FELDA SHOCKER – UNDER NAJIB, SETTLERS LUMPED WITH ‘HUGE & UNEXPLAINED DEBTS’ DUE TO MYSTERIOUS ACCOUNTING SYSTEM: AFTER PAKATAN-ORDERED AUDIT & REVAMP, SETTLERS FINALLY GET A RAY OF HOPE WITH BORROWINGS TO BE SLASHED BY UP TO 40% NEXT MONTH – REP

FELDA settlers will see their debt of RM7.7 billion, a constant headache for the community, slashed by up to 40% next month, thanks to a new accounting format.

This follows a financial forensic audit of settlers’ debts, started by Pakatan Harapan as part of its RM6.5 billion turn-around plan for the ailing land redevelopment scheme.

Mohamad Stap Othman, a settlers’ representative who sat in the audit, told The Malaysian Insight the process restructured how the debts were calculated by Felda management under the old system.

“The team managed to identify how settlers were burdened with so much debt to the point that some owed Felda RM100,000,” said Stap, who heads the 2nd Generation Felda Settlers’ Association (SGK2F).

This is because certain expenses that were not borrowings were marked as such under the old accounting system, said Stap.

“For instance, they lumped together payments for the disaster savings account and the levies we pay to Felda. These are classified as expenses and Felda charges a 6.25% interest rate on them.  

“No wonder the amount of debt we owe is high,” he told The Malaysian Insight.

The settlers’ huge and unexplained debts are a constant gripe for the more than 112,600 families in Felda schemes throughout the country and a source of anger towards the former Barisan Nasional government.

Settlers have long complained about how the debt is calculated by Felda and have accused the management of hiding crucial details to extract endless repayments from them.

The promise to fix cash-strapped Felda, which includes erasing settlers’ “unreasonable debts”, was one of PH’s key promises during the 14th general election.

Mohamad Stap Othman, a settlers’ representative, says certain expenses were considered as borrowings when they’re not under the old accounting system. – The Malaysian Insight pic by Hasnoor Hussain, October 29, 2019.

Interest on expenses

Stap said the financial forensic audit team comprised officers from Felda’s financial department, accountants from Ernst & Young and reps such as him.

The audit was completed on October 9 and it was decided that settlers will get new account statements on their debt next month.

The audit found that the highest amount of debt that a settler family owed was RM60,000 and not RM100,000 as previously feared.

There are also some settlers, who are supposed to receive payments from Felda, but Stap said it’s highly unlikely the agency would honour them given its current financial situation.

Among the settlers’ debts include loans for replanting aging oil palm trees and monthly cost of living advances, as well as borrowings to repair or renovate their homes.

There are also advances on potential income that settlers have to repay.

Settlers also have to pay a levy of RM12 per 0.4ha to Felda every month and another RM12 for a savings’ fund that will be used if their estates are hit by a natural disaster.

For the past 13 years, Felda had been charging interest on the disaster savings fund which has collected about RM2 billion.

“The simple example is you work for the government, which pays your salary but you then charge a 6.25% interest rate on the government.”

Felda’s mismanagement of its finances is one reason it struggles to collect debts from settlers, he said.

At the same time, about 20,000 settlers broke the rules and sold their twice-monthly harvests to non-Felda accredited millers.

The financial audit is one of the ways that Pakatan is reducing the debt burden among settlers.

Before this, the government announced that as part of the Felda turn-around plan, it is eliminating interest charged on loans taken for cost of living allowances and advances on harvest totalling RM2 billion.

– https://www.themalaysianinsight.com/