The Edge: 1MDB claim of ready buyers for Air Itam, Pulau Indah land reeks of LTH fumble

1MDB’s Arul Kanda said the Cabinet had been informed of the company’s intention to ‘monetise’ its land in Pulau Indah, Selangor and Air Itam, Penang through joint ventures or outright sales on February 15 this year. ― File pic
1MDB’s Arul Kanda said the Cabinet had been informed of the company’s intention to ‘monetise’ its land in Pulau Indah, Selangor and Air Itam, Penang through joint ventures or outright sales on February 15 this year. ― File pic

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KUALA LUMPUR, July 1 ― A local business daily today questioned 1Malaysia Development Berhad's (1MDB) claim of “significant expressions of interest” in its land parcels in Air Itam and Pulau Indah, equating it to Lembaga Tabung Haji's (LTH) still-unfulfilled claim that it would pull in profit from a controversial land purchase from 1MDB.

The Edge Financial Daily said in an editorial piece that it is unknown if 1MDB has received actual proposals to buy the two land parcels or if the latter's executive director, Arul Kanda Kandasamy, was merely announcing that they will name an independent consultant in the next two weeks.

“Is 1MDB saying buyers for the Air Itam and Pulau Indah land will be named within two weeks?” the paper asked.

“Otherwise, can anyone be blamed for thinking that the statement sounds all too similar to the one made by Lembaga Tabung Haji chairman Datuk Seri Abdul Azeez Abdul Rahim on the ready buyers available for the pilgrims' fund's controversial RM188.5 million purchase of the 0.63ha Signature Tower land in the Tun Razak Exchange (TRX)?

“Did Abdul Azeez not say Tabung Haji was expected to make at least RM5 million profits when the land sale competed as early as end-May? The last we checked, a buyer has not been named,” the paper added.

The Edge said the least 1MDB can do is name the consultant that they should have already hired to evaluate the “significant expressions of interest” the state-owned firm claims the two land parcels have received, to lend credence to Arul Kanda's statement yesterday.

The business daily said this is especially needed in the case of the Air Itam plot, on which 1MDB spent RM1.056 billion for a majority stake in 234 acres of encumbered land from private owners, including from associates of Penang tycoon Tan Sri Lim Gait Tong.

Despite owning most of the land, 1MDB would still need to get the buy in from the estimated 1,200 ground tenants on the Air Itam plot, which could potentially work out to some RM108 million in compensation payment, the paper added.

“Would any third party want to jump into the fray if there is no assurance of a settlement with these ground tenants who are not mere squatters?” The Edge queried.

The paper also raised questions over the status of the 310-acre Pulau Indah land, noting that there has not been any news of 1MDB finalising the RM294.378 million price to buy the plot from Tadmax Resources Bhd.

“The sale was supposed to be completed yesterday, according to Tadmax's December 16, 2014 statement. At the time of writing, there was no update on whether the deal has been completed,” it said.

Debt-riddled 1MDB announced yesterday it has received “significant” proposals to buy two large parcels of land in Selangor and Penang even as critics question the state-owned investment’s purchase of them.

In a statement, Arul Kanda said the Cabinet had been informed of the company’s intention to “monetise” its land in Pulau Indah, Selangor and Air Itam, Penang through joint ventures or outright sales on February 15 this year.

Arul Kanda added that the company will appoint an independent real estate consultant to review the proposals and will provide an update of the development in the next two weeks.

1MDB’s announcement came after opposition MP Tony Pua questioned the real estate deals, in particular the 310-acre land in Pulau Indah the company bought for RM282 million from Tadmax Resources Bhd, after securing a US$150-million (RM540 million) loan from Export Import (EXIM) Bank.

The DAP MP has suggested that the transaction was a front to bail out troubled government-linked companies, pointing out that Tadmax was formerly known as Wijaya Baru Global Bhd before November 2013, and that Wijaya was known for its involvement in the RM12.5 billion Port Klang Free Zone (PKFZ) scandal.

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