PAC: Mara bought overpriced UK, Aussie properties after MOF said no

Mara Incorporated Sdn Bhd overpaid for three properties in Australia and the United Kingdom in 2013 and 2014, even though the Finance Ministry had rejected its application to buy those properties, the Public Accounts Committee was told.

The purchase was only greenlit after Mara Inc appealed to the Economic Council, a council led by then-prime minister Najib Abdul Razak. Najib was also the finance minister.

In 2013, Mara Inc bought a student dormitory, Dudley International House, at 51, Queen Street, and 333 Exhibition Street, both in Melbourne, Australia.

The company paid RM72.64 million for the properties but they are now worth only RM47.45 million, the PAC said in its report released today.

In the UK, Mara Inc in 2014 bought Beaumont House in London for RM78.53 million, but the property is now only worth RM74.1 million.

Decision at a higher level

Mara director-general Azhar Abdul Manaf said the Economic Council’s decision came after the Rural and Regional Development Ministry - which oversees Majlis Amanah Rakyat (Mara) - appealed the Finance Ministry’s rejection.

Mara Inc is the investment arm of Mara, a statutory body aimed at uplifting the bumiputera community.

“The whole process started according to the normal procedure. It started from Mara Inc to the board meeting, then to the Mara Investment Committee Meeting (ICM), then to the Rural and Regional Development Ministry and the Finance Ministry.

“During the whole process, I checked with my officers and found out that the Finance Ministry did not approve it, so the Rural and Regional Development Ministry appealed to the Economic Council.

“So the whole procedure was followed yet the approval was not at Mara level but at a higher level.”

The rural and regional development minister at the time of the purchases was Shafie Apdal.

In 2021, former Mara Inc chairperson Mohammad Lan Allani pleaded not guilty to 22 corruption charges totalling RM20.45 million involving the purchase of Australian properties.

This came after an investigation by Australian newspaper The Age revealed a group of wealthy Malaysian officials overpaid by A$4.75 million (RM13.8 million), with the difference paid as kickbacks.

Loan from Abu Dhabi National Bank

During proceedings, PAC chairperson Mas Ermieyati Samsudin questioned whether the Finance Ministry had conducted a check and balance on the value of the building through its representation before the purchase.

Questioning the ministry’s Chief Assistant Secretary Farithal Sahari, Mas Ermieyati asked if the decision was made to profit those with vested interests.

“The value (of the properties during purchase) compared to 2022 with a two-and-a-half times depreciation gave the perception that it was overpriced at that time and some parties are making profits from it,” she said.

In response, Farithal read from the minutes of the Economic Council meeting which approved the purchases.

Citing the minutes, he said the council agreed to transfer RM100 million to Mara Inc to cover part of the purchases.

He said the minutes also revealed that Mara Inc was to apply for a £12 million loan with the National Bank of Abu Dhabi, in London, for the UK property and take out an A$52 million loan with the Westpac Banking Corporation in Melbourne to purchase the properties in Australia.

The Economic Council minutes also showed that Mara Inc was instructed to seek advice from Bank Negara Malaysia on the foreign exchange rates for the purchase and that a special-purpose vehicle was to be set up in Labuan for the deal.

‘Decision-maker no longer in govt’

Surprised at this revelation, PAC member Sim Tze Tzin asked Farithal several questions regarding the circumstances leading to the Economic Council’s intervention.

To the question of who presented the purchases at the Economic Council, Farithal said it was done by Mara Inc.

“Who chaired the EC (Economic Council) during that time?” asked Sim.

“He is no longer here (in the government),” answered Farithal.

The Economic Council was first formed by then prime minister Abdullah Ahmad Badawi in June 2008 but under Najib, it was accused of being an “economic cabinet”, which bypassed the actual cabinet.

In 2015, then Kluang MP Liew Chin Tong accused it of rendering the cabinet a “rubber stamp”, as the Economic Council meets on Monday, two days before the cabinet’s weekly meetings.

Recommendations

In its recommendations, the PAC told the Rural and Regional Development Ministry, Mara, and its subsidiaries Mara Inc and Mara Corporation Sdn Bhd to ensure all investment proposals adhere to government policy.

PAC also suggested all the parties involved prioritise local investment.

“All proposals must get clearance from the Finance Ministry and the Finance Ministry’s decisions must be followed to avoid similar scandals on property purchases,” the council said.

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