KUALA LUMPUR: Defence Minister Datuk Seri Mohamed Khaled Nordin said he was not against the restructuring of Boustead Holding Bhd but had instead called for alternative approaches that avoid relinquishing stakes in key strategic assets.
A report published by the Public Accounts Committee (PAC) quoted as Khaled as calling for the importance of thorough analysis for any radical or large-scale changes under the Armed Forces Fund Board (LTAT) strategic initiatives.
He also said the approach taken under the plan is short-term in nature, aimed solely at improving financial positions in accounting terms by divesting stakes in these strategic companies.
"When I became minister, I received numerous complaints from subsidiaries that they were neither consulted nor allowed to provide input.
"I emphasised that LTAT must not make short-term decisions involving asset sales or the relinquishment of stakes in strategic companies. Although such moves might generate short-term liquidity, LTAT, as a pension fund for military personnel, must prioritise long-term dividend returns and benefits.
"Without investments and strategically managed companies, this would adversely affect long-term outcomes. While asset sales might make financial accounts appear more attractive in the short term, the long-term implications need consideration."
Khaled also said that the LTAT management must present him with alternatives instead of proposing only one plan.
"Ultimately, I must understand the proposals to submit them for Cabinet approval. This approach ensures that all decisions are well-informed and endorsed by the Cabinet.
"I do not want a recurrence of scenarios like the Boustead Plantation sale to KLK, where LTAT or Boustead risk losing majority control over companies built over many years. I also said that dissolving Boustead Holdings is not the best step forward.
"Therefore, I want viable alternatives to determine the best course of action." he was quoted as saying in the report.
Khaled also expressed strong reservations about the approach taken by the restructuring programme -dubbed Project Moonshot - which would see LTAT hold only minority stakes while allowing third parties to manage strategic companies.
He said this would lead to a loss of control and reduce LTAT's role to that of a passive investor.
"Under Moonshot, LTAT would no longer hold majority stakes in these companies, which would be relinquished to others instead. For example, Boustead Heavy Engineering's stake would drop from 100 per cent to 40 per cent, while Pharmaniaga's would fall from 55 per cent to 40 per cent. This short-term divestment compromises oversight and strategic control," he said.
He had also requested a review of the plan to prevent potential Cabinet disapproval.
This, Khaled said was to avoid repeating past missteps, such as the halted sale of Boustead Plantations Bhd (BPlant) to Kuala Lumpur Kepong Bhd (KLK).
"We adopted the approach that all significant matters must be brought to the Cabinet's attention. This ensures collective decision-making and prevents unilateral decisions that may later be overturned," he said.
He said seeking Cabinet approval was his initiative, as Project Moonshot had yet to gain the necessary endorsements.
"Major decisions of this nature must be understood and approved by the Cabinet as part of our collective responsibility."
He added that once approved, updates on the plan's progress could be shared through parliamentary debates or other platforms to maintain transparency regarding LTAT's transformation.
Earlier, the PAC had criticised the Defence Ministry (Mindef) for blocking efforts to transform the LTAT by halting the restructuring plan of Boustead Holdings Bhd last year.
In a statement, following its parliamentary report, the PAC revealed that the ministry's decision to halt the restructuring of Boustead Holdings — a key initiative under LTAT's 2023-2025 Strategic Plan — hindered the necessary transformation of LTAT.
It said that the transformation required urgent, comprehensive, and thorough implementation.
The PAC further said that, according to Khaled, the decision to stop the restructuring plan was made after consultation with Boustead Holdings' management but without involving LTAT's management.