C4 calls for RCI into GLC RM29b in debt

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GLC set up as a special purpose vehicle to finance the development projects of the Ninth Malaysia Plan.

The Centre to Combat Corruption and Cronyism (C4) today called for a Royal Commission of Inquiry (RCI) into a little-known Finance Ministry-owned company, Pembinaan PFI Sdn Bhd, which reportedly had a debt level of RM29.68 billion.

Pembinaan PFI was set up on Sept 28, 2006, as a special purpose vehicle to finance the development projects of the Ninth Malaysia Plan.

It was reported back in 2020 that Pembinaan PFI had a debt level of RM29.68 billion as of June 30 that year.

C4, which launched a report today titled “PFI: The Search for Accountability”, called on the MACC to explain a 2018 investigation into Pembinaan PFI, which has apparently come to nought.

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“What happened to the aborted investigations on the private finance initiative? Are they going to pursue it? The public has no information on it,” said C4 executive director Cynthia Gabriel.

She added that the government’s policy of private finance initiatives (PFI), which includes Pembinaan PFI, is a cause for concern.

During the launch today, she said the government’s PFI policy, which is a form of public-private partnership, should be reviewed immediately to ensure it is in line with international best practices.

The C4 report’s lead researcher Pushpan Murugiah also said Pembinaan PFI had secured RM 30 billion in loans from the Employees Provident Fund (EPF) and Retirement Fund Incorporated (KWAP).

He said the money was placed in a trust fund controlled by the government to fund PFI projects implemented through ministries.

“This (Pembinaan PFI) is actually a shell company that has no function in terms of implementing projects whatsoever,” he said.

He also pointed out that the company had no operational staff apart from directors.

Pushpan revealed that collateral for the loans was land leased by the Federal Lands Commissioner (FLC) to the company.

The FLC owns one share in Pembinaan PFI, he said, adding that the other 9,999,999 shares are owned by the Finance Ministry.

Lack of transparency

C4 alleged the FLC leased land parcels in 2007 to Pembinaan PFI for a mere RM10.

Pembinaan PFI’s records indicate that five years later, this lease rental was increased to RM5.7 billion, which was meant to expire in June 2022.

Pembinaan PFI then sub-leased these land parcels back to the government under another agreement for a period of 17 years for RM29.16 billion ending in 2027, it said.

Based on its research, C4 alleged that 186 parcels of land were misappropriated to generate funds for Pembinaan PFI to finance its projects.

It noted however that information regarding recipients of contracts awarded by Pembinaan PFI was difficult to obtain due to a lack of transparency.

Meanwhile, speaking at the report’s launch, economist Edmund Terence Gomez alleged that during a meeting with C4, EPF insisted it had the autonomy to loan funds to Pembinaan PFI as they were getting back a four percent interest rate.

“That RM25 billion could have been invested elsewhere where the returns would have been much higher which would have benefited us, the people who contribute to EPF.

“Is the EPF accountable and independent in the way they use the money? They insist they are, but I have to question that,” he said. – Malaysiakini