Published: Wednesday November 14, 2012 MYT 12:50:00 PM
Updated: Wednesday November 14, 2012 MYT 12:51:59 PM
Poor funding by Kedah agency led to failed PNG project, says businessman
KUALA LUMPUR: Kedah businessman Datuk Abdul Manaf Abdul Hamid has challenged the Kedah state government authorities to prove claims of irregularities in a failed logging and plantation joint venture in Papua New Guinea (PNG).
The failed project was highlighted in the 2011 Auditor-General's Report which stated that an agency under the Menteri Besar Incorporated of the PAS-led Kedah state government had incurred losses amounting to RM13.49mil when officials of the agency terminated the investment in March last year.
They had cited irregularities in the project.
The agency had bought a 70 per cent stake in MAS Incorporated Ltd for RM31.21mil to develop two areas covering 114,429 hectares in PNG while Abdul Manaf held the balance of the equity.
In detailing events that led to the joint venture and failure, Abdul Manaf, who is MAS Incorporated executive chairman, said he only wanted to tell "his side of the story without any political agenda".
He claimed that as a Kedahan, he had proposed the joint venture to the Kedah state agency so that it could earn foreign exchange.
"There are no irregularities in the project at all.
"The project is there, the approvals are there, including the environmental approval, all agreements are in force until 2031. The only thing you need is money to start rolling.
"Until today, I still hold the project, the land is still leased under me for 99 years and my company owns 100 per cent of it (the project) since the agency left," Abdul Manaf told Bernama.
He said the main reasons for the losses as stated in the AG Report was the financial incapability of the agency and its management weaknesses.
Abdul Manaf said presentation on the PNG project was made to Kedah state government officials in August 2008 including the estimated cost involved.
Their representatives even flew to PNG for a week to see the project area before a share sale and business collaboration agreement was signed two months later.
Under the joint-venture agreement, the agency was to put in RM3 million as pre-operating costs before the trees could be logged.
"They (PNG landowners) gave us the land (and trees), we pay back in terms of development (in starting oil palm plantations," said Abdul Manaf, adding that he received initial approvals to log and export between 5,000 and 7,000 hectares of timber out of a total of 42,140 hectares in one area.
"This was an excellent opportunity since these are trees from a virgin forest and PNG is among few countries that allows exports of logs.
"The trees can generate about RM19.8 million in revenue within two and a half years but unfortunately the agency did not have the funds to buy machinery for logging and build the basic infrastructure," he said.
He claimed that the agency even defaulted on paying the full sum of pre-operating costs as it only forked out RM1.87 million and that landed him, as the proponent of the project, in trouble with the landowners and the PNG government.
"I was told to remove the agency as my partner in the project. I was penalised and reprimanded by the government for not starting the logging," he said.
Abdul Manaf claimed that at one juncture, the agency even said it wanted to own 100 per cent of the project but did not proceed to do so.
To the best of his knowledge as the prime mover of the project, he said the agency only spent RM3.9 million in three years and not RM13 million as alleged by the agency.
"Its total commitment in PNG was RM1.87 million (in pre-operating costs) and RM1.2 million in terms of goodwill payment, plus other miscellaneous payments.
"Its last pay out was on February 2010, I have all the documents," said Abdul Manaf, who added that he would not refund the RM1.2 million in goodwill payment to the agency as the latter has offered it to him for bringing the project to the Kedah state government.
Abdul Manaf also referred to a demand from the agency concerned on a sum of RM1.4 million as commissions to be paid for an offshore loan in London, saying that he would not pay as he was not a party to the loan agreement. - Bernama
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