KUALA LUMPUR: Felda started experiencing worsening financial problems and mounting debts after its listing of FGV Holdings Berhad in 2012 and investing in the non-plantation sector.
According to the white paper on Felda towards the agency’s sustainability, tabled by Economic Affairs Minister Datuk Seri Mohamed Azmin Ali in Parliament today, the issue of integrity and accountability had contributed much to its financial difficulty and debt problem, which were also felt by the settlers.
Following were the main and related problems faced by Felda after its listing of FGV:
1. The Land Lease Agreement between FGV and Felda resulted in Felda’s income to decline by over RM1 billion a year.
2. Out of the RM6 billion received by Felda from the listing of FGV in June 2012, Felda spent RM1.4 billion on unprofitable new investments while its unproductive expenditure amounted to RM4.6 billion.
3. FGV spent RM3.3 billion from the RM4.5 billion it received from the listing on investment and development that were unprofitable.
4. There was a conflict of interest in the management and operations when Felda chairman Tan Sri Mohd Isa Abdul Samad also sat on the board of directors of 20 Felda subsidiary and associate companies, resulting in the absence of check and balance for the companies’ investment decisions.
5. Felda’s weak internal control, besides the lack of accountability resulted in Felda continuously incurring huge losses.
6. Investments by Felda and Felda Investment Corporation Sdn Bhd (FIC) that were less strategic, with a portion of the assets bought at above the market price and giving no appropriate returns. — Bernama
