Report: HRDF possibly mishandled multi-million buy by swapping property without approval

The Star said HRDF’s former CEO Datuk CM Vignaesvaran Jeyandran (pic) had explained that the property purchase was done according to the appropriate procedures.― Picture courtesy of HRDF
The Star said HRDF’s former CEO Datuk CM Vignaesvaran Jeyandran (pic) had explained that the property purchase was done according to the appropriate procedures.― Picture courtesy of HRDF

KUALA LUMPUR, Jan 9 — The Human Resources Development Fund (HRDF) allegedly bought property in Bangsar South, Kuala Lumpur without its board or investment panel’s knowledge in a 2015 purchase involving hundreds of millions of ringgit, it was reported today.

The HRDF had purchased six floors in a “landmark skyscraper” in Bangsar South at a price of RM154 million including goods and service tax (GST), although the board’s approval was for the government agency to buy another building in Bangsar South at a pre-GST price of RM141 million, local daily The Star cited sources as saying.

“The board was also informed that the minister (at that time) approved the change of the property to be acquired.

“The sale and purchase agreement was signed by the chief executive officer prior to the approval of the investment panel and the board,” the source was quoted saying by The Star.

The HRDF comes under the Human Resources Ministry and manages employers’ contributions for the training and development of employees, apprentices and trainees.

Under the Pembangunan Sumber Manusia Bhd Act 2001 which governs HRDF, the minister can only direct the board on matters and did not have the power to approve or consent to the signing of agreements.

According to The Star, documents showed HRDF’s investment panel as expressing intention for property investment in a 2014 meeting.

It said HRDF’s board had in February 2015 approved the setting up of a reserve fund and a RM250 million allocation, with the HRDF CEO then saying the property would be designated for HRDF to use.

It added that the RM141 million property purchase was approved in April 2015, but that the first payment of RM15.4 million in May 2015 was instead for the RM154 million property and that the agreement was signed the same month.

The Star said the HRDF investment panel was allegedly only told of the change in property five months after the RM15.4 million was paid, while a decision was made five months after the keys were received in 2017 for the property to be rented out.

The report said HRDF has been paying RM66,670 in monthly service charges since May 2018 for the property, while monthly rental income of RM115,168 have been generated with only one of the six floors rented out.

The report said the board had in March 2018 approved the purchase of two more floors in the same property for HRDF’s own office.

The Star said HRDF’s former CEO Datuk CM Vignaesvaran Jeyandran had however explained that the property bought was in a better building that was adjacent to the initial approved building that was also constructed by the same developer.

“Everything was done according to the appropriate procedures, that’s for sure. There’s no such thing as buying before getting board approval.

“It went through our legal adviser, the investment committee and the audit committee. When we bought the six floors in the other building from the same developer, we also went back to the board and rectified it,” he was quoted telling The Star.

He said the board was still in discussions as of his stepping down in June 2018 on whether the property would be for investment or HRDF’s own office.

The report said HRDF management has lodged police reports on the alleged misconduct in the property buy, while Bukit Aman Commercial Crimes Investigation Department confirmed receiving two police reports and having referred the matter to the Malaysian Anti-Corruption Commission.

The HRDF investment panel was then chaired by Datuk Abdul Razak Abdul, while Datuk Seri Richard Riot was the then minister during the property purchase.

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