Monday, February 27, 2012

Haven't NFC Defaulted on its RM250 Million Loan?

NFC has defaulted on soft loan, claims MP
Kuek Ser Kuang Keng | 4:31PM Feb 25, 2012

The agreement between National Feedlot Corporation (NFC) and the government reveals that the company has defaulted on its RM250 million government soft loan for over a year, claimed Petaling Jaya MP Tony Pua.

According to the much-sought agreement leaked to Pua (right) by an unnamed source, NFC enjoys a three-year installment and interest-free grace period from the day it obtains the first drawdown.

Earlier on, NFC had said that the first drawdown of RM7 million was in January 2008.

Hence the repayment should begin as early as January 2011 when the three-year grace period ended, Pua pointed out.

"We are now in February 2012. Our understanding is that they have not paid a single sen. They are long beyond the grace period," he said.

However, NFC claimed that it will start servicing its loan repayment beginning this year as stipulated in its loan agreement.

The DAP national publicity secretary then took to task the Finance Ministry (MOF) for not doing anything to recover its loan and freeze the project as NFC had clearly defaulted on the loan.

No penalty

On the penalty stated in the agreement in the event of a default, he flashed a wry smile and pointed out that Clause 11 of the document states that NFC only needs to pay default interest on the outstanding loan at a non-compounding flat rate of two percent annual interest.

This is the same interest rate as for the whole loan.

"This is one of the worst loan agreements I have ever seen," said Pua, who was a CEO and founder of a Malaysian IT company listed in Singapore before venturing into politics.

During the press conference at the DAP's Kuala Lumpur national headquarters today, Pua distributed copies of the agreement to reporters.

The agreement was signed by NFC chairperson Mohamad Salleh Ismail and his son Wan Shahinur Izran who is also NFC director, and two senior MOF officials representing the government, on Dec 6, 2007.

Salleh is the husband of Women, Family and Community Development Minister Shahrizat Abdul Jalil who has been under tremendous pressure to resign from cabinet after the scandal exploded.

In a related development, the Bukit Aman Commercial Crime Investigation Department (CCID) today announced that the police have recommended to the attorney-general to charge several NFC directors for criminal breach of trust.

35-page NFC loan agreement
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