The Employees Provident Fund (EPF) had approved 13 loans without government guarantee amounting to RM55.1 billion as at Dec 31, 2010, according to the Auditor-General’s (AG) 2010 report.
Of the 13, the AG had pointed out that only one borrower who got the loan of RM21.3 billion was eligible to have the loan approved by EPF without having to procure government guarantee.
It is not stated why the other loans were approved by EPF without requesting for government guarantee, except for two loans, which amounted to a total of RM7.3 billion. In providing feedback to the AG’s comment, the EPF had explained that the two borrowers — Khazanah Nasional Bhd and Tenaga Nasional Bhd — were exempted from having to procure government guarantee on the borrowed sum due to their high AAA credit rating given by Rating Agency Malaysia Bhd.
Meanwhile, the AG report, which was conducted between October and December last year, also found that the application for a government housing loan scheme amounting to RM4 billion was not tabled at the EPF investment management committee meeting before being approved by the investment panel on July 3, 2007. The EPF had explained that the investment plan was presented directly to the investment panel due to the urgency for a decision.
The AG found that as at Dec 31, 2010, the EPF had given out 15 government guaranteed loans amounting to RM35.69 billion. Of the 15, two loans of RM1.24 billion and RM5 billion were given to Assets Global Network and Valuecap Sdn Bhd respectively. The two companies are not government subsidiaries.
On this, the EPF had explained that Assets Global Network is a wholly-owned unit of the Minister of Finance Inc and hence, is deemed to be a government subsidiary. As for Valuecap, EPF said the company is equally owned by Khazanah, Kumpulan Wang Amanah Pencen (KWAP) and Permodalan Nasional Bhd (PNB), thus it is also deemed a government subsidiary.
The AG also found that EPF has been approving loans via the Islamic requirements since 2002 but it does not have an in-house lawyer that specialises in Islamic financial law. Hence, EPF has been using the services of lawyers from private firms to draw up the Islamic loan facilities but has its in-house lawyer, which goes through the conventional loan agreements, to also vet through the document.
In a separate note, the AG’s report found that the revenue from the federal statutory bodies’ 99 subsidiary companies in 2009 was at RM3.12 billion, which is RM1.06 billion lower than RM4.19 billion in 2008.
“The amount was lesser due to lower revenue from Felda Global Ventures Holdings Sdn Bhd (a reduction of RM667 million), Power Cables Malaysia Sdn Bhd (RM210.64 million) and Rakyat Holdings Sdn Bhd (RM138.77 million).
“The sector (among the federal statutory bodies’ 99 subsidiary companies) with the highest revenue is from the financial sector which brought in revenue of RM897.19 million or 29% of the total 2009 revenue. This was followed by the farming sector with RM557.58 million, education sector RM467.64 million and the manufacturing sector RM311.19 million,” said the AG report.
Only 24 out of the 99 subsidiary companies had made profit in the past four consecutive years, and paid out a total of RM156.46 million in dividend to its main/parent body.
Written by Sharon Tan, theedgemalaysia.com
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