Power never given to transfer land, says lawyer on Felda

PETALING JAYA: Prominent lawyer Azhar “Art” Harun says the case of land belonging to Felda in Jalan Semarak changing hands with the use of a power of attorney is “out of the ordinary”.

In a posting on Facebook today, Art said this was because in any agreement between a landowner and a developer, the power of attorney is limited, and comes with strict conditions.

“I have drafted agreements for the development of land by a developer on a joint-venture basis with the landowner.

“But I have never come across any case where the landowner grants a power of attorney to the developer allowing the developer to transfer the land to itself (unless of course, the developer has paid for the land in full).

“The Felda case is quite out of the ordinary, especially considering that it is a public entity holding properties in trust for all stakeholders,” he said on FB.

He was referring to the issue of land valued at more than RM200 million belonging to Felda being transferred to a developer in a “dubious” transaction.

The 16-hectare plot of land in Jalan Semarak, Kuala Lumpur, was said to have been transferred in 2015 after Felda Investment Corp (FIC) had awarded the developer the full power of attorney to develop the land.

Art said that the usual scenario for such an arrangement is when the landowner does not have money nor the expertise to develop the land.

“The developer has expertise to develop the land as well as to market and sell properties.

“So, the landowner enters into a JV Agreement (sometimes it is called a Joint Development Agreement) with the developer. Under the JVA, the developer is to develop the land, build and complete the project and sell the properties,” Art said.

He added that the developer will pay the landowner in cash or in kind, over a period of time, based on the agreed land valuation.

“The developer also pays some upfront cash to the landowner to purchase the rights to develop the land. After that, the developer will pay the landowner gradually.”

Art then elaborated on the use of a power of attorney, saying it is normal in such agreements, but with the authority granted to the developer limited to certain activities.

“The power of attorney empowers the developer to submit plans to the authorities, as well as to apply for development order, and also to market and sell the properties that are to be developed.”

“It is very rare for a developer to be allowed to use the power of attorney to charge the land to financial institutions in order to finance the development.

“This is because, in the usual scheme of things, the developer is to finance the development on its own,” he said.

Former Negeri Sembilan menteri besar Isa Samad was the chairman of both Felda and FIC at the time the land agreement was signed with the power of attorney given to the developer.

The land is being developed for the Kuala Lumpur Vertical City (KLVC) project, which will have seven towers, including the iconic Felda tower. -FMT