Source: https://fabm.wordpress.com/
Timestamp: 2019-04-22 00:46:42+00:00

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WHITE PAPER | The government today tabled a White Paper on the sustainability of Felda in the Dewan Rakyat which, among others, detailed several questionable deals that have pushed the organisation’s finances to a critical state as it struggles to pay settlers.
Starting out as an entity to help poverty-stricken bumiputera through plantation schemes, Felda, under the stewardship of former Umno vice president Mohd Isa Abdul Samad, went on a global splurging spree through its investment arm Felda Investment Corporation Sdn Bhd (FIC).
Here are a list of those questionable deals and a summary of what went wrong, according to the White Paper. They are based on a forensic audit by the firm Ernst & Young.
Park City Grand Plaza Kensington is a hotel located in central London, which FIC claimed it purchased for 60 million pounds (RM321 million) in 2014.
In reality, the hotel was purchased for 46 million pounds (RM246 million) and the remaining 14 million pounds (RM75 million) was for the benefit of certain individuals through a structure designed to make it appear as though FIC paid 60 million pounds for the hotel.
For starters, no agreement existed between the seller of Park City Grand Plaza Kensington and FIC.
Instead, a Malaysian-owned British Virgin Islands (BVI) company, referred to as “Company I” in the White Paper, purchased the hotel for 46 million pounds on Sept 12, 2014.
Subsequently, this unnamed Malaysian then transferred the shares of Company I worth US$5,000 (RM20,500) to two FIC directors at the time for 14 million pounds on Oct 13, 2014.
The ownership of the Park City Grand Plaza Kensington (purchased for 46 million pounds) and Company I shares worth US$5,000 (purchased for 14 million pounds) was only transferred to FIC in 2015, after its name was changed to FIC London Hotel (Private Limited).
This was despite FIC claiming in its financial statement that those assets were already in its possession since 2014.
“FIC suffered 14 million pounds losses from buying Company I shares which were in the name of two former (then) FIC directors without the FIC board’s approval for 14 million pounds, even though it was only worth US$5,000.
“Following the questionable purchase, FIC has lodged a report with the MACC for further investigation,” it said.
Furthermore, a 2015 valuation found that the value of the Park City Grand Plaza Kensington had slid to 26 million pounds (RM139 million).
The purchase was never tabled for approval by the main Felda board. It was only informed by FIC three months later.
FIC, through FIC UK Properties Sdn Bhd (FUPSB), purchased the four-star Grand Plaza Serviced Apartments from one “Company D” and its sister operator “Company E” for 98 million pounds (RM524 million) on July 31, 2013.
However, upon checking Company D’s financial reports, which also included details of Company E, it was discovered the two companies only received 83.7 million pounds (RM448 million).
“This means that the difference of 14.3 million pounds from the transaction cannot be traced,” said the White Paper.
Since then, the Grand Plaza Serviced Apartments’ performance had deteriorated, causing FUPSB to maintain its operations at a loss.
It also meant that FUPSB was unable to repay the loan it got from Felda as an advance for purchasing the real estate. FUPSB was later forced to take out a 48 million pounds (RM257 million) loan from a financial institution to repay Felda.
To date, Felda foots RM19.82 million in losses a year to operate the Grand Plaza Serviced Apartments.
In December 2015, the Felda board approved the purchase of “exchangeable bonds” that later became a 37 percent stake in Indonesia’s Eagle High Plantations Tbk (EHP) for US$505.4 million (RM2.07 billion). The sales and purchase agreement was signed on Dec 23, 2016.
The purchase was made through FIC Properties Sdn Bhd (FPSB) from a “Company A1” as referred by the White Paper.
It noted that the Finance Ministry, at the time led by former prime minister Najib Abdul Razak, was also involved in the deal by providing “strategic advice and suggestions on investment structure”.
The purchase price of US$505.4 million meant Felda was buying the EHP stake at US$0.043 per share, even though they were worth US$0.0098 on the open market at the time the board first gave its approval.
In other words, the shares had an open market value of just US$115.2 million (RM472 million).
“This meant that Felda agreed to buy the EHP share at 344.12 percent higher than the shares’ market price at the time,” said the White Paper.
Furthermore, it said all of EHP’s shares had been used by Company A1 as collateral for loans from Credit Suisse.
It added that Bank Negara Malaysia had also raised questions about the deal.
“Despite knowing the risks involved, the Felda board of directors approved the investment without additional due diligence and without justification in the meeting minutes over the rationale of the decision,” it said.
However, the deal also included an option that would allow Felda to recoup the full US$505.4 million, on top of a return of six percent per annum.
Najib had used this as a defence against critics of the deal, uploading the White Paper’s acknowledgement of the put option on Facebook, which he highlighted in red.
Ironically, in the paragraph immediate after, the White Paper said there was no evidence that Felda had carried out a credit risk evaluation of Company A1 to ensure that it is capable of repaying in the event Felda exercised the put option.
The White Paper also noted that Felda received a corporate guarantee of US$371 million from a “Company A2” on the purchase the EHP shares, but again, it did not conduct a credit evaluation.
It said a forensic audit found Company A2 to be only worth US$343.8 million, despite the US$371 million guarantee.
The Kuala Lumpur Vertical City (KLVC) is a proposed integrated development on Felda’s 20-acre land along Jalan Semarak, Kuala Lumpur.
FIC entered into an agreement with what the White Paper called “Company F” for this development.
In 2017, it was widely reported that Company F, after receiving power of attorney, proceeded to sell Felda’s land to itself and another “Company G” between Dec 2, 2015 and Nov 7, 2016 without Felda’s knowledge.
The White Paper provided further insight into the scandal, stating that the FIC management had knowledge of the matter since July 2016, but did not take any action. The Felda board only discovered the matter eight months after the transaction.
Representing Felda without its knowledge of the sale, Company F priced the land at RM270 million even though it was valued at RM618 million.
Furthermore, it asked for 10 percent of the RM270 million sale price to be paid to Felda, while the remaining 90 percent would be pocketed by Company F.
The sales and purchase agreements, organised by Company F, claimed Felda had no intention to appoint its own lawyers.
Apart from the land controversy, Felda had also agreed to rent 700,000 square feet of office space for 20 years in the development by Company F, even though its needs can only fill up 3.6 percent of the space.
“The lease agreement caused FIC to be exposed to the risk of suffering losses in rental income of at least RM1.5 billion over 20 years,” it said.
I recognise that the government has decided to withdraw from the Rome Statute of the International Criminal Court, and also acknowledge that the alleged presentation is a mere executive summary (my opinions below are therefore subject to the disclosure of the full report, if any).
But there are several points raised in the alleged presentation which are rather disconcerting and warrant an intellectual legal rebuttal – lest it would lead to mischaracterisation of the issues at hand among the public.
First, it was suggested that because the Yang di-Pertuan Agong was entitled to information from the cabinet (Art 40(1)) and to make his views known to the prime minister (Reid Commission Report), then he is not a constitutional monarch in the purest sense.
However, this only proves that the king plays an advisory role in governance. This does not in any way detract from the clear provision in Art 40(1A) that he must always act in accordance to the advice of the prime minister – and consequently, that the prime minister is entirely responsible for such decisions made.
Second, reference was made to a Court of Appeal decision in Armed Forces Council, Malaysia & Anor v Major Fadzil bin Arshad  1 MLJ 313, which purportedly held that “Surely His Majesty is expected to play an effective and meaningful role as the supreme commander”.
With respect, this was merely a dissenting opinion of the Court of Appeal, and it is perplexing that this was not pointed out in the alleged presentation. Any first year law student would tell you that this quote in no way is the authoritative principle enunciated by the Court of Appeal.
Third, it was alleged that Art 38(4) of our Federal Constitution states that laws passed which directly affects the privileges, position, honours or dignities of the rulers would require the consent of the Conference of Rulers.
With respect, this mischaracterises Art 38(4), which reads: “No law directly affecting the privileges, position, honours or dignities of the rulers shall be passed without the consent of the Conference of Rulers.” The phrase “shall be passed” clearly means only laws passed in Parliament – and cannot possibly be read to include ratification of international treaties.
The assertion that Art 159(5) has been violated is even more baseless. Art 159(5) provides that amendments to the constitution on several limited provisions cannot be done without the consent of the Conference of Rulers.
But it is clear as daylight that ratification of the Rome Statute does not involve an amendment to the Constitution at all. The limited provisions referred in Art 159(5) also do not include the immunities of the the rulers. It is therefore disturbing to suggest that Art 159(5) has in any way been breached.
These arguments also presuppose that the Yang di-Pertuan Agong and rulers have absolute immunity to begin with. Since 1993, amendments were made to the constitution to allow criminal proceedings to be instituted against the king and the rulers via special courts (see Articles 32, 181, 182 and 183 of our constitution).
Hence, even domestically, the Yang di-Pertuan Agong and rulers do not have absolute immunity to begin with (albeit governed by certain special procedures) and can be held accountable for crimes. This was a crucial point which was never highlighted in the alleged presentation.
Fourth, it was alleged that Art 27 and 28(a) of the Rome Statute affects the position of the Yang di-Pertuan Agong. Again, if we look closer at Art 28(a) of the Rome Statute, the ICC only has jurisdiction to try a military commander who has “effective command and control” or “effective authority and control as the case may be”. A king who must act on the advice of the prime minister is very unlikely to be an “effective” commander of the armed forces – he is, at best, a symbolic figurehead.
Fifth, it was alleged that because the government ratified the Rome Statute without the consent of the Yang di-Pertuan Agong, this violates Art 46 of the Vienna Convention on the Law of Treaties (VCLT).
Art 46 of the VCLT says that, as a general rule, a state may not depart from treaty obligations on grounds that it is in violation of internal law regarding competence to conclude treaties. The only exception is if (a) such violation of internal law was manifest (it is considered manifest only if it would be objectively evident to any state), and (b) it concerned a rule of its internal law of fundamental importance.
Arguably, Malaysia cannot invoke the two exceptions to Art 46. Any violation cannot be considered “manifest”, nor can the internal law be of “fundamental importance” because it is clear that under the constitution no such consent by the Yang di-Pertuan Agong or Conference of Rulers – as with many other constitutional monarchies which have ratified the ICC – was required for ratification of foreign treaties.
Sixth, it was alleged that the interpretation of the “unable” or “unwilling” principle under Art 17 of the Rome Statute (which states that the ICC can only assume jurisdiction if states are “unable” or “unwilling” to act) “hanyalah berdasarkan keputusan pendakwa ICC semata-mata (based on the decision of ICC prosecutors alone).
This is untrue. Art 17 of the Rome Statute clearly provides that the ICC Court itself – and not the Prosecutor unilaterally – has the final say on whether the “unable” or “unwilling” principle is satisfied. Malaysia will have its day in court to argue the same if it does not agree with the prosecutor.
And the ICC Court will arrive at a decision, as it did in Prosecutor v Katanga (Judgment on the Appeal against the Oral Decision of Trial Chamber II of 12 June 2009 on the Admissibility of the Case) (ICC, Appeals Chamber, Case No ICC-01/04-01/07-1497, 25 September 2009).
This is inaccurate. As long as an element of a crime has been committed in a state party, then any state party can refer the matter to the ICC (see Art 14 of the Rome Statute).
This was decided in the recent ICC decision i.e. “Prosecution’s Request for a Ruling on Jurisdiction under Article 19(3) of the Statute” (Case No ICC-RoC46(3)-01/18-37, 9 April 2018). For example, if the Myanmar military has committed genocide on Rohingyas in Bangladesh (a state party) territory, even Malaysia (a state party) can initiate a referral to the ICC independent of Bangladesh.
Eighth, it was impressed that there have been attempts to prosecute royalties in the past. The example given was King Wilhelm II of Germany who was named in the Leipzig War Crimes Trials but had fled to the Netherlands, as well as Emperor Hirohito of Japan who was allegedly under the jurisdiction of the International Military Tribunal for the Far East after World War 2, but was spared by the US.
With respect, these are false equivalences. The German kaiser was an absolute monarch. So was the emperor of Japan, who under the Japanese constitution then, had divine power over his country from the Shinto belief that the emperor was the offspring of the sun goddess Amaterasu (only in 1946 was the emperor’s title changed from “imperial sovereign” to “constitutional monarch”).
They were both absolutely in control of the military. There is a stark difference between such absolute monarchs and the modern Yang di-Pertuan Agong and rulers who are constitutional monarchs.
Further, the alleged presentation seem to have missed the fact that both Wilhelm and Hirohito were attempted to be tried even when the ICC had not existed. In today’s terms, the UN may create ad hoc tribunals as it did in Rwanda and the former Yugoslavia – regardless of whether they had ratified ICC.
Ninth, it was alleged that the Yang di-Pertuan Agong would be exposed to the ICC because of Malaysia’s participation in UN peacekeeping missions across the globe. This is baffling. UN peacekeeping missions are meant to prevent genocide or war crimes from happening. To suggest that the UN itself would remotely commit the same ill crimes it intended to pacify is bewildering. To my knowledge, there has never been any attempt to prosecute UN peacekeeping forces under the ICC.
Tenth, it was alleged that our laws criminalising homosexuality would expose us to a “war crime” under Art 7(2) of the Rome Statute which criminalises “persecution against any identifiable group or collectivity on… gender as defined in paragraph 3”. This is untrue.
We must look at what paragraph 7(3) of the Rome Statute say: “For the purpose of this statute, it is understood that the term “gender” refers to the two sexes, male and female, within the context of society. The term “gender” does not indicate any meaning different from the above.” Hence, “gender” under Art 7(2) clearly does not include sexual orientation – and therefore does not include persecution of homosexuals.
Eleventh, it was suggested that there are cases of selective prosecution towards Kenya and the Ivory Coast. There is a wealth of literature to counter such arguments, as well as credible international reports that war crimes have occurred there, and I do not wish to reproduce them here for brevity’s sake.
Finally, it was alleged that there is likelihood of veto by the P5 nations on the ICC investigations: Russia in the MH17 investigations, China in Rohingya genocide and US in the Israel-Palestine dispute.
It was also stated that many Asean countries are not part of the ICC. I am not going to be ignorant of the realities of international law. But Malaysia cannot stand idly by while such gross violations of humanity are occurring. If we are not part of the Rome Statute, where is our credibility and standing to shout about war crimes and genocide? We must adhere to a higher standard and not lower ourselves in imitating the worst traits of superpowers.
The public and the royalty deserve legal objectivity and accuracy on this controversial issue. If we allow crucial foreign policy decisions to be swayed by one side without considering countervailing arguments, it will not be good for the nation as a whole.
LIM WEI JIET is an advocate and solicitor of the High Court of Malaya. He is also the author of Halsbury’s Laws of Malaysia on the Federal Constitution (2019 reissue).
1. It is my duty and privilege to open the first trial in our courts against a former Prime Minister, who for nearly a decade, occupied the most powerful office in the land and wielded near absolute power, which carries with it enormous responsibility, which my office intends to discharge in order to establish that the Accused is guilty of the seven (7) charges that he is facing before Your Lordship.
2. The Accused during his entire period in office as Prime Minister, at which time these offences were committed, simultaneously held the office of Minister of Finance, thereby combining maximum political power and control of the nation’s purse. In holding the office of the Prime Minister, and thus the nation’s highest elected public officer and Head of Government, the highest trust was reposed by our people in the Accused. In such circumstances, the law demands the highest standards of care in the discharge by the Accused of his duties and obligations as trustee of public offices.
3. Not being satisfied with the holding of the twin positions of Prime Minister and Minister of Finance, the Accused was also appointed the Chairman of the Board of Advisors of 1Malaysia Development Berhad (“1MDB”) and Advisor Emeritus in its fully owned subsidiary, SRC International Sdn. Bhd. (“SRC International”). A common feature of both companies was that the true power in directing and managing their affairs did not lie with the Board of Directors, as is required by law and is the universal practice wherever companies carry on business, but in the person of the Accused by virtue of his holding these two positions.
4. The operation of Article 8(1) of the Federal Constitution that “all persons are equal before the law” is amply demonstrated by this trial. A former Prime Minister is charged under due process in the ordinary court of the land, like any other Accused. The Accused is not above the law and his prosecution and this trial should serve as precedents for all future holders of this august office.
5. This trial is the first of many kleptocracy-1MDB-linked prosecutions. As required under Section 179 of the Criminal Procedure Code, I will state briefly the nature of the offences charged and the evidence by which the Prosecution proposes to prove the guilt of the Accused.
7. To prove the prosecution case beyond a reasonable doubt, the Prosecution will be relying on direct and circumstantial evidence, both oral and documentary, to prove that the Accused, on the dates, times and manner as contained in the charges, is guilty of each of the charges against him.
8. For the charge under Section 23 of the MACC Act 2009, evidence will establish that the Accused at all material times, as an officer of a public body, to wit, as Prime Minister and Minister of Finance, used his office and/or position to obtain for himself a gratification of RM42 million. Evidence will abundantly establish that the Accused was directly involved in the decision on behalf of the government of Malaysia to give government guarantees for the loans amounting to RM4 billion received by SRC International Sdn Bhd from Kumpulan Wang Persaraan (Diperbadankan) (“KWAP”).
h. The Accused, between 17 August 2011 and 8 February 2012, as a result of the aforesaid, had received as gratification the said monies totalling RM42 million into his AmPrivate Banking-1MY no. 211-202-201188-0 and AmPrivate Banking-MY no. 211-202-201190-6 bank accounts.
10. For the charges under Section 409 of the Penal Code, evidence will establish that the Accused at all material times, as agent, to wit, as Prime Minister and Minister of Finance, and Advisor Emeritus of SRC International, whilst entrusted with monies belonging to SRC International, committed criminal breach of trust in respect of the RM27 million, RM5 million and RM10 million belonging to SRC International.
e. That between 10 February and 2 March 2015, a sum of RM10 million belonging to SRC International was remitted to the Accused’s AmPrivate Banking-1MY no. 211-202-201188-0 account through the company accounts of Gandingan Mentari Sdn Bhd and Ihsan Perdana Sdn Bhd.
i. Evidence will establish that the personal cheques were issued for, among others, payment for renovation works carried out at the Accused’s residence at No.11 Jalan Langgak Duta, Kuala Lumpur, the Accused’s residence in Pekan, Pahang and cheques issued to various Barisan Nasional component political parties.
13. The burden is now on the Prosecution to prove, beyond a reasonable doubt, that the Accused, Mohd. Najib bin Hj Abd Razak is guilty of the criminal charges preferred against him at this trial.
The former premier and his cronies are accused of plundering billions of dollars from the fund and spending it on everything from high-end real estate to artwork and a luxury yacht.
Looking relaxed in the dock, he denied seven corruption and money-laundering charges related to the alleged theft of 42 million ringgit (US$10.3 million) from SRC International, a former 1MDB unit. It is just a fraction of the hundreds of millions of dollars that he allegedly stole.
The judge set the next hearing for 15 April, and trial dates until 10 May. Najib left without commenting, to cheers from his supporters waiting outside court.

References: Art 40
 Art 38
 Art 38
 Art 159
 Art 159
 Art 159
 Art 159
 Art 27
 Art 28
 Art 46

Art 46
 Art 46
 Art 17
 Art 17
 Art 14
 Art 7
 Art 7