AAM struggling to stay afloat

18 Aug 2016 / 10:42 H.

KUALA LUMPUR: Once a dynamic motoring organisation with over 200,000 members, the Automobile Association of Malaysia (AAM) has been forced to its knees with a series of unpaid bills and creditors at its doorstep.
To add insult to injury, its officials face prosecution for non-remittance of Employees Provident Fund (EPF) contributions.
But more important is its relationship with the International Automobile Association (FIA) which is in jeopardy.
The Formula 1 is scheduled to be held in Malaysia in October and it is learnt that FIA president Jean Todt is closely following the developments.
From a hefty cash pot and reserves, two plots of prime land and buildings, what remains are two properties – one in Johor Baru and another – its headquarters in Shah Alam which it wants to put up for sale to pay off mounting debts.
An extraordinary meeting to dispose two units of five-storey shop houses scheduled for last Sunday was called off on technical grounds.
Staff have not been paid for six months and their EPF has not been remitted, which has entailed the wrath of the authorities. Staff were assured that their salaries would be paid on Monday and when this did not materialise, they picketed outside the office.
So, where did it all go wrong? AAM records show that there had suffered small losses (RM46,000) in 2008 but it ballooned from RM584,000 in 2012 to RM2.1 million the following year.
AAM's annual report and audited accounts for the year ending Dec 31 2014 have not been posted on its website which has provided details from 2008 until 2013. The 2015 AGM has not been held yet.
In its 2013 posting, AAM recorded revenue from annual members' subscription as RM6.93 million, RM2.6 million from sale of merchandise and RM387,400 from Federation International de Motocyclisme (FIM). It also recorded an income of RM1.5 million through sale of insurance policies to members.
It also reported that its associate, AAM Motorsports (AMS) recorded "an income of RM2,652,408 for the financial period of 2012" with a total of 101 event permits issued for organising clubs at national, zone and international levels. This includes sanction fees for the F1 and the World Motorcyle Championship.
Despite such encouraging figures, there was a deficit with staff costs of RM7.1 million, office rental and expenses of RM960,000.
In an immediate response, AAM Chairman Tunku Mudzaffar Tunku Mustapha attributed its present state of affairs to marketing challenges and drop in market share.
Over the past three to four years, he said, almost 90% of AAM branches were losing money. But yet AAM continued the employment of all staff "to ensure their livelihoods are secure and not affected by economic slowdown, GST, etc".
"With all these things happening, it has affected AAM's capability to pay wages on time as income could no longer sustain operational costs," Tunku Mudzaffar said.
He said over the past few years, AAM had purchased properties, some of which are fully paid and some had appreciated in value.
"This would enable AAM to dispose and realise its value to continue to sustain our operations, for which we are selling some of these assets," he said.
On the question of 10% deposit paid for the intention of disposing a property, Tunku Mudzaffar said this is normal on a willing seller, willing buyer basis.
However, he did not explain why it had entered into an agreement with WWRC Malaysia Sdn Bhd without the sanction of the members.
On EPF contributions, he said AAM is in touch with the authorities and full payment is expected once the sales of assets is realised.

He said that the AAM had always complied with the requirement on submission of accounts to the Sports Commissioner.
"AAM has already embarked on new business module and strategic partnership that will enable to improve our finances and operations," he added.


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