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Sale of KL land to fund 1MDB rationalisation plan, says PAC

It says Bank Negara did not conduct adequate due diligence in the purchase of Lot 41.

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An aerial view of Kuala Lumpur.
An aerial view of Kuala Lumpur.

The sale of Land Grant 18335, Lot 41, Section 51 in Kuala Lumpur (Land Lot 41) to Bank Negara Malaysia (BNM) by the government through special vehicle company Hartanah Mampan Sdn Bhd was for the purpose of funding of 1MDB’s rationalisation plan, the Public Accounts Committee (PAC) said today.

PAC chairman Wong Kah Woh said the acquisition price of RM2.07 billion was made by BNM on Dec 19, 2017 (RM1.035 billion) and Dec 27, 2017 (RM1.035 billion) with the proceeds of the sale used to fund 1MDB’s rationalisation plan on Dec 31 the same year.

PAC which held a proceeding on the land issue on Sept 20 concluded among others that BNM did not plan to purchase Lot 41 before the offer was made by the finance ministry.

“The Lot 41 acquisition plan did not exist in the annual BNM strategic planning for 2015 to 2017 despite BNM stating the purpose to develop a financial services education hub in the long term,” Wong said in a statement today.

Wong said three witnesses called to the proceeding were Deputy Auditor General (Performance) Patimah Ramuji, treasury secretary-general Asri Hamidon and Bank Negara governor Nor Shamsiah Mohd Yunus.

PAC also found that BNM did not conduct adequate due diligence in the purchase of Lot 41 apart from BNM board of directors making the decision to purchase Lot 41 in nine days after discussions with the finance ministry on Aug 15, 2017 and three days after the offer was made by the ministry on Aug 21 the same year.

“The acquisition transaction was completed in a short period of four months. All these raised doubts on whether BNM was under pressure from the government in making a decision,” Wong said.

PAC also concluded that the acquisition of Lot 41 amounting to RM2.07 billion based on an evaluation carried out by Tetuan Suleiman & Co was high.

“The evaluation of the Malaysia Property Services and Evaluation Department based on the status of the existing ownership status, namely land usage category ‘none’, real condition ‘none’ and the institutional zoning with a plot ratio of 1:2, was RM1,421,650,000,” he said.

Wong said the acquisition payment price of RM2.07 billion was inappropriately carried out without earlier changing the land use status from ‘none’ to ‘building’ and the breaking of boundaries/sub-division which was partly owned by the Malaysia Space Agency.

PAC said it was important for BNM to be able to make decisions on its investments and developments independently without being influenced by other parties while respecting that the land sale transaction profited the government.

BNM also needed to quickly resolve the issue of changing the land use category and sub-division of Lot 41 apart from thorough planning to optimise the use of Lot 41, he said.

According to Wong, the issue of land was part of the findings of the National Audit Department in the Auditor-General’s Report Year 2019 Financial Statements and Compliance Audit of Federal Agencies, tabled in Parliament on Dec 10, 2020.

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