MACC report over ‘failed’ Kedah project

Gerakan wants anti-graft body to probe Kedah Corporation Berhad's failed logging and plantation projects in Papua New Guinea.

PUTRAJAYA: The MACC has been urged to look into possible corruption offences in the failed logging and plantation projects in Papua New Guinea brought about by state-owned Kedah Corporation Berhad.

Kedah Gerakan Youth today lodged a report asking the MACC to start investigations into the project which the 2011 Auditor-General’s report said brought millions in losses to the state.

“We estimate it be about RM14 million, and want the MACC to investigate,” Kedah Gerakan Youth chief Tan Keng Liang told reporters outside the MACC headquarters here.

The AG’s report also revealed that a goodwill payment was made to a third party (vendor) for the purpose of “lobbying to minister” for the project.

Tan said he was puzzled as to which minister the report was referring to, and why such lobbying was necessary.

“There were no feasibility studies, no due diligence done on the company. It does not justify the RM1.21 million paid to this third party vendor,” he said.

Tan said the worse part was that the Kedah state government was trying to wash its hand of the mater and shift the blame to other parties.

“With power comes responsibility and accountability,” said Tan, who lodged a police report last week over the same matter.

Tan said it was up to the authorities to see if there were criminal elements, including criminal breach of trust (CBT) or corruption, involved in the case.

KCB, a subsidiary of Menteri Besar Incorporated, had bought a 70% stake in MAS Incorporated Ltd (a company registered in Papua New Guinea) for RM31.21 million.

This was for the development of two areas totalling 114,429 hectares in Papua New Guinea.

‘Goodwill payment’

The project, however, was terminated by the KCB board of directors on March 1 last year on the grounds that it was not feasible and contained many irregularities.

The failed investment, according to the AG’s report, caused KCB to incur losses amounting to RM13.49 million.

The incurred losses of this ‘high risk investment’ reached the extent where the company concerned had to take a RM135 million offshore bank loan.

The move that did not have the approval of the KCB board of directors and the loan was cancelled in 2010, but a RM1.6 million in “commission and legal fees” had to be paid by KCB.

KCB also had to pay RM1.21 million to the vendor, appointed by KCB to run the business in Papua New Guinea, a goodwill payment for the transfer of the 70% equity to KCB.

The terms did not favour KCB. Acording to the report, the goodwill payment to the vendor included the work of “developing land” and “payment to lobby to the minister”.

Last week, Kedah Mentri Besar Azizan Abdul Razak, who is one of the directors in KCB, defended the state over losses incurred in the project.

He dismissed allegations that the state government was at fault for having caused KCB to suffer a loss of RM13.49mil.

He said that a senior officer of KCB, who had since gone missing, had secured the RM135 million offshore loan in 2009 without the knowledge of the board of directors.

He said that a committee was set up to investigate the operations. However, the state did not lodge a report with the police or MACC, and denied committing any criminal offence.