KUALA LUMPUR: The Defence Ministry's decision to stop the investment portfolio restructuring plan of the Armed Forces Fund Board (LTAT) implemented by the previous management has hindered the comprehensive transformation process of LTAT, according to the Public Accounts Committee (PAC).
PAC chairman Datuk Mas Ermieyati Samsudin (pic) said the primary initiative in the LTAT Strategic Plan 2023-2025, which includes the restructuring of Boustead Holdings Berhad (Boustead Holdings), which was launched in July 2023, was described as a practical plan.
She said the plan would reduce LTAT's dependence on Boustead Holdings and diversify LTAT's investment in other quality assets.
"The plan also went through various screening and approval processes at each level at LTAT and Mindef at that time and involved a comprehensive study by LTAT.
"Based on the Defence Minister's testimony during the proceedings, the postponement decision and instructions to redraft the restructuring plan of Boustead Holdings were made after only getting views from the management of Boustead Holdings, but without input from the management of LTAT.
"LTAT, as the 100 per cent owner of Boustead Holdings, needs to be given space to formulate and implement a plan that meets the needs and objectives of LTAT, not the other way around," she said in a statement.
She said the PAC had already held four proceedings, two on June 20 and two on Aug 7, 2024, involving the Auditor-General, the Defence Minister, the ministry's secretary-general and LTAT chief executive officer, about issues affecting the board.
Also called were the former chairman, former chief executive and former senior director of LTAT Strategy, who resigned between Jan 31 and Feb 16 this year.
Considering the various crises and scandals, Mas Ermieyati said Boustead's structure as an intermediary company between LTAT and profit-generating companies should be revamped.
She said the reorganisation of LTAT's investment into Boustead Holdings will help LTAT increase its accumulated profits, increase the value of its investment assets, and improve its reserve position.
"The critical cash flow and various financial crises that hit Boustead Holdings and its subsidiaries increased the impairment risk, involving up to 50 pct of the fund's value, almost RM5bil of the retirement fund managed by LTAT.
"This depreciation will not only cause LTAT to be unable to pay dividends to contributors but may also cause LTAT to lose the RM5bil fund," she said.
Regarding the issue of LTAT reserves remaining negative, PAC believes that strategies focused on increasing accumulated profits should be continued to enable LTAT to rectify the situation gradually.
As part of improvement measures, the PAC outlined three recommendations: LTAT should base its dividend payments on realised gains rather than non-cash profits, as in 2021 and 2022.
"LTAT should also increase efforts to diversify the composition of the investment portfolio and not rely on just one entity to reduce exposure risk to provide high and consistent dividends to contributors.
"Mindef and LTAT need to present to the PAC the latest status of LTAT's planning regarding share portfolio holdings, the restructuring of the Boustead Group and the future direction of LTAT before the end of 2024," she said.
Mas Ermieyati said PAC asked the National Audit Department to carry out a detailed audit of Boustead from the finances and governance of Boustead Holdings next year, in addition to giving Mindef and LTAT two months to update PAC and implement the committee's recommendations.- Bernama
