EPF has been accused of making RM800 million DISAPPEAR in a BN-era deal. Here’s why.

Another year, another financial scandal – and this one’s not even the first.

It was only a few days ago that we wrote a piece on the controversial VEP govt project that has led to the PAC calling up former Transport Minister Liow Tiong Lai, and now Malaysia again has another major deal from the past all over the news:

Okay, we know what you’re thinking, “where got EPF in that news headline?!?1? #ihatecilisos #stopclickbait”, but hold on k we’ll explain really soon. The ‘deal’ that’s being talked about right now actually starts all the way back in 2010, and while the EPF will play a part in this story, the real protagonist here is the Malaysian Rubber Board (MRB).

 

The former govt allegedly made almost RM800 million at the MRB’s expense

So back in 2010, when this writer was still years away from doing his SPM, the then-PM Najib Razak had a grand plan for the area between Sungai Buloh and Kota Damansara. The 3285-acre area was set to be a new township called Kwasa Damansara, and the master developer would be Kwasa Land Sdn Bhd, a wholly-owned unit of EPF. Kwasa Damansara would have everything from affordable housing to commercial units and targeted a population of 150,000 in it.

Now the land in that area was at the time owned by the MRB, which meant that Kwasa Land kinda had to first get the land from the MRB to develop it. And since they are the land owner, you’d think that they could have some say in the deal right? Well you thought wrong – according to Primary Industries Minister Teresa Kok anyway.

She was the one who brought up the issue at a press conference recently, and highlighted that the then-Cabinet had pretty much forced the MRB to sell a huge chunk of the land (2800-acres in fact) to the Aset Tanah Nasional Bhd (ATNB), which is a special purpose vehicle (SPV) that’s under the Ministry of Finance. The current MRB chairperson Sankara Nair was also at the press conference, and here’s what he had to say about MRB’s land sale.

“Basically MRB was ordered to sell — no question to be asked. There was a lack of information. We were arbitrarily told: ‘Here’s RM1.5 billion, your land is sold’. And that’s it, and they walked away with it,” – Sankara Nair, MRB chairperson, as quoted by The Edge

And so by the end of 2010, the MRB’s land was pretty much owned by the Ministry of Finance thru the ATNB, and the MRB received RM1.5 billion in return for the land. Usually anyone would be quite happy to receive RM1.5 billion laa (pls boss gib raise), but not the MRB. See, just two years later, that same piece of land which the MRB sold for RM1.5 billion was then sold again to Kwasa Land (which is under the EPF) for a whopping RM2.28 billion! That means that the Ministry of Finance apparently pocketed a nice profit of RM780 million over the land sales, which Teresa Kok claims should have gone to the MRB in the first place.

“MRB was arbitrarily paid RM1.5 billion as sale consideration. However,… the said 2,800 acres of land was subsequently bought by Kwasa Land (EPF) for a sale consideration of about RM2.28 billion. MRB has therefore been shortchanged and there is a difference of about RM800 million. MRB therefore contends that it is lawfully entitled to the difference of RM800 million. This sum is still unaccounted for to date,” – Teresa Kok, as quoted by Malaysiakini

With the ATNB becoming a somewhat redundant middleman that seemingly didn’t do much else other than provide the Ministry of Finance with an extra RM780 million, there was also bound to be some attention turned onto the ATNB. Regarding this, Sankara mentioned that no one can actually get any info on the ATNB other than the auditor-general. As such, they’re currently waiting on the A-G’s audit report, as well as MRB’s own internal audit report.

As for the EPF’s role in this, they deny having any extra knowledge or info regarding the original deal made between the MRB and the Finance Ministry’s ATNB. They also claim that the amount they paid for the land was a fair reflection of the market value of the land at the time. That being said, the MRB aren’t amused by the EPF’s explanation at all, instead saying that they have proof that the EPF had info about the original deal.

“The EPF had full knowledge and was fully apprised of the price at which MRB sold the land to ATNB. It’s scandalous for the EPF to make a complete denial now. This entire explanation (by EPF) becomes questionable and raises grave concerns while MRB has been shortchanged by those involved,” – Sankara Nair, as quoted by Free Malaysia Today

Of course, every story has two sides to it, and the Opposition – who were the ones in charge during the time of the deals – have responded to it.

 

Najib sees no issue with a govt agency selling govt land to a govt agency

Almost immediately after the issue broke out, Najib hit back at Teresa Kok’s claims. He was quick to point out that the deals gave an opportunity to the EPF to raise billions of ringgit in profit for depositors thanks to the development of Kwasa Damansara – which by the way was part of his govt’s Greater Kuala Lumpur Strategic Development Project. He was also pretty sarcastic about it laa, saying:

“How despicable of the old BN government to take care of their cronies, the EPF contributors. How cruel is the old BN government to carry out development projects as announced under the 10th Malaysia Plan,” – Najib Razak, as quoted by New Straits Times

As for the subsequent sale of the land from the ATNB to EPF, Najib defended the price of the sale, claiming that Kwasa Land was already developing the area with a gross development value of around RM50 billion. He even poked back at Kok, telling her that if she wants the RM780 million back for the MRB, she should go ahead and claim it back from the Finance Minister Lim Guan Eng as ATNB is a special purpose vehicle under the Ministry of Finance.

Meanwhile, the former Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, who was in charge of the MRB during the time of the two deals, also responded to Teresa Kok. According to Dompok, the sale was instructed by the govt and that the RM1.5 billion fee was also agreed upon by the MRB. He however added that what happened after the initial 2010 deal with the ATNB was beyond the MRB’s control.

“Whatever land that belongs to the government belongs to the country and the government of the day instructed that it should be sold to ATNB … There was no irregularity. It was quite simple actually. But what happened after that would be beyond the scope of MRB,” – Tan Sri Bernard Dompok, as quoted by The Star

 

As for now tho, the MRB are determined to get that RM800 million back

Now if you somehow feel sad for the MRB over the whole debacle, you might wanna get a tissue ready because it hasn’t gotten better for them since then.

You’d think that the MRB would have some say in what to do with the RM1.5 billion that they got for the land sale, but alas, that would be wrong. Instead, what happened was that since the MRB sold most but not all of the land in Kwasa Damansara, according to Kok the then-govt also told the MRB to use that money to develop the remaining land that they still had ownership of. As such, the MRB would go on to approve the development of five facilities in the area, which included an office tower, a museum and a sports facility.

However, the project, which was given a budget of RM1.1 billion, somehow stalled, achieving just 5% of progress in the six years that have passed since the project began. With development barely underway, it seems as tho the MRB had decided to cut its losses and terminated the project, with RM70 million already paid up by then. Sankara also hinted that this project breached standard MRB procedures, and that he lodged a report with the MACC over it.

Going back to the MRB-ATNB-EPF deal tho, as for now, the MRB and Sankara’s next action, other than to wait for the A-G’s report and for their own audit to complete, would be to take a civil action suit against both Najib and Dompok in an attempt to get back the RM800 million for the MRB. However, even Sankara admitted that he wasn’t sure if the money was still with ATNB as it’s been seven years since the deal was struck.

In any case, this fiasco appears to be the latest in a string of investigations over the past govt’s deals and projects. And while some might not like dirt from the past being dug up, if it means lessons to be learnt and more transparency for the future, then it might be welcomed after all. Besides, none of us wants Malaysia in the spotlight for financial trouble again right?