Wednesday, October 3, 2012

The Reason Why We Regard It As A Bailout - 3rd October 2012


Press Release: 

 

The reason why we regard it as a bailout:

 

1)           When acquiring/accepting assets the state government is suppose to use the valuation by the Property and Services Department (JPPH). However assets are acquired/accepted at gross inflated prices according to private valuation instead of JPPH. An example is Bukit Beruntung 2 which is valued by the JPPH at RM113 million but acquired/accepted by the Pakatan Selangor State Government at RM345million.

 

Of the total assets accepted/acquired amounting to RM676million by the PR Selangor State Government there is apparent overvaluation of RM339 million to RM397 million.

 

2)           Assets accepted/acquired for the debt settlement has limited commercial value. For example:

 

a.           Low occupancy and empty office lots in Menara Pandan and Ukay Perdana;

b.           Danau Putra land that is ex-mining pond and not subdivided

c.            Hillslope C3 and C4 land in Ulu Yam;

d.           Underwater ex mining pond land in Bestari Jaya; and

e.           Puncak Jalil land that has returned to state government by Talam since 2005.

 

3)           PR Selangor State Government settled a sum of RM266 million to Talam financers/bankers. The amount is mainly raised through sales of land to PNSB, where PNSB took a loan plus interest of RM316million. (The Edge article dated 15th March 2010, indicates that for Talam to be no longer designated as a PN 17 Company, the company had to satisfy in effect outstanding defaulted debts that stood at RM227 million as at 30th November 2009).

 

4)           The MB has indicated that Talam was facing the possibility of liquidation. It should however be noted that after the transaction with PR Selangor State Government, Talam was no longer designated as a PN 17 Company.

 

5)           Most of the land in selangor is earmark for development. However after 2 ½ years the land acquired from talam does not have clear development plans.

 

6)           The state companies scenario is as follows;

 

a.   The state government owe KHSB RM115million and no payment has been made to KHSB based on latest quarterly result.

 

b.   Unisel financial condition has worsened as Unisel only receive RM10 for the talam debt collection exercise instead of RM248million. RM36million discount is also given though Talam did not fulfil the settlement agreement that expires in 2008.

 

c.   PNSB instead of collecting RM28milion has received only RM10 and is now having a loan of RM230million with interest cost of RM86million while talam saves RM24million yearly

 

7)           Why is it necessary for PR Selangor State Government to accept/acquire assets more than required to the extent that it now owes Talam money RM30million at the end of this exercise?

 

8)           In the previous settlement agreement before 308, Talam is required to settle all the land encumbrances. There was no terms to accept land with encumbrances or to pay Talam financers/bankers.

 

As such the total cost in terms of the Talam deal is as follows;

 

Assets accepted/acquired with

  apparent overvaluation                                   RM 676million

 

Total interest cost borned by PNSB                RM 86million

 

Discount given talam                                         RM 36million

                                                                             ________

Estimated total cost                                           RM 798million

                                                                             ---------------

Included apparent overvaluation of RM397million

 

Until today PR Selangor government has not been able to give a clear answer on the issues raised.

 

The white paper is still not tabled and the rakyat is waiting after 2 ½ years. Why is the state exco and MB so silent on such a big transaction?

 

The review by KPMG is only a Public Relations exercise as it did not address any allegations including assets acquired at inflated price compared to JPPH valuation. In fact it raises more questions.

 

There is an abuse in government procedure as PR Selangor government has not been able to clarify if JPPH valuation supports each of the assets acquired.

 

MACC should look into this.

 

 

 

 

//END

 

BY Datuk Chua Tee Yong

 

MCA Young Professional Bureau Chairman

Deputy Minister of Agriculture and Agro-based Industry

Member of Parliament for Labis

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