KUALA LUMPUR: Suspicious real estate deals and high-risk investments were some of the issues identified by the Public Accounts Committee (PAC) in its report on Human Resources Development Corporation (HRD Corp).
One such deal was the purchase of Menara Ikhlas for RM202.5mil in February 2021, where a deposit of RM120mil was paid upfront to a company called Crystal Clear Technology.
“It was more than 50% of the purchase price of the building, but the purchase was eventually cancelled.
“The agreement was a sales and purchase agreement, but the contents of the agreement was a lease to purchase agreement,” said the PAC in its report released yesterday.
HRD Corp chairman Datuk Rajasekharan Ramasamy said the RM120mil deposit in question was returned with an interest of RM3.2mil.
The PAC also zeroed in on the purchase of a Bangsar South building for RM154mil which did not obtain the approval of the HRD Corp board.
“Instead, the purchase was made under the purview of the HRD Corp chief executive.
“But due to a lack of evidence regarding the purchase of the building, HRD Corp could not ascertain who was responsible for the purchase,” it said.
Also under scrutiny was the purchase of Blok A, Sutera Avenue, in Kota Kinabalu for RM16mil, in which the purchase was not tabled in HRD Corp’s board meeting.
“The board was asked to sign the Statement of Arm’s Length Transaction without providing full details about the building bought,” said the PAC.
On another matter, the PAC said the investment panel of HRD Corp had failed to report substantial investment activities to its board of directors.
“Besides that, HRD Corp’s investments in the ‘put and call’ option is considered high risk,” it added.
According to the PAC, HRD Corp had invested levy collected from employers on several high-risk investments despite HRD Corp not being an investment institution.
The training fund’s levy collection stood at RM2.134bil in 2023, an increase from RM475mil in 2020. The increase was due to the expansion of scope under the Human Resources Development Act 2001, which mandated employers from all industries to contribute.
Employers’ levy contributions will be forfeited if they are not used within two years and would then be pooled into the unutilised levy fund.
“This period is too brief as it did not help small and medium enterprises (SMEs) to fully utilise the training funds,” the PAC said.
HRD Corp had assets worth RM3.77bil, with cash making up for the largest chunk at RM1.92bil (51%). This was followed by bonds, sukuk and derivatives at RM690.31mil (18.3%), equities and derivatives amounting to RM542.45mil (14.4%), and Amanah Raya and unit trust at RM143.83mil (3.8%).
The report also said HRD Corp had outstanding levies totalling RM205.42mil as of Dec 31 last year.
The PAC said there was no Bank Negara Malaysia representative in the panel, which is a requirement under the Human Resources Development Fund Act 2001.
“According to Act, a Bank Negara representative must be appointed into the investment panel.
“But there has been no Bank Negara representative in the investment panel since 2017,” it added.
The PAC report was released yesterday and can be accessed at www.parlimen.gov.my/pac
