KUALA LUMPUR, April 10 — Former Felda chairman Tan Sri Isa Samad created conflicts of interest by also holding positions in 20 other related subsidiaries, the White Paper on the federal agency concluded.
The document Economic Affairs Minister Datuk Seri Mohamed Azmin Ali tabled in Parliament today said this was against corporate best practices and circumvented natural checks and balances.
“This situation will result in conflict of interest and mismanagement, which would lead to practices and work ethics lacking integrity,” the report said.
The paper also said Felda failed to appoint office holders with the necessary expertise, make sound investments, or otherwise manage the welfare of settlers under its care.
These along with other lack of internal controls exposed Felda to risks that resulted in its continued losses.
“Based on forensic auditing, the new management of Felda found fraud in the acquisition process and investments, via the meeting minutes of Felda and FIC’s board of directors, whereby property purchases by Felda and FIC were done on Tan Sri Isa and Mohd Zaid Abdul Jalil’s names, without conducting due diligence and approval from the Felda directors board,” the report said.
FIC refers to the Felda Investment Corporation.
The White Paper was compiled to look into issues plaguing agency. It said the lack of due diligence resulted in Felda overpaying for assets purchased, which consequently hurt its ability to generate good returns.
In December last year, Isa was charged with criminal breach of trust over FIC’s purchase of a hotel in Sarawak allegedly for more than its fair value.
A government audit in 2016 found that, under Isa, Felda had also invested in other dubious projects that resulted in losses of more than RM100 million to the agency.
Former prime minister Datuk Seri Najib Razak made Isa the chairman of Felda in 2011. Isa stepped down in January 2017 after the agency suffered financial losses.
At end of June last year, its debt stood at RM8 billion.
On November 30 last year, FGV Holdings Berhad sued Isa and former CEO Datuk Mohd Emir Mavani Abdullah over the purchase of two luxury condominium units allegedly for above market price.
In the lawsuit filed in the High Court in Kuala Lumpur, FGV blamed the duo for losses suffered as a result of their alleged failure to discharge their legal duty to the Felda unit.