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Will audit on Felda reveal the real thieves?

LETTER | C4 Center views the appointment of an external audit firm to conduct a forensic audit on the Kuala Lumpur Vertical City (KLVC) project being developed by Synergy Promenade Sdn Bhd (SPSB) on land belonging to the Federal Land Development Authority (Felda) as an interim stop-gap measure, without longer-term solutions to Felda’s far-reaching woes.

The appointment was announced by the Prime Minister Najib Abdul Razak on Jan 4, following an expose on Dec 21, 2017, that Felda is at risk of losing its ownership over four parcels land along Jalan Semarak, the titles of which were transferred to SPSB circa 2015.

The dubious land transfer was reportedly made possible through a full power of attorney granted by Felda's wholly-owned subsidiary, Felda Investment Corporation (FIC), to SPSB.

FIC was incorporated in 2013 specifically to manage Felda’s assets and shares, so that Felda could focus on its core business to be more successful in the long term.

FIC is the same company that is the subject of MACC’s ongoing investigation over its controversial purchases of luxury hotels in London and Kuching at above market value.

Will the audit shed any light on the real culprits and thieves?

Until today, it remains undisclosed to the public as to which audit firm has been appointed; whether the auditors involved are independent; and what are the terms of their appointment.

The public was only told that the external auditor is expected to complete the audit within 30 days and that a full report would then be submitted to the Prime Minister's Department.

There is also no information on whether such an audit report would be tabled in Parliament or whether it would suffer the same fate as the Auditor-General’s Report on 1MDB.

The public needs to be informed whether the process of appointing the external auditor is free from a conflict of interest. Felda was placed under the purview of Najib in 2004, when he was the deputy prime minister, and such arrangement continues until today under the Prime Minister's Department.

Under the Land Development Act 1991, Najib, as the minister in charge of Felda, has extensive powers, including the power under Section 4(2) to demand that Felda furnishes, from time to time, its account and other information in relation to its properties and activities.

Further, under Section 3(3)(c), Felda could only enter into any arrangement for the sharing of profits or to carry on activities with any company upon the approval of the minister.

It raises the question on the proprietary of the selection and appointment process of an external auditor by the very minister that failed to perform his duty towards Felda under the law.

The fact that the external auditor reports to and their report would be submitted to the Prime Minister's Department alone also raise issues of transparency in the probing of the whole scandal.

This cannot be another tale of yet another scandal kept secret. Pending the completion of the auditor’s probe, C4 Center strongly urges:

  • That Prime Minister Najib answers to the public on how the Prime Minister's Department, as the ministry in charge of Felda, was unable to detect such a glaring fraud in Felda’s management; is there not any form of effective reporting in place that ensure Felda’s chairperson reports to the prime minister frequently and certainly on transactions as crucial as affecting Felda’s ownership of land? Under Section 15 of the Land Development Act, Felda’s chairperson is appointed by and holds office at the pleasure of the prime minister (as the current minister in charge of Felda);
  • That statutory bodies and government-linked companies (GLCs) performing commercial functions, such as Felda and their companies, be made subject to public scrutiny. The tabling of Felda’s aggregated annual report in Dewan Rakyat alone is insufficient;
  • Malaysia should consider establishing an Ombudsman Office that would allow probing into the actions of governmental organisations and statutory bodies; and
  • For the forensic audit to release its report for public scrutiny and not use the Official Secrets Act as a shield to hide the corruption under Prime Minister Najib’s administration.

The South African method in scrutinising the performance of its state-owned enterprises (SOE) can be looked at for a start.

The South African Parliament gives a mandate to its Standing Committee on public accounts to evaluate the performance of its SOEs by interrogating their annual financial statements, and its Portfolio Committee exercises oversight over the service delivery performance and non-financial aspect of the SOEs.

This parliamentary scrutiny is necessary to ensure transparency and to prevent further leakage and wastage of public monies. What we need is the political will to tackle such deep-rooted malfeasance and corruption, not more sandiwara.

The writers is director, Center to Combat Corruption and Cronyism (C4).

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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