Mavcap fails to comply with terms of fund utilisation

KUALA LUMPUR: Malaysia Venture Capital Management Bhd (Mavcap) has failed to comply with the original terms and conditions of the utilisation of the RM200 million fund under the 10th Malaysia Plan (10MP).
The original terms and conditions stipulated that RM130 million of the fund must cater for Mudharabah concept venture capital direct financing, while the remaining RM70 million for the Asean level (OSP3) venture capital indirect funding.
"Instead, Mavcap invested RM193.88 million of the fund received in the Mudharabah concept Corporate Venture Capital and non-Mudharabah concept OSP3," according to the Auditor-General's Report 2016 Series 2 (Conformation of Financial Statement of Federal Statutory bodies, Federal Funds, Trust Accounts and other Agencies) relased today.
No written permission was obtained from the Ministry of Finance (MoF) on the changes made in the investment structure, it said, adding that the fund also failed to reach the optimum limit of investment financing in the venture capital market.
The report said under the 8MP, Mavcap achieved only 73% direct investments and outsourcing investment programme 1 (OSP1) due the failure of investment and fund companies in achieving the production target.
However, he said Mavcap achieved committed investments of more than 118.1% in the 9MP, 10MP (119.9 per cent) and 11MP (167.8%).
According to the report, between 2007 and June 2017, Mavcap could only pay back RM337.29 million of the RM450 million allocated under the 8MP that should have been settled in 2011.
It said Mavcap's failure to repay the loan on time resulted in the fund being charged with a cumulative total interest amounting to RM85.85 million, making Mavcap's overall commitment to the loans, including late interest charges to increase to RM198.56 million.
In addition, it said recommendations of staff annual bonus approved by the board for 2013, 2014 and 2015 were also not submitted to the MoF Incorporated for approval.
To Mavcap's reply on Sept 18, 2017 that the bonus payment and annual salary increases for 2013 until 2015 were approved by the MoF, the report said from 2016 onwards, the MoF would ensure that Mavcap obtain approval from the MoF incorprated first before doing so. — Bernama