The prime minister said the accusation was a falsehood made against an institution which served well the rural community and the Malays.
"Settlers are generally venting their anger as they regard it as an insult against an institution which they love," he told reporters after opening the Jerantut Umno Division delegates meeting, here.
Najib said Felda was not bankrupt and that it would continue to develop the settler community, into the second and third generation.
Suara Keadilan, the official organ of Parti Keadilan Rakyat (PKR), in its June 21-29 edition, had carried an article entitled "Felda Bangkrap".
Following the publication of the report, Felda has filed a RM200-million suit against PKR and is seeking an apology.
The Home Ministry has also not renewed the publication permit of the newsletter which expired yesterday.
Najib said the PKR allegation was seen as an effort by the opposition to destroy Felda which had successfully nurtured the economic development of the Malays over the last 50 years.
He said that over the last 50 years, Felda had drawn up programmes for the settlers and their children in various fields, including education and skills development.
The prime minister said the government always scrutinised Felda's asset management in a systematic manner to ensure that it did not deviate from the objective of settler development.
"We (the government) always scrutinise the assets carefully. We have all kinds of programmes to develop settlers," he said.
Najib said he would provide a clear explanation of Felda's situation on National Settlers' Day on July 7.
Asked about the Suara Keadilan publication permit pending renewal by the Home Ministry, he said: "We have laws. I leave it to the authorities to make the appropriate consideration."
- Bernama
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