Malaysiakini News

Has the gov’t lost control of Bernas?

Gooi Hsiao Leung  |  Published:  |  Modified:

MP SPEAKS Three days ago, Ismail Sabri Yaakob urged the public to grow their own vegetables in light of the soaring cost of living. While I am all for healthy living in growing our own vegetables, Ismail Sabri’s rationale in urging the public to grow vegetables to alleviate the problem of increasing living costs is shocking.

The minister should instead address the declining financial health of Bernas responsible for regulating the national rice industry as recently reported in the RAM Rating Services report on Bernas dated June 4.

Since taking Bernas out of public scrutiny with its delisting from Bursa Malaysia a year ago, the public has been kept in complete darkness about its financial operations and performance, until the recent shocking revelations made by the credit rating report that Bernas is channeling huge funds to its parent companies owned by Syed Mokhtar Al-Bukhary totaling over RM700 million.

Not only is Bernas reported to have made huge advances to Syed Mokhtar’s ( photo ) companies, it is also reported to have approved dividend payouts much higher than its net earnings to its shareholders, now fully owned by Syed Mohktar’s companies.

Ismail Sabri has a public duty to explain whether the government was complicit in approving the channeling of huge funds from Bernas to Syed Mokhtar’s companies as revealed in the recent RAM Rating Services report.

The downgrading of Bernas’s credit rating is particularly worrying as it puts the company’s financial viability into question and would impact its ability to raise new funds for its operations in the future.

In addition, the minister must also publicly disclose which government agencies (such as Retirement Fund Incorporated or KWAP, Employees Provident Fund or EPF, Pilgrims Fund Board or Tabung Haji, etc) are holders of Bernas’s RM750 million Islamic notes which have been downgraded to A3/negative/P2 from AA3/negative/P1 in the credit rating report, making it extremely difficult for the note holders to sell their bonds and recover their investment.

Is Tradewinds (M) Bhd, owned by Syed Mokhtar, facing financial difficulties that it has to resort to raiding Bernas’s funds? For a long time now, questions have been raised whether the high debt levels of Syed Mokhtar’s group of companies pose a systemic risk to the country’s banking system. In 2013, just three of Syed Mokhtar’s companies alone, MMC, Tradewinds Corp and Tradewinds (M) combined, have more than RM28 billion in debts.

Strategic national asset

Bernas is not a mere private company for its shareholders to do as they like. It derives its profits from huge government subsidies, tax exemptions and the monopoly rights to import rice. It is a strategic national asset tasked with maintaining food security, managing the country’s rice stockpile and government subsidies, protecting the national interests of rice farmers, millers and the consumers.

The suspect corporate governance in Bernas since its delisting above shows, if anything, that our government has lost control of Bernas, and Ismail Sabri’s past public assurances that Bernas’s delisting is only temporary, and that stakeholders such as the National Farmers Association (Nafas) and National Fishermen Association (Nekmat) will gain huge profits from the buyout of their shares by Syed Mokhtar’s companies to facilitate the de-listing and subsequent relisting of Bernas is turning out more and more to be fiction and fantasy.

The minister must immediately answer the above questions before Bernas is stripped to its bones, triggering yet another government bailout of the losses suffered by Bernas and government agencies holding the Islamic notes in Bernas.

GOOI HSIAO LEUNG is Member of Parliament, Alor Setar and PKR supreme council member.

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