Tuesday, February 28, 2012

NFC Spins Itself Into A Corner

In response to my press conference held on Saturday to reveal the NFCorp RM250 million loan agreement with the Malaysian Government, the company has yesterday responded publicly to claim that I have "misled the public".

I have highlighted the fact that the Directors have clearly breached the loan agreement by using the loan funds for purposes other than that of that specified in the agreement, which is to rear cattles and improve its quality and production in the country.

However NFCorp argued that "the loan agreement had to be read concurrently with the implementation agreement, the powers of the company as set out in its memorandum and articles of association and other related documents."

In essence, the company claims that the Loan Agreement signed with the Government must be read concurrently with the company's memorandum and articles of association (MAA). They clarified that the MAA allowed the company to “to invest and deal with the money of the company not immediately required in such manner as may from time to time be thought fit."

Therefore, according to NFCorp it is important that the agreements and the company’s MAA "for a holistic understanding of MoF’s terms and conditions for the loan."

NFCorp even tried to justify their generous use of tax-payers' funds channelled through the loan by the fact that the Government owns a Golden share in the company.  They argued that the Government's share in the company means the former's complete approval with its use of funds lent to the company.

Even to someone not trained in law like myself, the statement from NFCorp must be one of the most preposterous but beautifully written legal gobbledegook I've read in my short political career.

There is absolutely no provision in the loan agreement for the use of the monies to be "guided" by the company's MAA.  The fact that NFCorp MAA may allow the company to set up a casino does not in any "legalise" the use of the loan funds for its set up. The Government's stake in the company makes absolutely no difference to the legal effect of the loan agreement.

In fact I would go so far as to say that the statement by NFCorp is a clear admission of their guilt in breaching the strict terms of the loan agreement.

I found it laughable that NFCorp has also attempted to justify their purchase of luxury condominiums in Malaysia and Singapore by relying on the clause in the loan agreement which said

"12.1 - In the event that the Loan Facility is utilized to fully pay for the purchase of landed properties, the Borrower hereby agrees that it shall create the necessary charge/assignment over such landed properties in favour of the Lender."

Firstly, given the strict purpose of the agreement to promote cattle-farming, surely any acquisition of property must be directly related to the industry such as cattle-grazing land.

Secondly, and most incredibly, surely NFCorp can't be arguing that the luxury condominiums they have purchased can be defined in any possible way as "landed property". Or worse, that they were purchased for cattle-rearing purposes, or would we find new technological wonders on how to farm cattles in high-rise luxury residences?

The company is obviously so bankrupt of ideas and is desperately clutching at straws to save themselves from the wrath of the Malaysian public and the claws of the enforcement authorities.

Finally, if the above statement and legal justification of NFCorp's use of funds was advised by their lawyers, then my only advice to the directors is perhaps to consider appointing better lawyers to save their skin.
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