Felda was cheated in Eagle High purchase, says director general

KUALA LUMPUR (April 9): Federal Land Development Authority (Felda) director general Datuk Dr Othman Omar had yesterday evening lodged a police report at the police commercial crime unit here, claiming that it was cheated into entering into a "one-sided" deal for the sale and purchase of Eagle High Plantations TBK (EHP), owned by the Rajawali Group, two years ago.

Othman claimed that then prime minister cum finance minister Datuk Seri Najib Razak had directed Felda to invest in EHP through a 37% stake and this is contained in the Finance Ministry letter to Felda on Dec 8, 2015, whereas EHP has total debts of US$547.4 million in 2014 and its liability was US$676.9 million in 2016.

The purchase of EHP, owned by Rajawali's Tan Sri Peter Sondakh, who it claims is Najib's friend, was done through its special purpose vehicle FIC Properties Sdn Bhd (FPSB), said Othman.

The director general alleged that the efforts to purchase EHP shares were offered to several agencies including FGV Bhd, Malaysian Plantation Oil Board (MPOB) and Malaysian Rubber Board (MRB) before it was "forced" on Felda.

Othman claimed the agreement to purchase EHP is one-sided and to Rajawali's benefit as it involves payment of more than US$505 million, equivalent to RM2.3 billion, whereas the Finance Ministry and Felda realised there are many risk involved in the deal.

He said other factors making it a one-sided affair is that EHP does not possess the Roundtable on Sustainable Palm Oil (RSPO) accreditation and according to documentary evidence, the company would not be able to achieve RSPO certification even after 10 years.

Othman further claimed that the purchase of EHP as approved by Felda was at a more than 300% inflated price of US$505 million, whereas the value of its 37% acquisition was only US$114 million.

He said the Felda/FPSB purchase was against consultancy advice made including by KPMG Malaysia dated Feb 16 and Nov 11, 2016, BDO Malaysia in an evaluation report dated April 29, 2016 and Indonesian law firm Hiswara Bunjamin dated Nov 10, 2016 as well as JPMorgan's slides tabled on Dec 23, 2016.

As such, Othman alleged Felda and its subsidiaries should not have entered into the purchase of the EHP stake for US$505 million as it does not have the financial capacity.

The director general further claimed that Najib and his allies at the Prime Minister's Office, Finance Ministry and Felda board of directors had caused Felda to get a RM2.5 billion loan from GovCo Holdings Bhd, a subsidiary of the Finance Ministry under Najib's watch.

Othman further alleged that as a result of having to take the loan, Felda suffered RM1.576 billion losses as of Dec 31, 2017, and this affected Felda's and its subsidiaries' performance.

"As a result of the purchase at RM2.3 billion by Felda, it had suffered losses when the value of purchase is now just RM555 million as of last month," he said in the police report.

The director general suspects that the EHP agreement which resulted in losses for Felda is due to Najib directing Felda for its investment on Sondakh's interests in EHP and that Sondakh used his influence on Najib, resulting in Felda purchasing the stake at an inflated price.

Othman said former Felda chairperson Tan Sri Mohd Isa Samad played his role in signing the EHP agreement due to his position as FPSB chairperson.

The director general also claimed several senior Finance Ministry officials along with former finance minister II Datuk Seri Johari Abdul Ghani and former deputy minister Datuk Seri Razali Ibrahim had wielded their influence to go ahead with the purchase.

He suspected that some of the previous board of directors are involved in criminal conspiracy to cheat and cause Felda to suffer losses through the EHP agreement resulting in Felda entering a deal to get a loan from GovCo.

Othman added that as Isa was replaced by Tan Sri Shahrir Samad, as Felda chairperson, he suspected that Shahrir had also caused the US$505 million payment be made in 2017.

He further named seven individuals who he claimed are involved in criminal conspiracy, criminal breach of trust, possible graft involving public officers and cheating, and asked the authorities to investigate them.

The director general also believes that some may be involved in money laundering.

The Edge had since last June questioned the purchase of EHP. It was also reported that FGV Holdings Bhd had also filed a suit against Isa, its former chief executive officer and president Emir Mavani Abdullah and 12 of its former directors for breach of fiduciary duty where the suit is pending at the High Court here.

Earlier this year, several media reported that Felda wants to dispose of its stake in EHP.

Othman also lodged a separate police report over the Kuala Lumpur Vertical City project, which he claims also caused losses to Felda and where he suspects there are similar offences as stated above.  — theedgemarkets.com

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