Govt to the rescue again, for ‘crimes’ at Felda

By ALIFAH ZAINUDDIN & DASHVEENJIT KAUR / Pic By TMR

The government yesterday agreed to inject RM6.23 billion into the Federal Land Development Authority (Felda) to restructure the state-owned planter’s multibillion-ringgit debt and improve its cash position, confirming an earlier report by The Malaysian Reserve.

Felda, which was once the world’s most successful land settlement agencies, is now poised to be the second government-linked entity to be bailed out by the Pakatan Harapan government after Lembaga Tabung Haji’s RM19.9 billion asset-for-cash swap deal.

The capital injection will be made in stages in the form of grants, borrowings and government guarantees.

Prime Minister (PM) Tun Dr Mahathir Mohamad said the government had no choice but to pump in money to help alleviate the woes of Felda settlers who have suffered from the mishandling at the agency.

“If the claim is made that they have been making a lot of money, and they gave back the money, then the government will not inject anything.

“But unfortunately, the Felda settlers are suffering because the previous government has stolen their money, so we have no choice but to overcome the difficulties faced by the settlers,” Dr Mahathir told reporters at the Parliament lobby yesterday.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali, in his speech during the tabling of the Felda White Paper in the Dewan Rakyat, said Felda’s total liabilities had risen over 12-fold from RM1.2 billion to RM4.4 billion between 2007 and 2017. Its asset value increased by only 107% over the same period.

Felda’s cash balance, on the other hand, declined from an average of RM2.5 billion from 2007 to 2011, to just about RM35 million as of May 2018.

“This is not just negligence, this is a crime that led to the loss of billions of public funds,” Azmin said.

The federal agency has been in the spotlight in recent years over accusations of mismanagement and scandals over land, with Azmin accusing former PM Datuk Seri Mohd Najib Razak and former Felda chairman Tan Sri Mohd Isa Abdul Samad (who he identified as “FO1”) of bad investments for Felda’s troubles.

The report, which included a forensic audit E&Y, showed that Felda had impairments worth RM2.2 billion as at Dec 31, 2017, after its investments in eight key assets lost nearly 50% of their original investment value of RM4.4 billion.

One of them is Felda’s controversial stake in loss-making PT Eagle High Plantations Tbk, which was agreed at an inflated price of US$505.4 million (RM2.07 billion) with no “due diligence” carried out on the parties involved prior. It is said that such a contentious deal has contributed to Felda’s RM10 billion losses and RM12 billion debt accrued by end-2017.

As part of the revamp at Felda, Azmin said the state agency would also restructure the principal payment of its debts, and delay the repayment of its RM1.98 billion borrowings in 2019.

The remainder of its RM9.3 billion borrowings are scheduled to be repaid from 2020 to 2028.

Additionally, Felda will dispose of non-strategic assets and wind up companies that are inactive.

Azmin said a special task force will be developed to review the rationalisation plan to ensure the best outcome.

The report said Felda will implement several strategies to reduce cost, including right-sizing and the removal of duplication between departments and functions within its operations. The initiative will also include a study of Felda’s involvement in funding the Felda United Football Club.

The appointment of the chairmen for Felda, FGV Holdings Bhd and Felda Investment Corp Sdn Bhd will also be from among professionals and not politically linked individuals.