PAC chief questions wisdom of Tabung Haji’s 1MDB land deal

PETALING JAYA (May 8): Parliament's Public Accounts Committee (PAC) chief Datuk Nur Jazlan Mohamed (pictured) said Lembaga Tabung Haji's (LTH) RM188.5 million land purchase from debt-ridden 1Malaysia Development Berhad (1MDB) was questionable, given that the troubled firm is in the spotlight for its massive debts.

He expressed surprise over Tabung Haji's decision, since it was known that the Finance Ministry-owned 1MDB is saddled with RM42 billion debts.

"There are many other investment opportunities for which Tabung Haji can use depositors’ money to make a gain. 

“It doesn't have to be this one.

"The issue is about professionalism and the integrity of (LTH's) investment committee and the board which approved it, and whether there was an invisible hand directing them.

"As for the purchase, the land is in a prime location but is the deal done on current market values?" Nur Jazlan asked.

The Pulai MP from the ruling Malay party, Umno, said PAC would not probe into LTH's purchase for now, citing its busy schedule.

PAC is expected to begin hearings on 1MDB later this month when Parliament reconvenes. It is to question those involved in the setting up, management and regulating of 1MDB.

Sources have told The Malaysian Insider that Bank Negara officials might also be called to testify before PAC.

"PAC has a lot on its plate now, including looking into cases highlighted by the AG report and 1MDB. 

"But we are open to receiving more information on the matter," Nur Jazlan told The Malaysian Insider via WhatsApp yesterday.

However, he did not discount calling up Tabung Haji in the future, if the need arises.

LTH, a savings fund for Muslims planning pilgrimages to Mecca, yesterday confirmed that it had bought a parcel of land from the state investment vehicle's Tun Razak Exchange (TRX) project located in the Kuala Lumpur city centre for RM188.5 million, which it claimed was a "discounted" price to current market value.

It planned to build a residential tower at the site, which will be undertaken by LTH subsidiary, TH Properties Sdn Bhd, which has wide experience in property and construction including its 2,071ha Bandar Enstek township located near the Kuala Lumpur International Airport.

"The investment is a commercial decision which fits with Tabung Haji's risk appetite and went through all internal process accordingly," Tabung Haji chief executive officer (CEO) Datuk Johan Abdullah said in a statement.

But Tabung Haji denied that it had bought a second parcel of land from 1MDB at TRX as alleged in a blog called "The Benchmark" which leaked documents allegedly detailing Tabung Haji’s purchase of two plots of land at 1MDB's Tun Razak Exchange (TRX) project for a total of RM772 million.

However, opposition lawmaker Zairil Khir Johari said LTH had paid an "unbelievably exorbitant" price per square feet (psf) for the land, compared with what 1MDB had paid for the land at RM64 psf four years ago.

Meanwhile, Zerin Properties chief executive officer Previndran Singhe said the RM188.5 million price tag was a "fair price", taking into account the higher plot ratio, nett land area and tax incentives for the TRX project.

Depending on the product, size and quality, he estimated that the potential price of a condo unit in Tabung Haji’s latest acquisition to be "north of RM2,000 psf".

Previndran remained upbeat despite concerns over the softening property market and oversupply of luxury condominiums in the Klang Valley, noting that a property will do well as long as it has the 4Ps – product, price, place and promotion.

"Yes, I think the market can take some more, but the product must be good," he added in a text message.

Tabung Haji did not cite the size of its acquisition but the anonymous blog claimed it was 0.63ha.

Last month, conglomerate Malaysian Resources Corp Bhd (MRCB) forked out RM259.16 million, or RM3,188 psf, to buy 0.755ha of freehold land along Jalan Kia Peng from the German Embassy.

The price is about 6% higher than the market value of the land, based on the appraisal by CH Williams Talhar & Wong and Raine & Horne International Zaki & Partners, according to MRCB. 

The Edge business weekly reported in March that a 3.23ha freehold land in Jalan Ampang belonging to the French Embassy is up for sale for nearly RM700 million.

The British High Commission's land in Jalan Ampang was sold in December 2012 to developer S P Setia Berhad for RM294.96 million for the 1.24ha tract, which works out to RM2,200 psf.

The weekly also reported that in 2013, at least two parcels of land in the Jalan Kia Peng area were sold. 

City View Ventures Sdn Bhd bought a 63,089-sq ft leasehold tract from Tropicana Kia Peng Sdn Bhd for RM2,099 psf. Then, Kuala Lumpur Cosmopolitan Sdn Bhd purchased a 39,828 sq ft freehold parcel in Changkat Kia Peng from Hatayu Corp Sdn Bhd for RM2,799.88 psf.