Company denies double-billing gov't RM55m for prawn farms

The company Hannan Corporation Sdn Bhd (HCSB) has denied the Public Accounts Committee’s (PAC) allegation of double-billing the government in the amount of RM55 million for prawn farms.

It urged the PAC to clear its name, and the government to help ensure the success of its prawn farming projects.

The company also denied the claim that it lacked the relevant experience to run its two prawn farms in Kerian, Perak, for which it received government funding.

In a statement today, HCSB’s board of directors explained that the Northern Corridor Implementation Authority (NCIA) and the National Key Economic Area (NKEA) are funding different components of its program.

“Although the NCIA funding is originally understood as a loan and the NKEA funding is a government grant, the agreements that have been signed clearly shows that the funding is for different components.

“Only one component - the entry road - was found to have been funded by NCIA and the NKEA, which was discovered in early-2016. Upon being alerted, HCSB wrote to the Department of Fisheries (DOF) to deduct the NKEA portion that was double-billed, which was RM541,695.

“No reply was received from the DOF on that matter,” it said.

It said HCSB had first inked a deal with NCIA in January 2011, where it would repay the loan through levies on its revenue and corporate social responsibility programs.

Once the project was underway in April 2011 however, the DOF invited it to be part of the NKEA.

In response, HCSB sent a copy of the agreement between the company and the HCSB to be studied by DOF’s legal advisors and the Ministry of Agriculture and Agro-based Industries. Following that, HCSB was given an offer letter, and a deal was signed in October 2011.

“As for the different project costs, this is because the project components funded by the two are different. The project costs are referenced to unit costs issued by the Public Works Department,” the directors added.

Last week, PAC chairperson Hasan Arifin claimed that HCSB told NCIA that the project would cost RM150 million, and later told the NKEA that the same project would cost RM353 million.

Of the sum, HCSB had received RM25 million from NCIA and RM31 million through NKEA, he said.

“It was found that the company made claims for several of the same components from the NCIA and NKEA,” Hasan said, while claiming that the company lacked experience in the aquaculture industry.

He had said the PAC had urged the National Audit Department to obtain a detailed report of the project, and had backed the department’s proposal that a third party is to be appointed to review the project costs claimed by HCSB.

The projects comprising the Selinsing Aquaculture Complex (KAS) and Pulau Gula Aquaculture Complex (KAPG) are part of a government initiative to boost high quality prawn production to 100,000 metric tonnes by 2020.

Directors undergone courses

Meanwhile, HCSB said that prior to the projects, its directors had undergone courses conducted by the company Blue Archipelago, and had collaborated and trained with the company Indokom in Lampung, Indonesia.

It said Indokom had provided HCSB with experts who helped HCSB develop its own standard operating procedures.

In addition, it said it also collaborated the Bandung Institute of Technology, Bogor Institute of Agriculture, and the University of Malaysia Terengganu, and was able to produce 10 metric tonnes of prawns per hectare, some of which were exported to Japan under exacting standards.

“More recently, HCSB has produced a prototype pond system that is modern, reduces the risk of disease, and competitive. This success has received written acknowledgment from aquaculture experts,” it said.

The HCSB directors also warned that while Phase One (the KAS) of the project was completed two months ahead of schedule, Phase Two (the KAPG) has been postponed pending a clear directive from the government and risks becoming a failure.

This is because disease that had spread across Asia between 2012 and 2015 had caused about RM52 million in losses in HCSB, which did not have any financing from banks.

“Because of this, the company’s cashflow is very dependent on government funding to complete the project,” the directors said.- Mkini