KUALA LUMPUR: The Public Accounts Committee (PAC) today questioned Boustead Holding Bhd's "hushed" land sales, which was earmarked for development under an earlier plan which was shelved by the Defence Minister.
"Under the Boustead's restructuring plan that was halted, both lands were planned to be maintained by Boustead Properties Bhd, which is wholly owned by Armed Forces Fund Board (LTAT), for development purposes."
"Is the selling of these lands Boustead's new restructuring approach to generate income and reduce debts. If this is the solution, PAC is of the view that this approach is short term and will affect LTAT's asset value. It would not solve LTAT's problem in the long term."
"This approach is against the stance taken by the Defence Minister regarding the strategic plan that was halted, which was also deemed as a short term solution," PAC chairman Datuk Mas Ermieyati Samsudin said during her presentation on the PAC report on LTAT in Parliament today.
EcoWorld announced the purchase of land owned by Boustead's subsidiary worth RM742 million last month, while she said that PAC was informed of the sale of land owned by Boustead Plantations Bhd at Batu Kawan, Penang to Ideal Properties Bhd.
Mas Ermieyati said the transactions were done discreetly, which differs from the restructuring plan under the LTAT 2023-2025 Strategic Plan, that was announced and discussed publicly.
"PAC hopes that the Defence Ministry and LTAT will be ready with the appropriate response in next year's proceeding with regards to the issues raised as well as suggestions that were made by the committee," she said.
PAC in its parliamentary report published two weeks ago had criticised the Defence Ministry (Mindef) for blocking efforts to transform the LTAT by halting the restructuring plan of Boustead last year.
Mas Ermieyati said that LTAT's management had previously drafted and implemented a plan that was viewed as the most practical to reorganise the the fund's investment portfolio in July 2023.
The plan was also developed to solve Boustead Group's cash flow and debt issues and it was approved by the then Defence Minister.
However, the plan was halted in December 2023.
She said that the minister explained he had received feedback from Boustead's management and wanted an alternative plan to be brought for approval at the Cabinet meeting.
"It has been 10 months since the strategic plan was halted but there has been no alternative plans that were announced. This delay exposes LTAT to the continued impairment which has been going on for five years."
"The lack of a comprehensive restructuring plan stunted LTAT's transformation to become a sustainable retirement fund that could provide a consistent and competitive dividend," she said.
Mas Ermieyati also said that LTAT is too dependent on the profit and performance of Boustead, which is reflected in the group.
From 2017 until 2022, of the RM1.3 billion dividend gained from LTAT's investments, only RM426 million or 32.8 per cent were contributed by Boustead.
Boustead and its subsidiaries' critical cash flow and financial crises heighten the fund's impairment risk, potentially affecting up to 50 per cent of the fund's value—nearly RM5 billion.
"Boustead is seen as a ticking time bomb that can drag LTAT's investments if no corrective measures are taken by LTAT," she said.