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Thursday, July 31, 2014

THE 'SINS' OF KHALID IBRAHIM

THE 'SINS' OF KHALID IBRAHIM
Selangor MB Tan Sri Khalid Ibrahim must have been feeling as if the walls were closing in on him. His luck had run out. The MB’s abrasive style, aloofness and unwillingness to listen to anyone but himself had alienated all his allies but for a few sycophants. Talk was rife that his number was up, and the tripartite Pakatan Rakyat was ganging up to oust him.
He had managed to buy time with his cynical decision to hand out huge pay rises to state assemblymen, but even this goodwill quickly dissipated and he has of late drawn a lot of heat regarding his mishandling of recent issues:
> Doing a secretive deal with the BN Government on Langat 2 water after years of fighting to delay the project
> Favouring the UMNO-linked Puncak group in the water companies buyout after years of accusing them of greed, mismanagement and default
> Giving state approval for the controversial KIDEX tollway project
> Weak handling of the confiscated Bibles issue
> Giving a sweetheart deal to Danny Tan’s Tropicana (formerly Dijaya) Corp.
Love fest with federal govt that began with settlement of Bank Islam suit
What has been most intriguing is the MB’s perceived love-fest with the Federal Government after the settlement of his suit with Bank Islam.
Rumours have been swirling and doubts cast upon his loyalty to PR ever since, especially in light of his recent spate of bizarre and logic-defying decisions.
Central to the story are two names, people close to the UMNO leadership. The first is UMNO lawyer Rashid Manaf, and the second, Ethos Capital chairman Rohana Tan Sri Mahmood.
Khalid's goose cooked well and good
To recap, Khalid took took a loan from Bank Islam in 2001 to buy Guthrie shares. That was meant to be a golden handshake from PNB for their loyal servant. When he failed to service the loan, in 2007, Bank Islam sold the Guthrie shares and claimed from him the balance sum of RM66.7 million. Khalid sued Bank Islam and Bank Islam countersued him.
Bank Islam won a summary judgment against Khalid in 2009 but he managed to have that set aside a year later. In essence, he did not dispute that he borrowed money from Bank Islam. What he argued was that the loan did not comply with Syariah law, therefore it was illegal and he need not repay the loan.
In 2011, the High Court ruled that the Syariah Advisory Council of Bank Negara had the ultimate authority to decide whether an Islamic loan was legal or not. This ruling was upheld by the Court of Appeal in May 2012.
Khalid’s goose looked like it was cooked, his fate in the hands of the Syariah Council, which presumably had already approved the mode of loans at Bank Islam before certifying them Syariah-compliant. If he was made bankrupt, he would lose his post and likely his political future.
Then came Umno lawyer Rashid Manaf
This was when well known UMNO lawyer Rashid Manaf reportedly approached Khalid to broker a settlement with Bank Islam. The out of court settlement is rumoured to be generous in the extreme to Khalid, who was required to pay less than 10% of the outstanding amount over 5 years.
The settlement was shrouded in secrecy, with Khalid’s own lawyers Matthew Thomas and Malik Imtiaz unaware of the signing in December 2013, to the extent they even showed up in court on the accorded date only to be told that the case had already been settled.
Now why would Rashid Manaf be doing Khalid any favours?
Sudden about-turn in policy and attitude
Before we answer that let’s look at Khalid’s about-turn in policy. Since he came to power in 2008, the MB had been striving to terminate the concession agreement of SYABAS, majority owned by Puncak Niaga, which is controlled by UMNO state treasurer Rozali Ismail. He even refused to allow a scheduled tariff increase to come into effect on grounds that the company had defaulted on its obligations.
Fast forward to November 2013 and Khalid stunned observers by offering RM450 million to buy over SYABAS and RM1.1 billion for Puncak. The generosity of the deal and his close rapport with Federal Minister of Water Maximus Ongkili raised eyebrows.
Meanwhile construction blue chip Gamuda, State-controlled KPS and former Daim protégé Wan Azmi Wan Hamzah got the short end of the stick as their water company SPLASH was offered just RM250 million despite many analysts acknowledging the company was more profitable and in better financial shape. The poor minority shareholders of public-listed KPS copped it in the unmentionables too, but that’s just collateral damage to Khalid.
What prompted Khalid to embrace his nemesis, moving in one short hop from threatening fistfights to offering fistfuls of money to Rozali? To the extent of even short-changing a state GLC? Why the proximity to Maximus?
Enter Ethos' Rohana and Vincent Tan's brother Danny
Into the story comes Rohana of Ethos Capital, said to be a close confidant of the PM himself, until she somehow fell afoul of FLOM. Rohana was a fellow at ISIS, a position she shared in common with both Khalid and Maximus in the past. It was Rohana who renewed links for Khalid to Maximus. It is said that the two unlikely bedfellows, MB and Minister, even held their trysts at her office, hammering out the now infamous State-Federal Water MOU.
When did the process of building bridges start? One cannot say for sure but what is factually indisputable is that in April 2013, the state-owned Menteri Besar Incorporated (MBI) sold 1,172 acres of land to Tropicana Corp, a company controlled by Danny Tan.
And the chairman of Tropicana when that controversial land deal was done was … (drum roll) Rohana.
Sweetheart deal signed by Khalid when he was only a caretaker MB
Controversial not only because it was signed by MB when the PR Government was in caretaker mode pending the 2013 Elections, but also for the one-sidedness of the deal. And not in favour of the State!
The land, sited next to well-established townships like Kota Kemuning, was sold for RM587 million, to be paid over 12 years! That translates to RM11.50 psf compared to RM120psf for industrial land at Kota Kemuning. And the company is being charged a super soft interest rate of 5% pa, payments heavily back-ended as well – the state government itself would struggle to achieve those kind of borrowing terms, let alone a heavily geared property developer.
To be fair the deal does have a profit sharing element, with potentially a further RM710 million to be paid, but only over the next 20 years, and only if Tropicana can generate their targeted sales and profits.
“Smart partnership” was what Khalid termed it – yeah, for Danny Tan!
Rubbing salt to the wound
The land deal was announced in February 2013 but Tropicana was given at least three extensions of time to settle the first cash payment and the transaction only completed a year later in February 2014. One month after that Tropicana announced the sale of a 309-acre parcel from that land to Eco-World, so obviously Danny had been given time till he had done a deal first, otherwise, no money to pay.
But wait, the partnership gets smarter still! To rub dirt into the State’s face, Danny sold that 309-acres parcel in March 2014 to Eco-World for RM35 psf, almost 3X the price of land purchased from MBI!
Which is not to say that RM35 psf was a steep price to pay given the location and what Eco-World can do with it. Bungalow land in Kota Kemuning is going for RM180-200 psf. Champagne all round, courtesy of the MB!
And one of beneficiaries is a shareholder and director of Eco-World … (drum roll) Rashid Manaf. Payback time?
It gets cozier.
Anyone But Khalid
Selangorkini reports that an MOU was signed in February 2014 between the state and Eco World for the company to “project monitor” the RM100 million Selangorku Homes project. (What on earth is a “project monitor”?) What’s in that MOU, Tan Sri MB? Or is that under OSA too?
Ironically Khalid is currently campaigning for the post of deputy president of PKR on a platform of trust and integrity.
Is it any wonder that the catchword “ABUK” is going viral among the PKR faithful … “Anyone But Khalid”! - MAILBAG

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