by SHAZNI ONG / pic by MUHD AMIN NAHARUL
THE Federal Land Development Authority (Felda) will be 63 years old this year, but instead of celebrating its mark on the country’s landscape, the state-owned agency is saddled with billions of debts and write-offs, failed investments, political interference, and governance and mismanagement lapses.
The white paper which was tabled by the government showed how the land authority was “milked” largely from politically linked individuals, leaving some 112,000 plus settlers nationwide in the lurch.
The once cash-rich land authority with an estimated RM8 billion in the late 1990s and another RM6 billion from the listing of FGV Holdings Bhd (formerly known as Felda Global Ventures Holdings Bhd or FGVH) has turned into a debt-ridden institution.
As a profitable agency of RM5.8 billion in 2012, Felda posted a net loss of RM4.9 billion in 2017.
The revelation in the white paper was an eye-opener for the public, dimming all the accomplishments since the body was established on July 1, 1956.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali when presenting the paper had directed to political interference over Felda’s financial debacle.
The report, which included a forensic audit by Ernst & Young, 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 the politically-linked deals was Felda’s purchase of a stake in Indonesia’s PT Eagle High Plantations Tbk (EHP), which was agreed at an inflated price of US$505.4 million (RM2.07 billion) with no “due diligence” carried out prior to the inking of the deal. The deal contributed to Felda’s RM10 billion losses and RM12 billion debt accrued by end-2017.
EHP is an Indonesian company with interests in oil palm plantations and the processing of palm oil. It is owned by Peter Sondakh, founder and head of Rajawali Group.
The EHP deal is one of eight questionable investments under scrutiny as the RM6 billion received from FGVH’s initial public offering in June 2012 disappeared.
Other investments which had been linked to Felda were Dataran Aras Sdn Bhd, Grand Borneo Hotel Sdn Bhd, Grand Plaza Serviced Apartments, Kuala Lumpur Vertical City, Felda Wellness Corp Sdn Bhd and Park City Grand Plaza Kensington, as well as Felda House dan Grand Felda House in the UK.
“In any economy where you have extensive corruption, real businesses will be affected. If Felda did not lose so many billions to corruption, those billions would be circulating inside the Malaysian economy, buying products and services from Felda’s supply chain members,” said former Malaysian Anti-Corruption Commission Panel on Consultation and Prevention of Corruption member Syed Akbar Ali.
He said the money lost could have created billions of ringgit worth of spin-offs in the economy.
“Felda shareholders/settlers will also get dividends which will also be circulated in the economy,” he said recently.
Syed Akbar blamed poor management for the many wrongdoings that helped kick Felda off its perch.
“It was a maligned intention all the way. All the wrongdoings were caused by mala fide — neglect of fiduciary duties,” he said.
“Felda has been around for a long time. Felda has also made bad investments before, for example, a restaurant in London, and some others too. Those were poor management decisions.
“But this time around, it was not just poor management decision-making. This time the intention was no more genuine,” he said in a recent email reply.
The appointment of Tan Sri Mohd Isa Abdul Samad and the conflict of interest in the administration and operations of the Felda Group were highlighted in the comprehensive report.
Mohd Isa was Felda’s board chairman and Felda’s associated companies’ board chairman which were Felda Investment Corp Sdn Bhd (FIC), FIC Properties Sdn Bhd and FGVH, giving rise to practices that went against the best practices in corporate governance and the check and balance mechanism.
“He had held directorships of about 20 subsidiaries and other Felda-related companies.
“The failure of the (former) board and its management to put in a professional and competent team towards largescale investments had exposed Felda to various risks.
“Weak internal control, and lack of accountability and integrity resulted in Felda, on a regular basis, continued to experience high losses,” according to the white paper.
Federation of Public Listed Companies Bhd president Tan Sri Megat Najmuddin Megat Khas highlighted the bad governance, total lack of integrity and boundless greed at Felda.
“While the corporate sector is doing well in terms of good governance, integrity and risk management, the government-linked companies like Felda and Lembaga Tabung Haji are the opposites,” he said.
A transformation that requires a strong political will is imperative, he said.
“It will be very painful to ‘pick up the pieces’, but the government now must do the needful. A serious revolution of sorts, punish the wrongdoers and start afresh with better governance control all around.
“It will be messy and difficult, but the government must have the resolve and stamina to bring about widespread and deep changes in the way the government ‘do business’,” he said.
Calls for stiff punishments are growing louder to address the shenanigans at Felda.
Syed Akbar said the country has sufficient laws to handle these wrongdoings and that justice must be served immediately and prosecutions should be conducted the soonest.
“However, the courts should not allow delays in handling the cases. Lawyers should not be granted leave to postpone hearings on simple things like ‘my dog bit my hand’, ‘we have not made photocopies yet’, etc,” he said.
Asian Strategy and Leadership Institute’s Centre for Public Policy Studies chairman Tan Sri Dr Ramon Navaratnam said those found guilty should be held accountable for cheating the poor.
“If (such of) this corruption continues, the economy will be ruined. There are only so much beating any economy can take.
“(Now), the people are waiting to see what the government is going to do next. The people are waiting for justice,” he said.