KUALA LUMPUR: It was cabinet members in 2017 who decided for a RM2.07 billion piece of land to be sold to Bank Negara Malaysia (BNM), the Public Accounts Committee (PAC) report revealed.
The PAC report on the purchase of Lot 41 which was published on the Parliament website today said the offer by the Finance Ministry (MoF) for BNM to buy the land was made following a cabinet meeting on Nov 17, 2017.
According to the report, it was also the cabinet that decided that Lot 41 should first be transferred to a special purpose vehicle (SPV), Hartanah Mampan Sdn Bhd (an MoF Inc subsidiary company), before being sold to BNM.
The decision to get BNM to buy the RM2.07 billion piece of government land in the city was to pay off 1MDB's debts. In 2017, the cabinet was under the premiership of Datuk Seri Najib Razak.
In the report, PAC chairman Wong Kah Woh had asked Treasury secretary-general Datuk Asri Hamidon where the RM2.07 billion was channelled to after the amount was paid by BNM to the SPV.
Asri said the proceeds from the sale was used "to rationalise the 1MDB plan", adding that during the November 2017 cabinet meeting, cabinet members had agreed that the land was to first be transferred to an SPV and that "this SPV would then sell it to BNM".
Wong: So, the cabinet members made the approval for this land to be transferred to the SPV and then sold to BNM?
Asri: Yes, correct.
Wong: So, that means it is a cabinet decision that this piece of land was to be sold to BNM?
Asri: Yes, correct.
Deputy Auditor-General (Performance) Patimah Ramuji was quoted as saying in the report that the National Audit Department found that the entire purchasing process happened in a "very short time", describing it as an "extraordinary" circumstance.
"That's why we find it surprising because it happened very quickly where MoF Inc was established in what appears to fulfil this need because it was established on Oct 19, 2017, just before the S&P (sale and purchase) was signed on Dec 14," she said.
Patimah explained that the process of purchasing a piece of land with such a big amount, both in public and private sectors, would usually take a longer time than just four months. The offer was made in August 2017 while the full payment was made in December of the same year.
"For us, it is extraordinary because it was only from August, (until December) so about three or four months? Everything was settled including the ownership.
"Not only in the private sector, even in the government, based on our (experience) doing audits, (the process) could take a long time, years even. But, this was very quick. If we want to evaluate the efficiency, this would be considered as very efficient."
At the same time, Patimah also pointed out that up until September 2020, there had yet to be any development on the land and this, she said, was the reason why the Audit Department decided to audit the purchase.
"The plan was to turn it into an education hub but there has yet to be any development on this.
"We were informed that the development is 'coming' and so our question was what is the exact period for the word 'coming'. Until now there is nothing yet," she said.
According to the PAC report, BNM had not carried out adequate due diligence when buying the land as it was done in haste and that BNM had paid a higher amount than the valuation carried out by the Valuation and Property Services Department.
The PAC report said BNM had never planned on buying Lot 41 land before the offer was made by the Finance Ministry, adding that the purchase was never part of BNM's yearly strategic plan for the period of 2015-2017.
This, the PAC said, raised the question of whether the BNM was, at any point, pressured by the government to purchase the land to bail 1MDB out of its massive debt.
"All these raise doubts as to whether BNM was facing pressure from the government in making the decision," the report read.
It said that BNM had paid RM2.07 billion. RM1.035 billion was paid on Dec 19, 2017, and another RM1.035 billion was paid on Dec 27, 2017.
The sales proceeds were then used for payment under the 1MDB rationalisation plan on Dec 31, 2017.