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MP SPEAKS Following reports that Lembaga Tabung Haji (LTH) had purchased two plots of land in the Tun Razak Exchange (TRX) development from 1MDB at exorbitant prices, the Muslim pilgrims’ fund responded with a statement clarifying that they had actually bought only one plot of land for RM188.5 million.

According to LTH deputy group managing director Johan Abdullah, the investment was in line with LTH’s strategic plan to focus on property development.

He also added that the purchase price of RM188.5 million was discounted based on current market value.

Meanwhile, in addressing the leaked documents published on an anonymous blog , Johan ( photo ) said that “the leakage of information as seen on the proposal papers cannot be made proof of the final decision in the investment.”

In other words, LTH acknowledges the veracity of the documents but insists they were not final.

Based on the leaked documents, the LTH investment panel had, on 30 March 2015, recommended to the board of directors to propose to the minister to approve the purchase of two plots of land from 1MDB Real Estate Sdn Bhd, measuring 1.56 acres and 3.4 acres, at RM194 million or RM2,860 per square feet and RM578 million or RM3,900 per square feet respectively.

This was apparently endorsed by the LTH board of directors on 1 April 2015.

However, yesterday’s statement by LTH shows that the 1.56 acre plot was actually acquired at a slightly lower price of RM188.5 million or RM2,773 per square feet, which corresponds to a discount of less than three per cent compared to the recommended purchase price.

Nonetheless, it must be noted that RM2,773 per square feet is still a very high price for LTH to pay considering 1MDB bought the land for a mere RM64 four years ago in 2011.

Huge profit for 1MDB

In fact, LTH’s own internal risk assessment report revealed that comparable transactions in the vicinity saw land being sold for between RM649.49 per square feet to RM2,266.85 per square feet.

At RM2,773 per square feet, LTH has paid at least RM500 per square feet more than other comparable recent transactions.

This sweetheart deal has effectively allowed 1MDB to rake in a huge profit of RM184 million by acting as nothing more than a land broker.

Furthermore, LTH has not explained why they insisted to press on with the deal despite a “high-risk” assessment by their internal risk management team.

Among the many problems pointed out by the report include the currently lacklustre property sector, softening of real-estate prices in KL, increasing difficulty for buyers to obtain financing, an oversupply of luxury condominiums in the Klang Valley, as well as the generally slow pace of development of the TRX project.

In fact, the report even stated that LTH would face a reputation risk if it associated itself with 1MDB.

With so many dissuasive factors, it is alarming that LTH would take on such a high-risk investment, and in doing so potentially place the savings of millions of hajj pilgrims in jeopardy.

LTH must immediately respond to justify their investment decision or risk it being seen as an unwise attempt to bailout the debt-ridden 1MDB sovereign fund.


Zairil Khir Johari is DAP assistant national publicity secretary and

Bukit Bendera MP.

 

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