The FGVH issue, again and again

— Sakmongkol AK47
The Malaysian Insider
Jun 02, 2012

JUNE 2 — This issue is not going to stand down.

I have to repeat this question. FGVH has not even been listed, the government of the day plans to give a total of RM15,000 to each FELDA household. The pop gets 5k first, then the mom and, finally, junior. Where did the government appropriate the money? Advances from the underwriting banks? From FELDA itself?

If the money is from FELDA coffers, then the FELDA folks must be suffering from a peculiar mental illness, the name of which I don’t know. But it entails a person feeling jubilant receiving his own money but given by another person.

If the money is not from the listing exercise, it must come from somewhere. So for what purpose was the money given? I have said it many times; Najib’s favourite way is to pay his way through. The FELDA settlers are no exception. Moreover there are 52 parliamentary seats to be won in FELDA areas. Sabah and Sarawak are almost certainly gone. FELDA is now the favourite political fixed deposit. Najib is pre-paying the interest amounts.

And Najib at least knows the Malay mentality — anything given free will be wiped clean. He told this once to me when I complained that FELCRA settlers wanted shares for every member of the family when only per household was meant to be given. So now he has improved on his delivery system — RM15k to be divided among pop, mom and junior. That’s representing every member of the family.

Clearly, this is a financial inducement to FELDA settlers to persuade them to decide in a particular way. It is corruption. If settlers are given RM15k, what about the ordinary traditional villagers? FELDA settlers are better off than most of them. This government is being selective again. So, intelligent sons and daughters of discriminated villagers — go back and tell your parents not to vote for a government that is playing favourites.

The original idea to list FGVH came from CIMB Investment Bhd. It was also aided by Ethos Consulting as joint global co-ordinator. Probably now many others have been roped in to become joint co-ordinators. It’s Don Corleone assembling a gathering of the families from New York, Nevada, Vegas to join in to share in wetting their beaks.

This probably was the source of the idea when Najib announced some time in October 2011 that he wanted to list FGVH and its related companies.

If he has studied FELDA, he would have not agreed to the idea in the first place. If the idea has always been the welfare of the settlers and FELDA employees as he claimed, the better idea was to allow KPF to buy out FGVH completely and then go for listing. KPF can hire a top management team to run the business. FGVH is doing the same too, so managing better is not something exclusive that can be done only by FGVH. Moreover, if KPF had been allowed to buy out FGVH and gained 100 per cent control of FH, the claim that we are looking out for the welfare of settlers and FELDA employees first would have been more credible.

The business outfit making money for FELDA is FELDA Holdings, which is owned by KPF and FELDA (through FGVH). FGVH is the smaller partner of FH and in theory the bigger partner offers to buy out the smaller.

FELDA the authority made a judgment and subjective call; it favoured FGVH to buy KPF out instead of the other way round. Now, please tell us, based on that decision, which side does FELDA support? The settlers and employees or the corporate marauders?

The owners of FGVH, upon receipt of the purchase sum, will then do whatever they want in the downstream side of the business or whatever. They can even buy shares in the FELDA Holdings. If that has happened, then FELDA settlers and FELDA employees would have become 100 per cent owners of FH and all assets therein. Moreover, FGVH has no standing to swallow up FELDA Holdings because as a business it hasn’t done well. The last two years profits were probably not enough to cover all the previous losses it incurred.

It has to tackle one nagging question. After the listing, where would FELDA (the parent company) get money to run its business? It has to pay employees, manage the welfare of the settlements and carry out its social and political responsibilities. It needs about RM3 billion a year to finance its operations. When the listing takes place, it will be left with RM400 million a year which is not enough to see it through. It can of course operate from the earnings it gets from selling its 49 per cent in FH to FGVH. How much will it get? It will have to use its portion from the listings to pay off EPF debt, for example. It borrowed RM6 billion from EPF the last time. And don’t forget, it has to allocate a big amount to the ministry in charge of FELDA to allow the minister in charge to play Santa Claus all over.

Probably realising that, FELDA says it will set aside 20 per cent of its earnings from the listing in a new vehicle named Amanah Saham FELDA. I suspect Amanah Saham FELDA will become the repository of moneys deposited there (either from earnings of its 20 per cent share in FGVH or from direct government transfers) to take care of the usual income which FELDA has now lost. From RM3 billion to RM400 million a year. So when Isa says Amanah Saham FELDA will use the dividends and earnings it gets to distribute dividends to settlers, that claim is dubious.

We don’t know whether Amanah Saham FELDA will get 20 per cent from FELDA’s portion of the profits upfront or 20 per cent in the form of shares in FGVH, entitling it to get dividends each year later. Will that 20 per cent equity entail getting RM3 billion a year, we don’t know. Suppose it doesn’t get RM3 billion, where will the shortfall come from? It will have to come from the government. If at the end of the day the government ends up having to contribute money into FELDA which previously doesn’t need help from it, doesn’t this show the myopia of the government? We can even call it stupidity. — sakmongkol.blogspot.com

* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).