Selangor will sell the majority of shares as well as hundreds of acres of land owned by the state government to property giant Berjaya Land in an effort to alleviate its financial burdens linked to a mega project worth RM10 billion, MalaysiaNow has learnt.
It is understood that the sale through a venture will involve 600 acres of land and a 55% stake in state government subsidiary Landasan Lumayan Sdn Bhd (LLSB).
The project known as Selangor Maritime Gateway had been planned on the stretch of government land covering 56km along Sungai Selangor with a gross development value of RM10 billion.
A source in the know about the project said LLSB had received loan funds from the state government amounting to RM45 million for the initial phase of the project.
“But until now, the company has suffered a cumulative loss of RM40 million,” the source told MalaysiaNow.
A report by an audit firm confirmed LLCB’s financial problems, stating in no uncertain terms that the company’s standing as a going concern was at a critical level.
The internal audit report on LLCB meanwhile identified 11 issues classified as critical, including its failure to provide certain information about the project’s allocation for costs.
It said the project would post losses of RM3.2 billion if these additional costs were to be taken into consideration.
It also found that the project had been approved without undergoing technical soil studies, soil studies or a comprehensive risk assessment.
“As of June 2020, there was no documented evidence showing that a comprehensive risk assessment was carried out to ensure that the project’s goals are met according to the set timeline and costs,” the source said.
LLSB was also accused of not practising prudent spending.
In 2019, its board of directors approved a four-month bonus, a 6% salary increase, and a jump in the managing director’s salary from RM29,000 to RM37,000 a month even though the company did not have enough income to fund its operations.
It was also burdened by accummulated losses and debts of worrying amounts.
The audit report also revealed that LLSB was not able to service its loan from the state government according to the initial timeline and instead experienced an average delay of up to 18 months.
Checks by MalaysiaNow found that efforts had been made by the management and shareholders to withhold the audit report from the state government for further discussion and action.
In the latest development, Berjaya Land announced a joint venture with LLDB for the clean-up, rehabilitation and development of the Klang River.
The joint venture company was named Landasan Lumayan Berjaya Sdn Bhd (LLB), with Berjaya Land owning 55% of the shares.
The source said the transaction was not made through open tender, but through direct negotiations with Berjaya Land.
Gombak Setia assemblyman Hilman Idham had recently questioned the move to hand over the project to a private company, calling it an attempt to bail LLSB out from its financial problems.