LTAT financial report to be publicised

The fund could have generated more than RM30m in returns, if the money was parked in bank savings instead

by AFIQ AZIZ/ pic by TMR

THE Ministry of Defence is expected to table the Armed Forces Fund Board’s (LTAT) recent financial irregularities, which had resulted in a very low dividend payout of 2%, in the Parliament.

Defence Minister Mohamad Sabu (picture) said the low dividend, way lower than the earlier annual average of 14%, was part of a correction that had to be done due to inaccuracies in accounting which had taken place in previous years.

“The auditor-general said LTAT’s audit reports for 2016 were inaccurate. We have to correct the accounts. The excess dividends paid out in the past amounted to over RM500 million.

“All this needs to be corrected, so this is the real report,” he told the press at a media appreciation event in Kuala Lumpur yesterday.

Citing LTAT’s investment in the Automated Enforcement Systems project as an example, Mohamad said the fund could have generated more than RM30 million in returns, if the money was parked in bank savings instead.

He said one of the corrective measures would include the switch from similar investments into a fresh venture which could also avoid any conflict of interest.

“Before this, maybe there were cases where the CEO was also holding a huge stake in other organisations, so it became a conflict of interest,” Mohamad added.

Mohamad said LTAT is expected to elaborate further on the issue on Friday, including the fund’s next course of action and future plans.

“They are confident that in three years, the (financial) situation will improve once the mistakes are corrected,” he said.

On Monday, LTAT chairman General Tan Sri Mohd Zahidi Zainuddin said Messrs Ernst & Young (EY) had detected flaws in the LTAT account management.

He said the mismanagement however, rejected any criminal action.

“It is just mismanagement. There are numbers which are not properly accounted for and, fortunately, or unfortunately, when we commissioned EY to do the audit, we discovered discrepancies, which are not criminal (in nature).

“But all these are due to mismanagement and we are here to correct that,” Mohd Zahidi said after announcing LTAT’s financial results for the financial year that ended on Dec 31, 2018 (FY18).

The announcement had caused a public outcry, especially among depositors and stakeholders. The issue has also been heavily politicised by the Opposition bloc.

LTAT declared a dividend of 2% last year — the lowest since the fund was established in 1972.

The fund’s profit was also halved to RM221 million from a restated net profit of RM459.5 million in FY17.

Mohd Zahidi also assured the public that any misappropriation detected by the fund’s internal audit would be referred to the relevant authorities. He added that no police report would be necessary for the time being.

Meanwhile, Mohamad said the government would continue to encourage the participation of non-Malays in the armed forces, which is reported to have received less than 10% of the total enrollment per year.

“There is no specific percentage for now but we will be continuously campaigning for non-Malays to join the army. We have seen some interest in non-Malays who have joined the navy and air forces,” he said.

As for the Defence White Paper, Mohamad said it is expected to be presented in the next parliament sitting, slated in early December.

He said the formalisation of the blueprint, which is expected to chart out a 10-year plan for the country’s defence, is currently in the final stages.

Among others, the White Paper would outline the armed forces’ direction and strategies, as well as matters pertaining to funding and manpower.