Home Civil Society Voices White Paper on Felda confirms massive fraud: Time to charge the culprits

White Paper on Felda confirms massive fraud: Time to charge the culprits

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The Centre to Combat Corruption and Cronyism (C4) is deeply concerned with the findings of the government’s White Paper on the Federal Land Development Authority (Felda), which was tabled in Parliament on 11 April by Economic Affairs Minister Azmin Ali.

The paper highlights malpractices committed by the previous government and proposes solutions through:

  • restructuring
  • disposing of non-profitable assets
  • strengthening of corporate governance of Felda
  • guaranteeing the provision of welfare aid to Felda settlers

The losses and liabilities of Felda as of 2017 were RM4.9bn and RM14.4bn respectively – which are staggering and point to multi-fold areas of poor governance and outright malfeasance.

In particular, Isa Samad, Felda’s former chairman and former Prime Minister Najib Razak must stand responsible.

Outrageous information was confirmed on 10 April including that political parties received financing from Felda up to RM2.7bn.

The incidence of conflict of interest is stinging in the case of Felda. Many shady and corrupt deals were confirmed, such as the purchase of a piece of land (Park City Grand Plaza Kensington) for 60 million pounds and Felda Investment Corporation in the name of Isa Samad where the land was purchased without undergoing due diligence and receiving the approval of Felda’s board of directors.

This is a gross breach of trust, an attempt at thievery, as the properties are supposed to be purchased in the name of Felda/Felda Global Ventures (FGV)/FIC and not in the name of the chairman or any individual.

Similarities from the 1MDB and Tabung Haji scandal show that even in the case of Felda, the board of directors failed in their fiduciary duties to govern and to represent the interests of Felda settlers. Will the board be brought to justice?

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It has become imperative, now more than ever, that the PH government is committed to ensuring that professionals are appointed into the Felda bodies and as FGV and FIC chairmen. These appointments must be based on meritorious credentials and not on political connections.

To strengthen the initiatives spelt out in the White Paper, C4 Center recommends:

  1. It is assuring to note Prime Minister Dr Mahathir Mohamad saying that action would be taken against Najib Razak, given his direct hand in the scandal as the minister in charge.We urge that such gross thievery and fraud must be met with swift criminal action – which should include the board of directors for failing to carry out their duties in preventing such abuses. This government must stand firm to prevent this from happening again.
  2. Although Isa had been charged with one count of criminal breach of trust and nine counts of corruption involving more than RM3m (under Section 16(A) of the Malaysian Anti-Corruption Commission Act 2009,) he must be held fully responsible, accountable and punished for the wide-scale fraud in Felda.
  3. Felda and its subsidiary companies should be monitored by a parliamentary select committee tasked to evaluate their financial and non-financial performance. Select committees should be given the power to conduct an inquiry, to compel attendance to its hearing and to demand production and inspection of documents. These inquiries should be made public with settlers given a chance to participate in them. Accountable and transparent governance of Felda is imperative to ensure that this institution suffers no more abuse.
  4. The settlers should be given greater participation in Felda’s decision-making process. Their representation on the Felda board and that of the agency’s companies should be increased, thus allowing them to co-manage these businesses. Felda companies can be better managed if led by professionals, but with feedback from settlers.
  5. Perhaps the most crucial recommendation is that government-linked companies must no longer serve as vehicles of political financing. This must be reflected in new legislation on political financing.
  6. The government should speed up the establishment of the office of the ombudsman to supervise the conduct of government administration aimed at enhancing and strengthening corporate governance and accountability. The ombudsman must be an independent institution and must act as an independent officer with the responsibility of investigating the actions of government institutions and with an independent complaints commission for government-linked companiess and statutory bodies.
  7. Enact a Public Sector Malfeasance Act in Malaysia which functions to prevent those holding public office from misusing their public power and inflicting loss and damages towards government institutions. C4 Center calls on the government, in the name of good governance, to uphold accountability in our economic restructuring and keep Malaysia clean for the future.
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Cynthia Gabriel is executive director of C4 Center.

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