DAP parliamentarian Tony Pua insists the National Feedlot Corporation (NFC) had flouted provisions under the Companies Act 1965 by claiming that the funds allotted for the cattle farm could be channelled to the company’s subsidiaries.

The Petaling Jaya Utara MP, who also sits on Parliament's Public Accounts Committee (PAC), urged the attorney-general (AG) to not just charge NFC with criminal breach of trust (CBT) for alleged abuse of state funds but also for breaching provisions of the Companies Act prohibiting loans to directors and their related companies.

On Sunday, NFC asserted that the “companies” which utilised the RM250 million government soft loan were always meant to be its subsidiaries, with its directors also sitting on the boards of the other companies.

NONE Pua ( left ) argued that this showed the claim “is in fact a clear admission of wrongdoing under the Companies Act” as “NFC lent liberally to its directors and directors’ companies”.

According to the Section 133 and 133A of the Act under the category of ‘Loans Prohibited’, it stipulates that:

“[...] a company shall not make a loan to a director of the company or of a company which by virtue of section 6 is deemed to be related to that company, or enter into any guarantee or provide any security in connection with a loan made to such a director by any other person […]”

“The statement by NFC that - ‘the directors of NFC sat on the board of these associate companies’ would ‘prove exactly the point of the attempt to rationalise’ the group of unrelated companies, is in fact the exact offence which the Companies Act seek to make illegal,” said Pua in a statement today.

“In addition, Section 133A extends the prohibition to include loans to persons connected with directors of the lending company. Such persons include other companies in which its directors have an interest in 20 pecent of the equity of such companies.

 

“Finally, Section 133(4) makes directors in breach of the prohibition guilty of a criminal offence and such directors are made jointly and severally liable to indemnify the company against any resulting losses,” he said.  

NFC did not seek for government approval to source out the loan to its subsidiaries.

Last week, Pua revealed NFC’s loan agreement, saying that the company had contravened the conditions by purchasing luxury properties as an investment.

The company then responded saying that the loan agreement must be read alongside the memorandum and articles of association (M&A) and other related documents on the Finance Ministry’s terms and conditions for the loan.

NFC argued that the M&A allows the company to use the money for landed properties, which can be liquidated as a short-term investment.

The company has come under fire after the the Auditor-General’s Report 2010 stated that the National Feedlot Centre project meant to reduce Malaysia’s beef imports, is very far off-target.

PKR had then exposed how the government loan was used for non-cattle rearing-related matters, such as financing purchases of luxury condominiums in Kuala Lumpur and Singapore, a plot of prime land in Putrajaya and a luxury car.

‘Acquisitions not made through NFC’

“Such acquisitions and investments with the loan funds have not been made through the NFC entity but through the individual directors of the company,” said Pua.

“In effect it meant that NFC has lent money to the individual directors of the company and/or directly to companies which had common directors with NFC. Such director-related companies would include Meatworks (Singapore) Pte Ltd which is not owned by NFC but by the individual directors of NFC,” he added.

Although certain types of loans are permitted to “employees and advances on expenditure to be incurred”, it would require prior shareholders’ approval, explained Pua.

However, in NFC’s case no approval was sought from the Finance Ministry which has a “golden share” in the company.

Pua reiterated that it is evident the company had not just breached of the loan agreement, but “it is illegal under the Companies Act to extend such loans”.

Mohamed Salleh, who is the husband of Women, Family and Community Development Shahrizat Abdul Jalil, as well as her children who are the company’s directors, are being probed for alleged mismanagement of the funds for their personal purposes.

Shahrizat is also being investigated by the Malaysian Anti-Corruption Commission (MACC) on her role in the award of the cattle-farming project to members of her family.

The minister has, however, denied having a hand in the matter and deflected calls demanding she resign from her post.

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