LTAT too dependent on Boustead, needs overhaul - PAC

The Armed Forces Fund Board (LTAT) is too dependent on Boustead Holdings Bhd (BHB), Public Accounts Committee (PAC) chairperson Mas Ermieyati Samsudin said today.

In a statement, she called for the Defence Ministry and LTAT to take immediate action over the matter as BHB and its subsidiaries had increased the impairment risk of the fund’s value to 50 percent, or nearly RM5 billion.

“Taking into account the various crises and scandals that have occurred under Boustead’s supervision, the structure of BHB as an intermediary company between LTAT and companies that generate profits needs to be reorganised,” she said.

She recommended that LTAT diversify its investment portfolio to reduce risks from reliance on a single entity.

This would also ensure the fund is able to provide contributors with high and consistent dividends, she added.

She also called for the National Audit Department to perform a detailed audit of BHB’s finances and governance next year.

Conditional voluntary takeover

In 2022, LTAT provided BHB with a conditional voluntary takeover offer, which was completed last year.

This allowed for BHB to be de-listed from the Official List of Bursa Securities, as it became a wholly owned subsidiary of LTAT.

In March, Mas Ermieyati expressed concerns over LTAT after it was revealed that its reserves were in the negative during a meeting with the auditor-general over the Auditor-General’s Report for the federal agencies’ financial statements for the year 2022.

She said that PAC will meet with LTAT after Hari Raya Aidilfitri over the matter.

‘Give space’

Today, Mas Ermieyati also criticised the Defence Ministry’s decision to halt LTAT’s restructuring plan last year, saying it has stunted the fund’s urgently needed transformation.

“Based on the defence minister’s briefing during the proceedings, the decision to postpone and instructions to do over the plan to restructure BHB was only done after receiving input from BHB’s management, and not from LTAT’s management.

“LTAT as the 100 percent owner needs to be given space to formulate and implement a plan that meets its needs and objectives, not the other way around,” she pointed out.

She demanded that the Defence Ministry and LTAT present plans regarding the BHB restructuring to the committee by the end of this year.

The presentation should also include plans over LTAT’s stock portfolio holdings as well as the fund’s direction, she said.

She also called for LTAT to pay dividends based on realised gain instead of non-cash income as was done in 2021 and 2022.

“PAC gives the Defence Ministry and LTAT a period of two months before we call them back for follow-up proceedings so that we will know the actions that have been taken towards the recommendations.

“In the follow-up action proceedings, PAC also requests that LTAT present its strategic plan specifically to ensure its resilience, continuity and sustainability,” she said.

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