for the land, which some valuers claimed to be high considering that the central bank is part of the government. Like other state-owned entities (SOEs), BNM contributes to the government in the form of dividends.

The internal study over the land deal would wipe the slate clean and end the controversy faced by the central bank.

Controversial SOEs like the Federal Land Development Authority, Felcra Bhd, Majlis Amanah Rakyat and Lembaga Tabung Haji are also conducting their own internal study as the new government pushes for greater accountability and transparency.

The land deal was concluded under the previous governor Tan Sri Muhammad Ibrahim. Muhammad had maintained that the deal was conducted as an “arms-length” transaction and that the fair value was determined by an independent private sector valuer.

He said the land purchase was not the first of such transactions undertaken by BNM, and that the central bank did not know nor had any control over the proceeds from the land purchase.

Muhammad volunteered to resign due to controversies surrounding the land deal in order to protect the central bank’s image and reputation. The government had accepted his resignation and appointed former BNM deputy governor Datuk Nor Shamsiah Mohd Yunus to take the helm.

Nor Shamsiah is seen as the right figure to return the central bank to its original mission as a financial regulator.

Meanwhile, Prime Minister (PM) Tun Dr Mahathir Mohamad said “obviously somebody in BNM knows” about the land transaction.

“I only know that the land was sold to BNM. What happens after that, I don’t know. Where the money goes, I don’t know.

“But obviously somebody in BNM knows about it,” he said at the launch of the National Policy on Industry 4.0 in Kuala Lumpur yesterday.

The new government is already challenging the US$5.78 billion (RM24.17 billion) consent award related to 1MDB’s debt settlement claims involving International Petroleum Investment Co and Aabar Investments PJS.

Former PM and Finance Minister Datuk Seri Mohd Najib Razak and former Treasury secretary general Tan Sri Dr Mohd Irwan Serigar Abdullah have been charged of misappropriating government funds totalling RM6.6 billion in relation to paying 1MDB debts. Both pleaded not guilty to the charges.