Saturday, March 31, 2012

Noh Omar Puts the Cart before the Cows

The Minister of Agriculture and Agro-Based Industry, Datuk Seri Noh Omar has announced on Tuesday 27 March that the Government is inviting bids to take over the National Feedlot Centre project from the scandal-tainted National Feedlot Corporation Sdn Bhd (NFCorp).

The announcement to invite bids for the project is mind-boggling and outlandish at just so many levels.

Firstly, the Ministry of Agriculture has an existing “Implementation Agreement” for the National Feedlot Project signed with NFCorp on 8th March 2010.  With the call for new bids, does it mean that the Ministry of Agriculture has already terminated the Agreement with NFCorp?  And if it hasn’t been terminated, would not the Government then be in breach of the Agreement which defines NFCorp as the implementor?

Secondly, as highlighted in the National Audit Report 2010, the Ministry of Finance has specifically issued an order to halt the entire National Feedlot project in May 2009 and requested for a cost-benefit analysis to be carried out by the Ministry of Agriculture to justify the project’s viability.  This has of course raised the earlier question as to why an “Implementation Agreement” was signed in 2010 when a halt to the project was directed in 2009.

Regardless, now that Datuk Seri Noh Omar has announced the request for new bids, does it mean that a cost-benefit study has been indeed carried out and the project’s viability has been approved by the Ministry of Finance?  Based on our inquiry with both Ministries’ officials at the Public Accounts Committee as late as last week, there has been absolutely no study over its viability carried out to date.

Thirdly, both the Finance and Agriculture Ministries must surely recall the RM250 million soft loan granted to NFCorp for the implementation of the National Feedlot project since Datuk Seri Noh Omar has confirmed that there will be new parties being appointed to develop project.  It is completely untenable and against all common sense that the NFCorp Directors continue to enjoy the benefits of the RM250 million soft loan when they are no longer the project implementer.

As it stands, the 2% interest loan was fully drawn down even before the Implementation Agreement was signed has been abused by the NFCorp directors to acquire luxury properties in Malaysia, Singapore and even Kazakhstan and invest in unrelated businesses under their own names.

In public interest, and to ensure that every sen of tax-payers’ monies are recoverable, both Ministries must immediately demand the return of RM250 million loan given to NFCorp, whose directors are the family of UMNO Wanita Chief, Datuk Seri Shahrizat Jalil.

Should both Datuk Seri Najib Razak, who is the Finance Minister and Datuk Seri Noh Omar fail to take immediate and all necessary steps to such effect, all other pronouncements about making good the National Feedlot project will just be a public relations damage-control exercise and political rhetoric.  In fact their reluctance and failure to come down hard on parties who outrageously abuse public funds proves their bias and support for embattled Datuk Seri Shahrizat Jalil, at the expense of tax-payers.

Friday, March 30, 2012

Najib's Son Gets Free Stock Market Ride?

We call upon the Securities Commission to investigate an act on the extremely unusual price action of the stock, Supercomnet Technologies Bhd which smacked of manipulation and insider trading.

The ACE-listed Supercomnet saw its stock price rallied from 12.5 sen on 20 March 2012 (Tuesday) to 29.5 sen (Friday) and hit a peak of 58.0 sen on the very next trading day on 26 March 2012 (Monday).  The spike on Monday represents a 96.6% increase in price over Friday’s closing or a more spectacular 362% increase over Tuesday’s close.  The stock closed at 49.5 sen on Monday.

When queried by Bursa Malaysia over the unusual stock activity, Supercomnet had only responded on Monday after trading hours that the major shareholders of the company had the day before signed “an Agreement with Mohd Nazifuddin Bin Mohd Najib to give an option [to Nazifuddin] for the purchase of 45,357,000 ordinary shares of RM0.10 each at RM0.225 per share, representing 18.66% of the issued and paid-up capital of Supercomnet.

The announcement caused the stock to rise further on Tuesday morning to 52.5 sen before a collapse to 36.0 sen at the close.  What was perhaps shocking was that after trading hours, Supercomnet announced that “it had on March 27, 2012 received a letter dated March 27, 2012 from En. Mohd Nazifuddin Bin Mohd Najib indicating that he will not be pursuing the option to purchase the 18.66% stake in the Company as stated in the Option Letter”.

This has resulted in a further collapse of the stock yesterday to 22.5 sen.

The rise and fall of Supercomnet share price smacks of massive manipulation and outright negligence on the part of both the existing shareholders and Nazifuddin in ensuring material information is made available to investors on a timely basis.  Nazifuddin’s downright bizzare U-turn on the acceptance of the “option to purchase” 18.66% of the company, only to reject it within 48 hours is clearly suspicious must be immediately investigated.

Despite Nazifuddin being the son of our Prime Minister, Dato’ Seri Najib Razak, the Securities Commission must show its teeth and act without fear or favour against parties who bring disrepute to our stock markets.  The question must be asked as to who made tonnes of money from the entire exercise - by buying up the shares before the option agreement was announced on Monday evening, and subsequently sold the shares before the rejection of the offer was announced on Tuesday evening.

What is more damaging is the fact that this isn’t the first time Nazifuddin is involved in a controversial stock restructuring exercise.  Nazifuddin made headlines when he was appointed to the Board of harvest Court Industries Bhd in October last year and resigned within one month.  Harvest’s shares were trading below 10 sen for the longest time but it hit 40 sen just before Nazifuddin joined the Board.

Harvest’s shares then soared to a peak RM2.14 by November 14, before it all came crashing down following Nazifuddin’s hurried departure.

Without stern and prompt action from the Securities Commission, we can expect this pattern of Nazifuddin’s proposed entry into and quick exist from a penny stock company being repeat ad nauseam to make some parties a whole load of money at the expense of ordinary investors.  The end result will be Bursa Malaysia becoming the butt of jokes among the global investing community.

Thursday, March 29, 2012

Pakatan to Expropriate MEX

Pakatan promises to buy back MEX if voted to power
By Clara Chooi Mar 28, 2012

KUALA LUMPUR, March 28 — Pakatan Rakyat (PR) pledged today to buy back the part publicly-funded Maju Expressway (MEX) from its concessionaire should they wrest Putrajaya in the coming polls, claiming the move would save over RM4.6 billion in taxpayers’ money.

In a statement signed by representatives from all three PR parties - Rafizi Ramli (PKR), Tony Pua (DAP) and Dr Dzulkefly Ahmad (PAS) — the leaders noted that it was one of PR’s Buku Jingga promises to restructure toll rates and the country’s many highway concession agreements, many of which they claim have over-benefitted Barisan Nasional (BN) cronies.

Speaking at a press conference in Parliament today, Pua, DAP’s publicity secretary, said it was more sensible for Putrajaya to buy back the highway with a maximum payment of RM400.9 million, instead of allowing Maju Holdings Sdn Bhd to profit from its sale.

He said that Maju Group executive chairman Tan Sri Abu Sahid Mohamed stands to make a clean profit of RM1.09 billion or 1,800 per cent of his initial investment of RM60 million from his sale of MEX to EP Manufacturing Bhd (EPMB) for RM1.7 billion.

“This profit is too high because the government has already used taxpayers’ money to fund 74 per cent of the highway’s construction cost,” he said.

This, added Pua, amounts to a whopping RM976.7 million.

“This money will not be returned to the public but will be a great profit for Abu Said,” he said.

Pua explained that according to EPMB’s March 16 Bursa Malaysia filing on its purchase of MEX, there is an “expropriation” clause attached to the concession agreement.

The clause, he said, allows the government to buy back MEX and terminate the concession with three months’ notice.

Pua added that the acquisition cost to the government would be a maximum of RM401 million which, according to the compensation terms, is the sum of the value of construction work less the government grants, liabilities, dividends or interest to shareholders, plus 12 per cent interest per annum on investments by shareholders.

“This RM401 million compensation is sufficient returns for the concessionaire which only needed an investment of RM60 million over eight years.

“This is in comparison with the RM3.2 billion that that concessionaire would have earned in projected net profits over the 25 years of its agreement. This profit will be reaped from toll payments from Malaysians of over RM5 billion,” Pua said.

“With the decision to buy back MEX, savings for the people would exceed RM4.6 billion.”

For the full article on The Malaysian Insider, click here.

Friday, March 23, 2012

Kong Cho Ha Should Be Axed From Cabinet

I had yesterday issued a press statement on the cost of the new KLIA2 “low-cost” airport terminal which saw an increase in expenditure from an initial budget of RM1.7 billion to RM3.9 billion based on the “reply” by the Minister of Transport, Dato’ Seri Kong Cho Ha in Parliament.

I had requested for an explanation from his ministry over the issue, particularly over the reason for the shift of the airport from the originally proposed northern site (KLIA North) to the current western site (KLIA West) which is under construction. The shift of the site has caused the cost of construction to bloat because KLIA West was already identified as unsuitable for the construction of an airport due to it being a peat swamp.

The result of the shift for example, has caused substantial increase in earthworks cost, which the Ministry of Transport claimed to cost RM773 million, but is believed by many parties in the industry to be even higher.

However, despite the seriousness of the mismanagement of public funds, Dato’ Seri Kong Cho Ha has refused to provide any details in his parliamentary reply, and merely shrugged off the issue claiming that the decision to shift the site was “based on KLIA Blueprint December 2008”.

The Transport Minister has responded to my statement yesterday by saying that I was “playing politics” and was “barking up the wrong tree” (The Star).

Dato’ Seri Kong said I “should direct questions about the construction of KLIA2 to Malaysia Airport Holdings Berhad (MAHB) instead of accusing him of trying to cover up.”  He had further added that he has “nothing to hide. I'm not an airport engineer or consultant for the project and whatever the information I have about the project were given by MAHB.”

His response has proven his sheer incompetence and absolute lack of accountability in ensuring that public interest directly under his purview is fully protected.  How can a Minister plead ignorance over a RM3.9 billion scandal right under his nose?

The Ministry of Transport is fully represented in the Board of Directors of MAHB by none other than its Secretary-General Dato’ Long See Wool.  He is also joined by Dyg Sadiah binti Abg Bohan, who is the private secretary to the 2nd Finance Minister.

The Ministry of Transport, as the regulating agency for the airports and aviation industry must surely be competent enough to know why MAHB was allowed to shift the airport from KLIA North to KLIA West, resulting in massive cost overrun.

Is Dato’ Seri Kong Cho Ha claiming that the Secretary-General of his Ministry is sleeping on his job and has no clue over the underlying reason for the cost explosion over the KLIA2 project?  Or do they think that the amount of money is so trivial that it doesn’t necessitate a full audit and bring to book those who have been negligent, intentionally or otherwise?

As a result, the MAHB had to raise RM3.1 billion in debt in 2010, and a further RM598 million this year via new share placement to fund the massive increase in cost.  There is no doubt that public interest will be compromised as MAHB is owned by Khazanah Bhd (54%), Employees Provident Fund (10.3%) and Amanah Saham Bumiputera (ASB) (6.8%).

In addition, given the outrageous increase in cost, there is no doubt in anyone’s mind that airport taxes will have to be increased at some point in the near future to ensure MAHB’s commercial viability.  Such increase in taxes will not only be a burden to ordinary Malaysians, but also have a negative impact on our goal to be a competitive aviation hub in the region, especially in the low-cost budget carrier industry.

The Prime Minister, Dato’ Seri Najib Razak must immediately admonish his Transport Minister for completely lacking the necessary “people first, performance now” attributes and demand that Dato’ Seri Kong be accountable for his Ministry’s duties, or he should be removed from his position.

Thursday, March 22, 2012

KLIA2: KongChoHa Remains Evasive

I have received yesterday evening, a response from the Ministry of Transport to my question raised in Parliament with regards to the construction cost of KLIA2.

I had asked the Minister of Transport, Dato’ Seri Kong Cho Ha on the reason for the shift of the airport from the originally proposed northern site (KLIA North) to the current western site (KLIA West) which is under construction. The shift of the site has caused the cost of construction to bloat because KLIA West was already identified as unsuitable for the construction of an airport due to it being a peat swamp.

The Minster only responded that the decision to shift the site was “based on KLIA Blueprint December 2008”.

The super-short reply from the Minister of Transport to my question in parliament leaves much to be desired, to say the least.

One could immediately read from the reply that the Minister has no interest in promoting accountability and transparency in the KLIA2 scandal which resulted in the cost of construction increasing from an initial RM1.7 billion to RM3.9 billion.  The sheer nonchalance and lack of willingness to provide clarification shows that there is something to hide.

In addition to the above, I have received reliable information which says that the cost of the new “low-cost” terminal will continue to increase due to 2 additional factors:

a. The additional control tower which has to be built because the existing control tower cannot see the planes at the KLIA West site, has been shifted again at the request of the Department of Civil Aviation because the new site still could not have full view of the airport.  As a result more cost has to be incurred to shift the “new” control tower and construction cost will further increase due to higher height requirements.

b. Earthworks on the construction site has found additional challenges as certain parts of the the peat swamp contain more water than had been anticipated.  This will result in further cost increase and further delays in getting the airport ready.  The KLIA2 has already been delayed from the original September 2011 completion date to a new April 2013 target completion date.

These are serious issues of governance which must be dealt with by the Minister of Transport and there is no question that heads must roll in the above fiasco which will ultimately cost the tax-payers more than RM2.2 billion in additional costs.

Dato’ Seri Kong Cho Ha had kindly scheduled for a dialogue with Member of Parliament of Lembah Pantai, Nurul Izzah Anwar and myself this morning at the Ministry of Transport.  Unfortunately, the meeting was postponed at the last minute as the Minister had to attend an urgent function in Taiping.

We look forward to a rescheduled meeting with the Minister to provide more detailed answers since he is unwilling to do so in Parliament.

Wednesday, March 21, 2012

MEX: Government Can Expropriate for RM400m

The MEX is the most clear-cut case of making tax-payers’ pay for the construction of the highway, and subsequently allowing a BN crony to milk the tax-payers further by charging toll, in this case, over a period of 33 years.  There is no better example of how the BN Government and its cronies are conducting highway robbery in broad daylight.

Tan Sri Abu Sahid Mohamed who owns 96.8% of the highway has only effectively forked out RM60 million for the project, but with the proposed acquisition by EP Manufacturing Bhd (EPMB), he would effectively be making a NET profit of RM1.09 billion.  That works out to more than an astronomical 1,800% return on investment in less than 8 years since construction began in 2004 for MEX.

The rape of Malaysian tax-payers which made a billionaire out of Tan Sri Abu Sahid Mohamed on this exercise alone is simply outrageous and unacceptable because out of his “profit”, RM976.7 million was paid for by Malaysian tax-payers.  The grant hence constitutes 74% of the total cost of construction for the RM1.32 billion highway.

In EPMB’s announcement to Bursa Malaysia last Friday, the company has cited among the risk factors of the acquisition is the existence of an “expropriation” clause in the MEX Concession Agreement.  The announcement read:
Subject to giving three (3) months‟ notice, the Government may terminate the Concession  Agreement by expropriating MEX or the Concession if the Government considers such action  to be in the national interest or national security. Under such circumstances,  MEX will be entitled to compensation from the Government.
Based on the same clause applied to other highway concession agreements which were disclosed when they were declassified in 2008, the compensation terms for such expropriation would also be specified:

  1. the amount (if any) by which the Value of the Construction Works exceeds the aggregate of the amounts paid or the liabilities and obligations assumed by the Government… and all amounts as at the date of compulsory purchase or acquisition owing to the Government by the Concession Company.
  2. an amount equal to:
    1. the amount of interest which would have accrued on the moneys invested in or lent to the Concession Company by shareholders of the Concession Company as if the interest had accrued on such amounts from the relevant dates of payment to the date of payment by the Government on an accrual basis of 12%; less
    2. any net dividends or interest received by the shareholders of the Concession Company

In layman’s terms, the compensation terms for expropriation is as follows:

a. “the value of construction works” (RM1.32 billion)
b. LESS “the aggregate amounts paid” by the Government (RM976.7 million)
c. LESS “liabilities and obligations assumed by the Government (Not determined)
d. ADD 12% interest per annum “accrued on moneys invested” by shareholders of the concession (RM60 million x 12% x 8 years since 2004 = RM57.6 million)
e. LESS “any net dividends or interest received by shareholders” (None)

The maximum cost of appropriation of MEX by the Government will hence be only RM400.9 million [RM1.32 billion – RM976.7 million + RM57.6 million] before taking into consideration any liabilities which the Government has to assume.  If there are outstanding net liabilities which the Government has to undertake, then the cost of appropriation will be even less.  This amount will more than adequately compensate the investment of Tan Sri Sahid Mohamed in the highway who will make very reasonable returns on his RM60 million investment.

In comparison, based on calculations made available in the announcement by EPMB, MEX has projected earnings of RM3.2 billion over the next 25 years of the concession agreement which will be milked from ordinary Malaysians.

Therefore it makes absolute sense for the Government to expropriate or buy back MEX instead of letting the highway continue to rob the man-on-the-street.  Should the Government fail to expropriate the highway, the it will certainly make true the Malaysian BN dictum of “crony first, rakyat last”.

Tuesday, March 20, 2012

MEX - Highway Robbery in Broad Daylight!

The Barisan Nasional (BN) government’s attempt to plunder the nations’ coffers and impoverish the rakyat cannot be more blatant than the award of the 26km Maju Expressway (MEX) toll concession to Maju Expressway Sdn Bhd (MESB) which is 96.8% owned by Maju Holdings Sdn Bhd.  Maju Holdings Sdn Bhd is in turn wholly owned by Tan Sri Abu Sahid Mohamed.

The highway was first awarded in 1997 and the concession agreement was amended by supplemental agreements in 1998, 2003 and 2006.  The contents in the agreement are still a mystery as of today as the MEX agreements was mysteriously not included when other highways agreements were declassified by the Cabinet in November 2008.

On 16 March 2012 EP Manufacturing Bhd, a small-medium manufacturing company listed on Bursa Malaysia announced that it has proposed the acquisition of MEX for the amount of RM1.7 billion.  What was revealed since included the cost of construction of MEX was RM1.32 billion as reported in The Edge Financial Daily.

What was shocking however, was the revelation that the Government has given a grant of RM976.7 million to MESB for the construction of the highway.  Effectively, 74% of the cost of constructing the highway was borne by the tax-payers.

According to reports by the Malaysian Ratings Corporation, Tan Sri Sahid Mohamed only invested RM60 million and lent RM87 million in funds to the project.  The rest of the construction and operational cost of the highway was borne by borrowings which amounted to RM529 million at December 2010.

The question that needs to be asked is if the Government can already fund three quarters of the highway construction project, why was there even a need to “privatise” it to the private sector?  Why couldn’t the government raise a further small sum of RM343 million to complete the highway without privatisation? Needless to say, the award of the contract was done via direct negotiations without any open tender.

The MEX is the most clear-cut case of making tax-payers’ pay for the construction of the highway, and subsequently allowing a BN crony to milk the tax-payers further by charging toll, in this case, over a period of 33 years.  There is no better example of how the BN Government and its cronies are conducting highway robbery in broad daylight.

As my colleague in Pakatan Rakyat, Rafizi Ramli has highlighted in his press statement yesterday, Tan Sri Abu Sahid Mohamed has only effectively forked out RM60 million for the project, but with the proposed acquisition by EP Manufacturing Bhd, he would effectively be making a NET profit of RM1.09 billion.  That works out to more than an astronomical 1,800% return on investment in less than 8 years since construction began in 2004 for MEX.

The rape of Malaysian tax-payers which made a billionaire out of Tan Sri Abu Sahid Mohamed on this exercise alone is simply outrageous and unacceptable.  As highlighted above, out of his “profit”, RM976.7 million was paid for by Malaysian tax-payers.

I would echo Rafizi’s demand that the Prime Minister Datuk Seri Najib Razak demands that the RM976.7 million grant given must be returned to the Malaysian government.  The grant is clearly unnecessary as there were known to be at least 6 bidders seeking to acquire MEX, proving that MEX is assured of profitability.

Datuk Seri Najib Razak must live up to his call for a “transformational government” as well as his promise in the New Economic Model that he will “not tolerate the behaviour of rent-seeking and patronage”.  If the Prime Minister fails to take immediate action, he can be assured that the Pakatan Rakyat will launch a relentless campaign against this highway robbery by BN and its cronies all the way to the 13th General Election.

Monday, March 19, 2012

Najib's "Impulsive" Administration Makes A Perfect Flip-Flop Government

Eight months ago, the Najib administration sanctioned and defended the MAS-AirAsia share swap exercise which saw AirAsia owners take a 20% stake in MAS, while Khazanah Nasional took a 10% stake in AirAsia.  The deal was presented as the only means to rescue MAS which was not only bleeding heavily but was seeing absolutely no light at the end of the tunnel.

Their defense of the share swap exercise was in spite of the obvious anti-competitive elements contained and arising from the “Comprehensive Collaboration Framework” which will reduce flights and increase the price of air tickets.

However, the financial results of MAS for December 2011, just 4 months into the swap exercise showing a RM1.28 billion loss for the final quarter of the year, and a RM2.52 billion loss for the full financial year shocked the Administration and had many leaders in Barisan Nasional (BN) baying for blood.

The staggering losses according to the BN critics proved the failure of the restructuring and rescue exercise and the pressure was applied on the Prime Minister to unwind the swap deal.  It is now widely reported that Datuk Seri Najib Razak is seriously contemplating rolling back the August 2011 agreements.

According to The Malaysian Insider, “Putrajaya is considering a special entity to take loss-making Malaysia Airlines (MAS) off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier’s worker unions to unravel an unpopular eight-month-old share swap.”

The ease and absolutely lack of proper evaluation in the way the Najib administration makes decision is even more shocking than the losses incurred by MAS.

Was Najib seriously expecting the new management team brought in and started serious work perhaps only in September 2011 to work miracles and create surprisingly profitable results within 3 months?

In reality, out of the RM1.28 billion of losses incurred for the 4th quarter of 2011, RM1.09 billion were financial provisions made for items such as stock obsolescence and impairment of freighters.  These provisions were the “legacy” left behind by the previous management which should be best dealt with at the earliest possible instance.  There can be no “new start” for MAS if the rotten could not be rid of from its books.

Najib’s contemplation of changing course less than 8 months into the deal is akin to doe-eyed Premier League football club owners who hire and fire managers at will following a string of bad runs, as if the new managers will always be able to perform miracles with the same set of players and set up.

The fact is that MAS has been in a state of malaise which it has never reversed ever since Mahathir decided to privatise the airline to Tan Sri Tajuddin Ramli.  If Najib was seriously expecting the turnaround flight to be any less turbulent, then he must seriously take a peek out of his first-class cabin.

The sudden decision to execute the share swap in August 2011 and now the serious contemplation to unwind the exercise before the management is even able to impose its will and direction epitomises Najib’s impulse-driven decision-making.  Such hare-brained impulsiveness has characterised Najib’s administration with multiple U-turns in his policies, including but not limited to the much-hyped eradication of racial quotas in the “New Economic Model”, the reversal of the “Malaysian First” definition and the promise of “open tenders”.

As a result, many local and foreign investors have lost faith in his ability to make substantive reforms and effect changes in our political and economic system.  They now perceives Najib as probably the most fickle-minded Prime Minister in Malaysia’s history.

Sunday, March 18, 2012

Nong Chik Says Low-Cost Home Dwellers Can Afford 6.5% Interest

Pakatan asks if RM1.5b EPF loan is to unlock DBKL assets
By Shazwan Mustafa Kamal Mar 17, 2012

KUALA LUMPUR, March 17 — Pakatan Rakyat (PR) lawmakers are questioning the rationale behind using RM1.5 billion from Malaysia’s largest pension fund to finance Kuala Lumpur City Hall’s (DBKL) low-cost housing schemes, and whether it is to liquidate the capital city’s assets.

Noting that Putrajaya has yet to clarify the matter, they also flayed Federal Territories and Urban Well-being Minister Raja Datuk Nong Chik Raja Zainal Abidin for saying that prospective buyers who did not qualify for bank loans would have no problems repaying loans from the Employees Provident Fund (EPF) at a 6.5 per cent interest rate.

“My fear is that EPF is being used as a last resort, as the government’s personal piggy bank.  There is concern ... that the EPF funds are being used as a source to finance new projects and this scheme will be used to unlock illiquid assets,” PKR vice-president Nurul Izzah Anwar told The Malaysian Insider.


DAP publicity secretary Tony Pua stressed that the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money.

“Why must the taxpayers’ retirement funds be tapped? What has happened to the taxes we have paid to the government? Is the federal government so bankrupt now that they can’t afford to build low-cost homes without tapping into our retirement savings?’ he asked The Malaysian Insider.

The EPF is providing the first tranche of RM300 million to a special purpose vehicle (SPV) undertaking the financing for those buying some 24,000 low-cost flats in the capital city.

Raja Nong Chik  said on Thursday DBKL “did not ask [for] money from the government” as it wanted to “avoid politics” in the scheme described as a “liquidation exercise.”  The minister had told reporters that DBKL had decided against making direct loans to up to 35,000 city dwellers who are still renting and unable to borrow from banks as it needs funds for “future projects.”

Raja Nong Chik had earlier told Parliament that under the current rate of 6.5 per cent, a loan of RM36,100 over 25 years would incur a monthly repayment of RM243, or 50 per cent more than would be applicable with a 2.5 per cent interest rate.

“If we reduce it to 2.5 per cent, it will be RM161. It is only RM82 difference. This is just political posturing by the opposition,” the senator had said, and that the RM36,100 figure was for the newest and most expensive low-cost homes; the rest would be sold for less.

This did not sit well with PR MPs, who accused the Umno minister of being “insensitive” to rising costs of living among the poor in the city.

“RM82 is a large amount for the majority of the people, it is slightly more than 10 per cent of a standard household disposable income. This shows the minister does not understand the realities of urban living costs which are increasing due to government policies.

“There should not be any discrimination towards low-income earners seeing as independent power producers (IPPs) and the National Feedlot Corporation (NFCorp) received lower soft loan interest rates,” Nurul Izzah said.


“Raja Nong Chik is unfit to be the minister of urban well-being when he completely failed to understand and empathise with the poor man on the street.  He has the cheek to dismiss a RM82 instalment difference as a ‘small amount’ when these low-cost housing dwellers earn less than RM1,000 per month,” DAP’s Pua said.

Pua said the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money.


For the full article in The Malaysian Insider, click here.

Saturday, March 17, 2012

NFCorp Farmhouse kicked out of Singapore Mall

NFC loses supermarket lease in Singapore
S Pathmawathy | 1:02PM Mar 15, 2012

More questions are being piled on the controversial deal struck by the National Feedlot Corporation (NFC), this time for losing its lease for a concept supermarket in Singapore.

The Singapore Straits Times reported today that the lease for the Farmhouse Supermarket in Rochester Mall was cancelled because the premises was not ready on time.

Opposition parliamentarian Tony Pua (DAP-Petaling Jaya Utara), citing a report, said that the 25,000sq-ft supermarket was supposed to be situated at the second floor of the shopping mall.

Pua demanded to know how much had been invested in the retail project and whether the losses incurred will be borne by public-funded cattle-rearing company NFC.  The report, quoting a spokesperson of Buona Vista, the owner of Rochester Mall, said that they were in process of engaging new tenants.

“Before this, they said the supermarket has to be established to export beef from NFC although Singapore, as of now, does not allow the import raw meat from Malaysia,” said Pua.

Earlier this month Pua said Farmhouse, which is jointly owned by Women, Family and Community Development Minister Shahrizat Abdul Jalil’s husband Mohamad Salleh Ismail, son Wan Shahinur Izran and daughter Wan Izzana Fatimah Zabedah, will not be able to import raw beef from across borders as it is prohibited under Singapore’s Agri-Food and Veterinary Authority (AVA) regulations.

However, Mohamad Salleh was reported by the Malaysian Insideras justifying that the supermarket was a means to expand its beef market from cows slaughtered at the National Feedlot Centre, but without specifying whether NFC would be exporting raw or processed beef.

“They had insisted that the supermarket must be set up to export the beef from NFC, now we have the report saying that the lease has been cancelled,” Pua told reporters.

“What we want to know is whether the losses will be covered by Shahrizat’s family or NFC, which is running on taxpayers’ money,” he added.

NFC runs the National Feedlot Centre, which was heavily criticised in the Auditor-General’s Report 2010 for not having achieved its target to reduce Malaysia's beef imports by at least 40 percent.

Shahrizat has also announced that she will relinquish her minister’s post next month over the controversy.

The company was awarded the government contract to run the cattle-rearing project and given a RM250 million soft loan.

Since the report was published, PKR has revealed several documents to back its claim that the soft loan was abused for several dubious investments, which include prime land in Putrajaya and several luxury condominium units in Bangsar, Singapore and Kazakhstan.

Friday, March 16, 2012

DAP Sarawak Election Fund-Raising Dinner @ Petaling Jaya 2012

Help us spread the event by sharing our Facebook Event Page!

Dear friends & supporters,

As the 13th General Election approaches, widely speculated to be held in May 2012, expectations are high among many people in urban constituencies for Pakatan Rakyat to take over the Federal Government.

However, for Pakatan Rakyat to succeed, we must succeed in making major inroads in East Malaysia, particularly in Sarawak. To have a realistic chance of victory, Pakatan Rakyat needs to win 18 parliamentary seats in Sabah & Sarawak, with possibly 12 coming from the Land of Hornbills.

The DAP will be contesting and campaigning hard in many of Sarawak's rural and remote constituencies which require heavy logistical expenses. These rural seats are often poor and the candidates are not able to generate sufficient funding from local sources to launch a serious campaign.

Hence DAP Sarawak is holding a fund-raising campaign dinner in the Klang Valley to give our candidates in these difficult seats a fighting chance to defeat Barisan Nasional.
Theme: "One Big Step for Sarawak, One Giant Step for Malaysia"
Venue: MBPJ Civic Centre (Banquet Hall)
Date: 10 April 2012 (Tuesday)
Time: 7.30pm
The speakers will include:

  • Lim Kit Siang, DAP Parliamentary Leader 
  • Richard Wong Ho Leng, MP Sibu
  • Chong Chieng Jen, MP Bandar Kuching
  • Dr John Anthony Brian, Dayak Consultative Council Chairman
  • Leon Jimat Donald, DAP Sarawak Asst Publicity Secretary
  • Mordi Bimol, Special Asst to MP Bandar Kuching

The primary language for this dinner will be English and Bahasa Malaysia. Halal or vegetarian food is available upon request.

The cost of the dinner will be RM60 per pax or RM600 per Silver table. Gold sponsorship tables are available for RM1,500 table.

For reservations, please email to or to me directly with your name, contact number and number of seats or tables (Gold or Silver) required.

For those who are not able to make the dinner, donations are also very much welcome ;-). Cheques should be written to "DAP Sarawak".

If you have any more questions, you can call Rebecca Choong at +6014 9251527

Thank you and we look forward to seeing you!

p.s., tables are limited to 100 only, so reserve your seats today! Help us spread the event by sharing our Facebook Event Page!

NFCorp Directors Took Out Cash

Global Biofuture Pte Ltd is another company set up by the Directors of National Feedlot Corporation (NFCorp) in Singapore in December 2008.  The Directors of the company are family members of Datuk Ser Shahrizat Jalil - Datuk Seri Mohamad Salleh Ismail, Wan Shahinur Izran Mohamad Salleh and Wan Izzana Fatimah Zabedah Mohamad Salleh.  Together with Wan Shahinur Izmir Mohamad Salleh (who is not a Director), they are shareholders of the company with 60,000 shares each, except for Izzana who owns 20,000 shares of S$1 each.

Based on the latest audited accounts available from the Singapore Accounting and Corporate Regulatory Authority (ACRA) dated 31 December 2010, it is stated that the Directors owes the company the sum of S$4,975,415 (RM11.98 million).  In addition, the sole shareholder who is not a director also owes the company the amount of S$60,000 (RM144,000) (page 24 under “8. Other Receivables”

In previous exposes, we have accused NFCorp Directors of abusing the RM250 million soft loan to NFCorp for the purposes of rearing cattles to acquire luxury properties in Malaysia and Singapore.  The Directors have defended the move claiming that “it was deemed more astute business to invest in property in the short-term rather than just placing NFCorp monies in money market instruments”.

We have also accused the Directors of abusing the NFCorp loan to invest in unrelated businesses contrary to the purpose specified in the loan agreement, such as in restaurants and supermarkets in Singapore.  However, the Directors have defended the moves as a means of marketing and promotion of their beef products (even if it did not really make business sense).

As weak as the defense of the above abuses – acquisition of properties and investment in unauthorised businesses – at least they were plausible excuses.  However, there can be no defense at all to the fact that the Directors have withdrawn a sum of nearly RM12 million directly from Global Biofuture Pte Ltd.

The Audited Accounts also states that Global Biofuture owes a sum of S$7,935,877 (RM19.1 million) to other companies related to the Directors of the company (page 20 under “10. Other Payables”.  Therefore, we have strong reasons to believe that Global Biofuture is part the Shahrizat family group of companies – including National Meat and Livestock Sdn Bhd, Real Food Company Sdn Bhd, Meatworks (Singapore) Pte Ltd – all of which sources its funds from the RM250 million loan provided by the Malaysian government.

The transfer of monies to the respective directors are clear cut criminal breach of trust and misappropriation of public funds meant for specific purposes which must be investigated thoroughly by the Royal Malaysian Police and Anti-Corruption Commission (MACC).  The Attorney-General must not hesitate to prosecute the directors of NFCorp for such blatant in-your-face abuses.

At the same time, Section 162 of the Singapore Companies Act “prohibits loans from a company to a director of a company”.  Even if in the event a company wishes to extend a loan to a director under approved exceptional circumstances, the “approval of the company must be obtained at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed”.s

The audited accounts of the company as well as searches with ACRA have revealed absolutely no evidence of any such approval under these permitted exceptional circumstances have been obtained.

The mystery of Global Biofuture deepens when the specified principal activity of the company is “trading in food and fuel” which is quite different from that of rearing cattle.  The audited accounts showed that the company was able to generate sales of S$2.94 million in the 6 months from July 2010 to December 2010 (page 7).  However, it was noted that out of the sales revenue, S$2.87 million or 97.6% of the sales were made to a company related to the directors (page 22 under “5. Related Party Transactions”).  The question hence arises as to why the Directors are setting up a company to essentially sell to themselves?

The fact that “there are no key management personnel apart from the company's directors” (page 28) raises the suspicion that the company is acting purely as a vehicle to personally profit from sales of goods sold to other companies in the family’s group of companies, or for the evasion of tax.

The extent of chicanery in Shahrizat family’s group of companies continues to shock and amaze me, and I am sure all Malaysians.  The Government, represented by the Ministry of Agriculture and the Ministry of Finance, the Attorney-General, the Royal Malaysian Police as well as MACC must leave no stone unturned in the efforts to bring the guilty parties to book and ensure that every sen of tax-payers’ funds be recoverable.

Wednesday, March 14, 2012

Will There Be More Charges on NFCorp Directors?

Datuk Seri Mohamad Salleh Ismail, the executive chairman and director of NFCorp was charged under Section 409 of the Penal Code relating to CBT for misappropriating RM9,758,140 from NFCorp’s funds to purchase two condominium units at the One Menerung complex in Bangsar for the National Meat and Livestock Corporation (NMLC) on December 1 and December 4, 2009.

Mohamad Salleh was also charged under the same section for transferring RM40 million of NFCorp’s funds to the National Meat and Livestock Company (NMLC) between May 6 and November 16, 2009.

He was further charged in both cases for using the said funds without any approval from company’s annual general meeting, which is an offence under Section 132 of the Companies Act 1965.

We welcome the step by the Attorney-General to finally place charges against Datuk Seri Mohamad Salleh, after months of exposes on wrongdoings and abuse of power by the directors of NFCorp after receiving a RM250 million soft loan from the Government.

However, the four charges above are far from complete and we expect the Attorney-General to bring to book all directors who were involved in the abuses which have been raised by Pakatan Rakyat parliamentarians.

For example, the purchase of two condominiums at One Menerung amounting to RM9.8 million are certainly not the only properties purchased with the Government’s RM250 million soft loan.  There are probably dozens of properties which have been exposed which were purchased with Government funds, but placed under the directors’ personal names.  These properties will include land in Gemas and Putrajaya, as well as condominiums in Singapore.  The condominiums in Singapore include the posh Orchard Scotts Residences for RM10 million as well as 2 units at the Marina Bay Suites worth more than RM15 million each.  These purchases have yet to include possibly even more properties which have not surfaced.

On top of property purchases, it has already been made known that these directors also owns in their personal names, other companies such as the NMLC, Real Food Company (RFC) and Meatworks Corporation Sdn Bhd which have failed for submit annual returns with audited accounts since 2007.  The failure to submit annual returns and other relevant documents to the Registrar of Companies is a gross breach of the Companies Act 1965 and can be subjected to 5 years jail and/or RM30,000 fine.

What is even more serious, is the fact that these Directors have transferred shares of companies to their own names after investing in these companies with money from the Government loan.  For example, shares in Meatworks (Singapore) Pte Ltd were distributed to Datuk Seri Mohamad Salleh and his children from RFC in 2010.  These are clear cases of criminal breach of trust.

Finally, there is also the case of asset disposal by Wan Shahinur Izran, son of Datuk Seri Mohamad Salleh and fellow director of NFCorp.  Izran was the sole shareholder and director of Straits Beverages Pte Ltd before it was disposed to a mysterious “Gold Index International Limited”, a company based in British Virgin Islands in December 2011.  This is despite the fact that funds derived from the RM250 million loan was used in the setting up and operations of the company.  Such disposal of assets will be a clear breach of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001.

The police and the Attorney-General must take immediate actions to stop such disposals and to charge the directors for the various abuses to ensure not only accountability, but also maximum recoverability of the funds extended by the Government to NFCorp.

The people can be assured that Pakatan Rakyat leaders will continue to expose the abuses by the family of Datuk Seri Shahrizat Jalil until all necessary actions are taken to ensure that they do not get off lightly with just the Shahrizat resigning as a Minister and her husband, Datuk Seri Mohamad Salleh being charged for the above offences.

Tuesday, March 13, 2012

Najib's High Approval Ratings Will Be Shortlived

Najib’s popularity does not reflect support for BN, says Pakatan
By Clara Chooi and Lisa J. Ariffin Mar 12, 2012

KUALA LUMPUR, March 12 — Pakatan Rakyat (PR) lawmakers have said they are undaunted by the rise in Datuk Seri Najib Razak’s approval ratings, and have argued it does not necessarily mean stronger support for Barisan Nasional (BN) or the ruling Umno.

They attributed the prime minister’s increased popularity, which was particularly significant among those in the lower-income bracket, to his administration’s RM500 cash handouts to the same group under the Bantuan Rakyat 1 Malaysia (BR1M) scheme rolled out recently.

But this, said Petaling Jaya Utara MP Tony Pua, would eventually lose steam once the scheme’s recipients exhaust every single ringgit and if Najib chooses to further delay calling the 13th general election.


Pua noted this finding, adding that PR takes “comfort” in the notion that Najib’s rising popularity may not mean the ruling coalition will perform better in the polls.


Pua said opposition leaders could counter the surge in Najib’s popularity by explaining to voters that BR1M was merely a one-off “vote-buying exercise”.

An exercise, he added, that will return to haunt voters in the form of higher taxes and prices after elections.

For the full article, click here.

Monday, March 12, 2012

NFCorp Director Disposing Assets

Based on the Annual Returns submitted to the Registrar of Companies and Business (ACRA) in Singapore on 15 July 2011, Wan Shahinur Izran was also the director and sole shareholder of Straits Beverages Pte Ltd whose principal activity was to operate pubs (including bars).

However, based on the latest information provided by ACRA, the Company has since been “sold” to a British Virgin Islands (BVI) company – “Gold Index International Limited”, whose shareholders cannot be traced. Wan Shahinur Izran has also resigned from the company as a director on 2nd December 2011 and two new Singaporean directors were appointed.  They are Amir Mulyani bin Mohamed Solay and Alphonsus Wee Yew Hock who were appointed on 2nd and 16th December 2011 respectively.

This proves that the NFCorp director is either disposing or hiding his assets in Singapore.  Given that Straits Beverages was similarly set up with funds derived from the RM250 million government loan, such actions constitute a breach of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001.

The Act defines “money laundering” as the act of a person who — “engages, directly or indirectly, in a transaction that involves proceeds of any unlawful activity” or “conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of any unlawful activity”.

We call upon the police to not only investigate the above disposal of assets in Singapore, but also discover how much for NFC loan funds have been transferred to Straits Beverages before it was “sold” to other parties for sums unknown.

Despite a statement on the 14 January 2012 by the Prime Minister, Dato' Seri Najib Razak that the assets of the NFC have been frozen, it appears that the international assets of the NFCorps directors have been left untouched.  Hence we would also call upon the Police to request that all the directors’ international assets be frozen pending investigation to prevent further such disposal of assets.

Sunday, March 11, 2012

NFCorp Related Company Distributed Shares to Directors

The directors of NFCorp have admitted that the money has indeed been transferred to companies which they own and are not related to NFCorp.  However, they argued that these “so-called ‘unrelated companies’ of NFCorp where the fund was channeled to, were always meant to be the subsidiaries of NFCorp.”

The Chairman of NFCorp Datuk Seri Mohamad Salleh had in earlier statements claimed that it was always their intention to “rationalise the structure of NFCorp to bring in all associated companies and assets within the hold of NFCorp”.

The key “unrelated companies” held by the directors operating in Malaysia are National Meat and Livestock Company Sdn Bhd (NMLC), Real Food Company Sdn Bhd (RFC) and Meatworks Corporation Sdn Bhd.

At the same time, many “unrelated companies” were also set up in Singapore.  For example, by April 2010, RFC has also invested at total of S$450,000 (RM1.08 million) for 450,000 shares in Meatworks (Singapore) Pte Ltd.

However, interestingly on 20 July 2010, shares owned by RFC in Meatworks (Singapore) were distributed to the individual directors of NFCorp.  RFC had transferred 90,000 shares to Mohamad Salleh and his three children, Wan Shahinur Izmir, Wan Shahinur Izran and Wan Izzana Fatimah Zabedah each, leaving RFC with only 90,000 shares.

The above transfer of shares to individual family members of Minister of Women and Family Affairs, Datuk Seri Shahrizat Jalil indicates very clearly that there was obviously no intent to “rationalize the structure of NFCorp” by making these “unrelated companies” subsidiaries of NFCorp.  Had that been the original intent, what is the purpose of transferring the shares of Meatworks (Singapore) which is invested presumably with money from the RM250 million government loan, to the respective individuals?

In fact, the act that RFC had invested S$450,000 in Meatworks (Singapore) and subsequently transferred S$360,000 (RM865,000) of these shares to the individual directors is another clear case of criminal breach of trust.

We call upon the NFCorp directors to explain the above suspicious transaction, failing which we call upon the police and Malaysian Anti-Corruption Commission (MACC) to expand its investigations to cover the actions of all the Singapore companies owned by the directors.

Saturday, March 10, 2012

NFCorp Buys "Apartment" in Kazakhstan

It was exposed by The Malaysian Insider (TMI) that the police are investigating the fact that the directors of National Feedlot Corporation (NFCorp) has used part of the RM250 million government soft loan to purchase an “apartment” in Kazakhstan.  The apartment is said to be worth RM1.7 million.

What justification can there be now from NFCorp for such a purchase, which is understood to be an “all-cash” transaction?  Does the company even have any clue about the cattle industry in Kazakhstan, which is blessed with large tracts of the Central Asian Steppes or grasslands?  Are we planning to export beef to Kazakhstan or are we planning to buy meat from them?

If the TMI report is indeed accurate, then there was “a memorandum of understanding (MoU) was inked in June 2011 between NFCorp and the Jambyl district of Kazakhstan to raise cattle for export to Malaysia and neighbouring countries.”

While there is nothing intrinsically wrong with cattle imports as a business in Malaysia, the purpose of the RM250 million government loan is clearly not intended for such purposes.  The purpose as specifically defined in the loan agreement is to establish and operate “a National Feedlot Centre to be consistent with the Government of Malaysia’s policy of developing, promoting and nurturing the production of beef and beef products…”

Based on the loan agreement, NFCorp is certainly not meant to be acquiring meat from Kazakhstan, much less buying an “apartment” there.

We call on NFCorp to come clean on the Kazakhstan property purchase and confirm if the report by TMI is true.  In public interest, the following questions must be answered:

  1. Did NFCorp acquire an “apartment” in Kazakhstan?
  2. What was the full purchase price of the “apartment”?
  3. Is the property registered to NFCorp or to individual directors of NFCorp?
  4. What is the status and use of the “apartment” as of today?
  5. Did the acquisition of the property in Kazakhstan receive the endorsement of the Ministry of Finance?

If NFCorp refuses to answer the above questions, then surely Datuk Seri Najib Razak, as the Minister of Finance and the governing authority over the RM250 million soft loan must surely respond over the preposterous scandal.  Datuk Seri Najib Razak must confirm if any approval has been given to NFCorp to acquire an “apartment” in Kazakhstan, whether the Ministry of Finance endorses such an acquisition and what actions will be taken by the Ministry to protect the interest of Malaysian tax-payers, if indeed such an acquisition is deemed highly improper.

The Prime Minister has no right to talk about “transformation”, “fighting corruption”  and ending “political patronage” if he does not even have the steel and ability to act tough on those who abuse power.  Malaysians are thoroughly disappointed that the NFCorp scandals have only grown in size and incredulity over the past 6 months and yet do not see an end in sight with the Government taking any decisive action.

Thursday, March 08, 2012

NFC "Subsidiaries" Never Audited

Various parties including myself have made the allegation that the directors of National Feedlot Corporation (NFCorp) has improperly siphoned money originating from the Government’s RM250 million meant for the development of the cattle industry in Malaysia.  The money, at least RM81 million as at 2009, has been transferred to various companies owned by the directors of NFCorp, as revealed in the 2009 NFCorp audited accounts.  This amount will definitely have exceeded RM100 million as of today.

The directors of NFCorp have admitted that the money has indeed been transferred to companies which they own and are not related to NFCorp.  However, they argued that these “so-called ‘unrelated companies’ of NFCorp where the fund was channeled to, were always meant to be the subsidiaries of NFCorp.”

The Chairman of NFCorp Datuk Seri Mohamad Salleh had in earlier statements claimed that it was always their intention to “rationalise the structure of NFCorp to bring in all associated companies and assets within the hold of NFCorp”.

The key “unrelated companies” held by the directors operating in Malaysia are National Meat and Livestock Company Sdn Bhd (formerly known as BizVance Sdn Bhd) (NMLC), Real Food Company Sdn Bhd (formerly known as Macronial Technology Sdn Bhd) (RFC) and Meatworks Corporation Sdn Bhd.

The family members of Datuk Seri Shahrizat Jalil, Minister of Women and Family Affairs sit as directors in all these companies.  They are her husband Datuk Seri Mohamad Salleh and their children, Wan Shahinur Izmir, Wan Shahinur Izran and Wan Izzana Fatimah Zabedah.  The shareholders of these companies are also various permutations the same family members and companies which they own.

If the argument made by the NFCorp directors that these companies were indeed “always meant to be subsidiaries of NFCorp”, then surely, one would expect the financial accounts of these companies to be properly managed to ensure accountability and transparency over the use of the tax-payers’ RM250 million loan.

However, a simple check with the Registrar of Companies shows that none of these companies were ever audited ever since they became operational!  Both NMLC and RFC for example, has never been audited since four and a half years ago on 30 June 2007 when it was still a dormant company with no revenue or assets.  Meatworks on the other hand, has never filed its accounts since it was set up on 17 September 2009.

Hence not only was the siphoning of funds to these companies owned by the directors of NFCorp a breach of trust, the directors were further negligent, intentionally or otherwise, in accounting for the use of the monies.  The directors of NFCorp must answer as to why NMLC and RFC have never filed their accounts or even presented to the Ministry of Finance and Ministry of Agriculture as part of NFCorp’s loan agreement to provide updates on the use of the funds.

What is worse is the fact that the directors of these “unrelated companies” have further run afoul of the Companies Act 1965 by failing to hold the company’s Annual General Meetings, file its Annual Returns to the Registrar of Companies together with their Audited Financial Report.

For example, Clause 169(1) of the Companies Act says that “the directors of every company shall, at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year at intervals of not more than fifteen months, lay before the company at its annual general meeting a profit and loss account for the period since the preceding account (or in the case of the first account, since the incorporation of the company) made up to a date not more than six months before the date of the meeting.

Under Clause 171(1), the Act dictates imprisonment for 5 years or RM30,000 “if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company with the foregoing provisions of this Division or has by his own wilful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act.”

The concern for all Malaysians today over the above scandal is that the Directors may take steps to paper over the scandal with backdated accounts which will then hide certain activities carried out by by RFC and NMLC with tax-payers’ money.

We would like to remind the auditors of these companies to be extra diligent and mindful in auditing the accounts as public interest is involved.  Under the Companies Act, it is the duty of an auditor of a company to form an opinion as to “whether he has obtained all the information and explanations that he required” and “whether proper accounting and other records (including registers) have been kept by the company”.

The Act further clarifies that if an auditor finds “a breach or non-observance of any of the provisions of this Act” and if such a breach is serious enough, “he shall forthwith report the matter in writing to the Registrar.”  The penalty for not fulfilling the duties of an appointed auditor is “imprisonment for two years or thirty thousand ringgit or both”.

The Auditor is also protected under the law in Clause 174A that “in the absence of malice on his part, [shall not] be liable to any action for defamation at the suit of any person in respect of any statement which he makes in the course of his duties as auditor”.

Regardless of the above, we call upon the Registrar of Companies to act against the directors of these companies which have flouted the law by using the powers vested in him – to initiate investigations and “to inspect any accounts, book or other document seized.”  The interest of Malaysians is paramount, and we call on all authorities to act without fear or favour to ensure that our rights are fully protected from those who abuse their powers.

Wednesday, March 07, 2012

Why is 1MDB taking over Tanjong Energy?

The Singapore Straits Times reported last week that 1MDB has acquired Tanjong Energy Holdings (TEH) from Tan Sri Ananda Krishnan for RM8.5 billion.  Tanjong Energy owns and operates nine power plants in Bangladesh, Egypt and Malaysia and smaller joint ventures in Sri Lanka, Pakistan and United Arab Emirates.

While TEH is certainly a profitable business, there is hardly any justifiable reason for 1MDB to be making a RM8.5 billion investment to acquire it.

According to its own website, “1MDB is a strategic development company wholly owned by the Government of Malaysia.  As a strategic enabler for new ideas and new sources of growth, 1MDB leads in market-driven initiatives to help transform Malaysia into a thriving economy.”

The acquisition of TEH hardly qualifies 1MDB as a “strategic enabler for new ideas” and the power generation business is certainly not by any reasonable definition a “new source of growth”.  While IPPs are crucial to any economy, 1MDB’s entry into Malaysia’s IPP scene will add little value as we have already got a crowded with IPP scene.  Malakoff Bhd, YTL Power and Genting Sanyen leads a list of more than 20 IPPs in the country today.

What’s more, the RM8.5 billion highest bid by 1MDB, 100% owned by the Malaysian Government appears to have paid handsomely to Ananda for the power generation assets of Tanjong PLC Bhd.  Less than 2 years ago, Ananda has acquired all shares of Tanjong PLC listed on Bursa Malaysia for RM8.8 billion.  Tanjong PLC had owned TEH, a gaming business and several other leisure and property assets.

Tanjong PLC had sold the gaming business to a private consortium for RM2 billion last year.  Adding that to the RM8.5 billion for TEH, Ananda has made a profit of RM1.7 billion (or 19.3% returns) on his RM8.8 billion “investment” in 2010.  Tanjong PLC continues to own its leisure and property assets.

The question that needs to be asked is whether this is a pay-off for Tan Sri Ananda Krishnan, who according to former prime minister Tun Dr Mahathir Mohamad, made his billions as a direct result of his administration’s policies.

What is of greater concern however, is the manner which 1MDB is financing its business and operations, which is funded entirely by debt guaranteed by the Federal Government.

The last time it took a RM5 billion debt, it invested RM4.2 billion in a speculative PetroSaudi Joint Venture with PetroSaudi International company for an oil exploration project.  However, within 6 months, 1MDB converted its 40% investment in the joint venture into an 11-year loan to a company whose “track record” stretched back only to 2005.

The PetroSaudi stunt left 1MDB with very little cash for its new projects awarded without tender, by the Federal Government – the 160ha Bandar Malaysia in Sg Besi and the RM26 billion Kuala Lumpur International Financial District. Hence as it stands, 1MDB is already in need to secure further financing to develop these 2 mega projects.

Now, with the new RM8.5 billion investment in Tanjong Energy, there is absolutely no question that 1MDB will be the most leveraged company in Malaysia, with the risk entirely bourne by the tax-payers.  With absolutely not expertise or experience in oil and gas, property development and now, the power generation sector, 1MDB is setting itself up to become Malaysia’s mother of all bail-outs.  If it happens, it will be a disaster of epic proportions to our financial sector which will trigger possibly the worst economic crisis the country has ever faced.

The Prime Minister and Finance Minister, Datuk Seri Najib Razak must present an official ministerial paper to Parliament when it sits in the session commencing next week.  Brakes and risk management measures must be put in place to prevent the country from falling headlong into financial disaster.

Tuesday, March 06, 2012

UMNO's Most Unapologetic "Apology"

As reported by Bernama on Saturday, the Prime Minister Dato’ Seri Najib Razak made the momentous apology to all Malaysians “on behalf of the Barisan Nasional (BN) for the coalition's mistakes in the last general election, which cost it several electoral seats and states, including Kedah.”

Today, Deputy Prime Minister Tan Sri Muhyiddin Yassin tried to make light of the apology by boasting of Barisan Nasional’s (BN) achievement in the past few decades. He said "…during the 54-year period, no one can deny the fact, despite the weaknesses, we have made huge progress in the fields of socio-economy, culture, education, international relations and various others."

Muhyiddin had further wanted to avoid the subject by adding that “there is no need to list out our weaknesses; that is in the past.”

UMNO Information Chief Datuk Ahmad Maslan was even more dismissive of the Prime Minister’s apology. He had urged Malaysians “to provide BN the mandate to rule following the promise by Najib Abdul Razak that the coalition will fix its past mistakes”.

Their statements today have single-handedly destroyed any goodwill which may have arisen out of Najib’s apology made to Malaysian’s the previous day.  It demonstrates that BN remains as arrogant and as dismissive of Malaysian criticisms as ever and any chance of change will not happen if BN were to remain in power.

Muhyiddin made light of the need to list BN’s weakness because it was in the past and not present.  Ahmad Maslan on the other hand claimed that without return BN’s two-third majority in Parliament, the coalition is unable to fix its past mistakes.

The above only demonstrates the utter disarray and panic in the UMNO top leadership in facing the upcoming General Elections as all parties are contradicting each other over the same message to win votes.  While not wanting to contradict the Prime Minister directly over the apology which was made, UMNO leaders appear to be scrambling to contain its impact by making irrelevant the apology.

All UMNO leaders including the Prime Minister had missed the point that the apology is completely useless and lacks any semblance of credibility if it is not matched with deeds.  In fact it is rather late for Najib to be apologizing for the “past mistakes” prior to 2008, when he should be apologizing for not being able to correct these mistakes despite having been the Prime Minister for the past 3 years!

Malaysians vented their frustration at the BN government in 2008 over rampant corruption, cronyism and abuse of power.  Malaysians became more divided than ever due to BN’s divide-and-rule policies which plays off one race against the other.

However, after ascending the premiership for 3 years, Malaysians are not witnessing any improvements but only worsening conditions in the country.  Malaysia has dropped further in the Transparency International’s Corruption Perception Index (CPI) from 56th to 60th.  The BN government still lacks the political will to tackle grand corruption and cases of abuse of power as can be seen in recent scandals such as the RM250 million National Feedlot Corporation project.
On top of that, Najib is perpetuating patronage and cronyism in its administration by awarding mega-projects and concessions without any competitive tenders to well-known associates of the BN Government – such as the 60-year RM7.1 billion West Coast Expressway project.  The Government has also in the past year awarded many mega-contracts to entities related to Tan Sri Syed Mokhtar Al-Bukhary - the RM7.55 billion contract to DRB Hicom to supply 257 armoured personnel carriers, the new 1,000 Megawatt coal-powered plant concession to Malakoff Bhd and the appointment of MMC-Gamuda as the Project Development Partner of the RM53 billion Klang Valley MRT project.

Worse, instead of improving inter-faith and inter-racial relations over the past 3 years, the conditions have worsened with the Government’s obstinate insistence on banning the use of the term “Allah” by Christians while both the Prime Minister and the First Lady of Malaysia continued to lend support and give legitimacy to the right-wing Perkasa to fan racist sentiments and encourage violent behaviour.

There is much for the BN to apologise for to all Malaysians, not just prior to 2008, but particularly for the past 3 wasted years.  UMNO’s most unapologetic “apology” just before the upcoming elections will hence not change how the rakyat perceives BN, especially since the BN leaders are not even willing to recognize the faults in the system.

Monday, March 05, 2012

Parliamentary Questions 2012 (I)

Parliament commences again on 12 March 2012.  It will most certainly be the final session before the next general elections, so it should be pretty exciting and eventful.  The following are the list of 15 oral and written questions I have submitted for the coming session.

Parliamentary Questions for 2012 Session I

Soalan Jawapan Lisan

1.     Tony Pua meminta Perdana Menteri menyatakan terma-terma penyelesaian kes mahkamah antara Tajudin Ramli dengan Danaharta/Prokhas. Adakah jumlah hutang Tajudin RM589.15 juta telah dilupuskan dan apakah sebab langkah penyelesaian diambil tanpa bicara.

2. Tony Pua meminta Perdana Menteri menyatakan sebab konsesi lebuhraya Pantai Barat
(a) ditawarkan kepada anak syarikat Kumpulan Europlus Bhd tanpa sebarang tender terbuka.
(b) memerlukan kos sebanyak RM7.07 bilion dan pinjaman kerajaan sebanyak RM2.24 bilion

3. Tony Pua meminta Menteri Pertanian menyatakan kedudukan abatoir yang diperlukan dalam projek Pusat Fidlot Negara, berapakah jumlah wang yang diperuntukkan oleh Kementerian Kewangan dan adakah wang tersebut telah digunakan.

4. Tony Pua meminta Menteri Pengangkutan menyatakan
(a) sebab Lapangan Terbang KLIA2 dipindah daripada tapak asal KLIA Utara ke KLIA Barat yang telah dikenali sebagai tapak yang paling tidak sesuai untuk membina lapangan terbang.
(b) kos kerja tanah di tapak KLIA Barat dan pembinaan menara kawalan baru di KLIA2.

5. Tony Pua meminta Menteri Perdagangan Antarabangsa dan Industri menyatakan
(a) jumlah subsidi dan geran R&D kepada Perusahan Otomobil Negara (PROTON) dan industri pembuatan kereta setiap tahun sejak 2000
(b) adakah subsidi dan geran ini akan diteruskan setelah PROTON dijual kepada DRB Hicom.

6. Tony Pua meminta Menteri Kewangan menyatakan
(a) cara gula mentah diperolehi oleh Kerajaan dan pengiraan subsidi gula yang diberikan kepada syarikat penapisan gula
(b) sebab kerajaan membeli gula mentah dengan harga US$0.26 setiap paun walaupun harga pasaran dunia tidak melebihi US$0.24.

7. Tony Pua meminta Menteri Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan menyatakan
(a) senarai nilai geran yang telah diberikan kepada Juta Bersih Sdn Bhd bagi setiap Kedai Rakyat 1Malaysia (KR1M) yang dibuka
(b) nilai “revenue” jualan produk berjenama 1Malaysia berbanding dengan produk jenama lain yang dijual dalam KR1M sehingga Februari 2012

8. Tony Pua meminta Menteri Pengangkutan menyatakan kedudukan terperinci projek “Automated Fare Collection” (AFC) yang tidak dapat disiapkan dalam jangka masa yang ditetapkan dan memerlukan pelanjutan masa diberikan beberapa kali dan jumlah wang yang telah dibayar kepada pihak kontraktor.

9. Tony Pua meminta Menteri Pengangkutan menyatakan
(a) kedudukan projek Zon Bebas Pelabuhan Klang (PKFZ) termasuk keluasan yang telah disewa, kadar sewaan kaki persegi dan jumlah sewa yang dikutip
(b) sama ada PKFZ dapat mencapai sewaan dan pendapatan mengikut pelan perniagaan dan pengaliran tunai yang diberi kepada syarikat audit PricewaterhouseCoopers.

10. Tony Pua meminta Perdana Menteri menyatakan sebab projek MRT Sungai Buloh-Kajang diberikan kontingensi kos tambahan sebanyak 15% yang tidak akan mengenakan sebarang penalty ke atas pihak “Project Delivery Partner” (PDP) yang akan mengurus projek tersebut.

Soalan Bertulis

11. Tony Pua meminta Menteri Kewangan menyatakan senarai terperinci semua pinjaman agensi kerajaan atau syarikat swasta yang diberi jaminan oleh kerajaan yang merupakan "contingent liability" untuk setiap tahun sejak 2001.

12. Tony Pua meminta Perdana Menteri menyatakan dengan jadual terperinci (bukan rencana) jumlah pengundi baru yang didaftarkan
(a) Oleh setiap parti politik untuk setiap suku tahun sejak 2008
(b) Oleh setiap parti politik mengikut negeri sejak 2008

13. Tony Pua meminta Menteri Dalam Negeri menyatakan dengan jadual terperinci (bukan rencana), statistik jenayah setiap tahun sejak 2006 bagi
(a) Negeri Selangor mengikut daerah dan jenis jenayah
(b) Seluruh negara mengikut negeri dan jenis jenayah

14. Tony Pua meminta Perdana Menteri menyatakan senarai semua petender dan harga yang dibekalkan untuk projek MRT bagi
(a) pakej V5: Pembinaan jejambat dan lain-lain dari Portal Maluri ke Stesyen Plaza Phoenix
(b) Pakej V6: Pembinaan jejambat dan lain-lain dari Plaza Phoenix ke Stesyen Taman Tun Hussein Onn

15. Tony Pua meminta Menteri Luar Negeri menyatakan
(a) sebab perkhidmatan memproses permohonan visa melawat Malaysia di negara Cina diswastakan dan apakah syarat-syarat utama penswastaan termasuk kadar yuran yang perlu dibayar
(b) berapa permohonan yang diproses oleh syarikat tersebut setiap bulan mengikut jenis visa dan kawasan/daerah di Cina

Saturday, March 03, 2012

NFC: Where Did RM81.4 Million Go?

'Directors have taken out RM81.4mil from NFC'
Nigel Aw
11:50AM Mar 2, 2012

Directors of the National Feedlot Corporation (NFC) have transferred close to RM81.4 million from the company account to those of external companies as of 2009, DAP national publicity chief Tony Pua said today.

The amount, he said, is held by private companies under the directors without any guarantee  that the sum would be returned to NFC.

"The directors have emphasised that all these companies are either subsidiaries or associated with NFC.

“But the accounts since 2007 showed NFC has no subsidiaries," he said at a press conference at the DAP headquarters in Kuala Lumpur this morning.

The NFC's 2009 audit report states:"Included in other receivables and deposits of the company is an amount of RM81,324,745 (2008: RM32,275,493) due by companies which are associated with certain directors of the company.

"The amounts are unsecured and have no fixed term of repayment."

Pua said: "This means that we don't know if we can get the money back."

Audit reports for 2008 and 2009

Reiterating that lending directly to company directors is against the Companies Act 1965, Pua speculated that the amount may have ballooned to over RM100 million after 2009, the accounts of which  have yet to be published.

The audit reports of 2008 and 2009 listed  the company directors as Women, Family and Community Development Minister Shahrizat Abdul Jalil’s (right) husband Mohamad Salleh Ismail and their three children, namely Wan Shahinur Izran Mohamad Salleh, Wan Izzana Fatimah Zabedah Mohamad Salleh and Wan Shahinur Izmir Mohamad Salleh.

The other five appointed directors were A Manaf Hussin, Mohd Mokhtar Ismail, Mat Ali Hassan, Raj D Ratnakumar and Norzam Md Nor.

However, Ratnakumar and Norzam resigned in 2009 while Alias Mohd Yassim was appointed in May 2010.

“Given that this amount of money was funded by taxpayers, I call upon NFC to immediately disclose every single cent of the RM81.4 million.

“There is a great need for accountability, money from the government cannot be used for anything or hidden away, it must be transparent and taxpayers must be informed,” he said.

If NFC fails to immediately disclose all the private companies that have drawn money from NFC, Pua said, he will push this matter before the Public Accounts Committee which will meet on Mar 5.

“I will make sure NFC is at the top of the agenda... I will demand a list of other receivables from who and to where,” he said.

According to its audit report from LM Chan & Associates, NFC had in 2007 suffered a loss of RM1.94 million, followed by RM7.04 million and RM10.94 million in 2008 and 2009, respectively.

For 2008 and 2009, NFC’s revenue cost exceeded its gross revenue, thus suffering a loss even before other operating costs and expenses were deducted.

As of 2009, it had piled up a total loss of RM19.93 million.

The audit reports also showed that the directors had forked out a total of RM1.11 million for the National Feedlot Project, however, the remaining was from the RM250 million government soft loan granted to NFC.

DAP Petaling Jaya Fund-Raising Dinner 2012

Friday, March 02, 2012

NFC Puts Shopping Cart Before The Cow

In a statement today, NFCorp Chairman, Datuk Seri Muhammad Salleh “explained that the publicly-funded cattle-rearing firm was building up the market in Singapore” to justify the setting up of a Farmhouse Supermarket in Singapore soon.

PKR Strategic Director Rafizi Ramli had first exposed the fact that NFCorp may be using public funds to expand into the supermarket business in Singapore which are owned directly by the directors of NFCorp and not by NFCorp itself.

Rafizi has today responded by questioning NFCorp on the basis of expansion overseas when it was the objective of the NFCorp to fulfill 40% of the local beef demand.  At the moment NFCorp is barely scratching 1% of the local market demands, hence any investments for overseas exports is not only premature, but also contrary of the objectives set out in the government’s RM250 million loan agreement to the company.

I would further add the fact that opening a “supermarket” is a completely different business from that of “exporting” beef, even if such exports were indeed justified.  Sale of beef and beef products in such a supermarket would only  contribute a miniscule percentage of overall product sales and will do very little towards increasing the demand for beef from Malaysia in Singapore.

If promoting beef from NFCorp is indeed the overriding objective in setting up the Farmhouse Supermarket, then Datuk Seri Muhammed Salleh either completely lacks business sense or is lying through his teeth to justify the use of public funds.

What is perhaps most damning, is that a check with the Agri-Food and Veterinary Authority (AVA) of Singapore has shown that there is no approval to import raw beef from Malaysia.  At this point of time, only “processed beef” such as sausages, patties, meatballs, smoked meat etc., are approved for selected companies.  Even so, only 5 companies are approved and they are Mac Food Sdn Bhd, Nestle Manufacturing Sdn Bhd, PAP Cashnet Sdn Bhd, Unilever Bestfoods Sdn Bhd and Lucky Food Processing Sdn Bhd.

NFCorp has not  been given any approval to export its beef or processed meat to Singapore.  Hence how can Muhammed Salleh claim that the setting up of Farmhouse Supermarket, which is already about to open for business, be in the interest of promoting NFCorp’s “Gemas Gold”?  Is this not a clear case of putting the cart before the cows?

Most importantly, the allegation that part of the RM250 million loan to NFCorp was utilized to set up Farmhouse Supermarket, which is directly owned by the family of Minister of Women and Family Development, Datuk Sharizat Abd Jalil has yet been answered by NFCorp.  Such diversion of funds from the NFCorp is clearly in breach of the Loan Agreement and the Companies Act 1965.

Datuk Seri Muhammed Salleh should not be distracted from the core issue of criminal breach of trust and must be held accountable to the tax-payers who are funding the operations of NFCorp.

Thursday, March 01, 2012

Attorney-General Objected to West Coast Expressway Contract?

The Malay Mail cover an exclusive story on the fact that the Attorney-General “is of the opinion the terms of agreement for the project, which has seen its cost balloon, are not in the public interest” on Monday, 27 February 2012.

According to the report, “Government sources tell The Malay Mail Abdul Gani had expressed reservations over the terms, which seem to heavily favour the highway concessionaire, WCE Sdn Bhd, a 64.2 per cent subsidiary of Kumpulan Europlus Bhd… Abdul Gani has put the Economic Planning Unit (EPU) and the relevant agencies and ministries such as the Malaysian Highway Authority, the Finance Ministry and the Works Ministry on notice over his reservations on the 316km-long highway that will link Banting in Selangor to Taiping, Perak, where 224km will be tolled.”

Allegedly, according to their source, ‘despite immense pressure to sign the legal documents, the A-G has informed the stakeholders he wants to review the terms of the agreement.”

Assuming that the Malay Mail front-page report is spot on, then the Prime Minister must immediately answer as to why the Government is insistent on awarding the new WCE concession to Kumpulan Europlus via direct negotiation which has seen the cost of the project inflate excessively.

The cost of the expressway was RM3.0 billion when it was first awarded without tender in 2007 but further “negotiations” between the Government and the concessionaire has increased the cost to RM7.1 billion when it was re-awarded last month.  In addition, the concession period has been increased from 33 years originally to 60 years, a record for highway privatisation projects in Malaysia.

What is perhaps unacceptable is the fact that despite such attractive terms, the Government still have to provide RM2.24 billion of soft loans to the concessionaire, as well as up to 3% interest-subsidy for commercial loans secured.  The Government will also bear the cost of all land-acquisition, estimated at RM1 billion.

If the Malay Mail report is indeed true, then we call upon the A-G to do all necessary within his powers to ensure that the Government receives a fair bargain, and to avoid a repeat of many costly mistakes made by the Government in privatisation projects such as the RM12.5 billion Port Klang Free Zone scandal, toll highways which generates astronomical profits for the concessionaires such as the RM5.9 billion PLUS and the RM1.3 billion LDP.

What is shocking is the fact that the project is being awarded to a company with very poor financial record over the past few years.  Kumpulan Europlus earned revenues of RM50 million and RM28 million in the last 2 financial years of 2010 and 2011 respective.  Besides the small revenue base compared with the RM7.1 billion project, the company also made losses of RM35 million and RM46 million in the past 2 years.

Dato’ Seri Najib Razak must walk the talk of “economic transformation” by implementing all the reforms on transparency and accountability that his administration has been preaching over the past 3 years.  He must not “over-rule” the opinions of the A-G to ensure that the people’s interest comes first and the tax-payers’ are not excessively burdened.  Instead, the Prime Minister must disclose in full the basis of the award of WCE to Kumpulan Europlus, as well as the financial justifications for the soft-loan, interest-subsidy, 4.1 billion increase in the cost of the highway as well as the 27-year extension of the concession.  Most importantly, the Government, in the interest of transparency, must disclose the proposed toll rates which will be imposed on motorists to justify such lucrative terms to the concessionaire.

Otherwise, all the talk of “economic transformation” which Najib has been “selling” to both local and foreign investors will be seen as just political rhetoric, and the Prime Minister will soon be branded by businessmen all over the world as the one who just could not deliver the promised changes.