PAC report censures ‘underperforming’ Amanah Raya

 

The Public Accounts Committee (PAC) has issued a report revealing the ‘unsatisfactory’ performance of Amanah Raya Berhad (ARB), following a PAC proceeding on the issue on Aug 3.

The report found that ARB did not have complete and thorough investment policies, and the board of directors had no control over potential investments that were to be made, said PAC chairperson Wong Kah Woh (above) in a statement on Tuesday (Oct 12).

Wong added that ARB’s investments performance of Kumpulan Wang Bersama (KWB) funds was "not encouraging" and contributed to KWB’s accumulated loss of RM1.023 billion in 2019.

"Among them, ARB recorded a loss of RM114.3mil in the investment of 56 units of properties in a development project at Keppel Bay Singapore where the Gross Development Value (GDV) was insufficient to cover the cost of the investment.

"There are no documents to prove that due diligence or (a) feasibility study was carried out before the investments were made.

"ARB was found to have been negligent in the process of making investment decisions by overestimating GBV compared to market prices," he said.

The report also found that the income distribution to fund holders did not take into account KWB’s ability and did not align with Section 27 of the Public Trust Corporation Act 1995.

Wong added that ARB did not adopt the policies underlined in the Minister of Finance Incorporated (MOF Inc) handbook with only two of seven policy amendments - proposed by ARB company directive committee - approved by the board.

"The progress of the other five policy amendments were very slow and unsatisfactory," he said.

Present at the Aug 3 PAC proceedings were Auditor-General Nik Azman Nik Abdul Majid, Treasury secretary-general Asri Hamidon and ARB managing director Azmeen Adnan.

Recommendations

Taking into account the above, Wong said the PAC recommended several improvement measures for ARB including complying with policies stipulated in the MOF Inc handbook.

“All policy amendments proposed by the ARB company directive committee must be decided by the board with immediate effect.

“ARB must have a complete investment policy in order to maximise the investment impact in line with the objectives of its establishment,” he said.

Another recommendation is that the investment committee should be assisted by a team of investment experts and should be fully accountable to the board in line with the interests of the organisation.

ARB shall also conduct an audit on KWB’s accumulated losses, particularly in the investment of the 56 units of properties in the Keppel Bay development project in Singapore.

“The distribution of income to fund holders must comply with Section 27 of Act 532 and decided by the board,” he said. - Mkini