A subsidiary of the Selangor State Economic Development Corporation (PKNS) wanted to purchase 3.2 acres of land in Gombak for a whopping RM16.71 million even though the market price was only RM3.5 million, the Auditor-General's Report 2013 reveals.

This would have ended in Selamat Sdn Bhd (SSB) - 60 percent owned by PKNS - overpaying by RM13.21 million or 4.8 times the market value.

However, the deal involving Lot 15319 at Sungai Bakau did not proceed as the bank refused to grant a loan for that price.

The AG's report nevertheless criticised the deal as Selamat Sdn Bhd had already paid a 10 percent deposit of RM1.67 million which was already half the land's market price.

"The cancellation of the land purchase deal caused SSB to face the risk of losing their RM1.67 million deposit on top of having to foot a RM20,500 bill for surveying the land," says the report.

SSB themselves called off the deal after it was discovered that part of the land had to be handed over to the Selangor government for a road expansion project.

Another dubious purchase

The fact that part of the land had to be surrendered was already announced on March 15 2013 but SSB had still gone ahead and entered into the deal to purchase the land with an unnamed individual on April 24.

In a separate land deal, SSB had purchased 6.03 acres of land at PM758, Lot 9007, Sungai Merab, Sepang for RM2.5 million in 2011.

However, the company later found that the land could not be developed after its application to construct 30 units of three-storey houses was rejected by the Sepang Municipal Council.

"The land's slope was at level three and four which is dangerous and risky and for which construction is not allowed … ," says the report.

It added SSB could only use the land for housing if it was prepared to build retaining walls and obtained approval from the Mineral and Geoscience Department – steps which increase the project's cost.

SSB would also first have to spend RM1.22 million to make the land suitable for housing construction use.

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