Controversial transactions

Armed Forces Fund Board (LTAT) chief executive Tan Sri Lodin Wok Kamaruddin says that all transactions that it takes are done on commercial basis and in the best interest of shareholders.

However, the parties involved in the corporate transactions and their timing have raised questions as to whether the deals are politically-motivated.

Two such controversial deals are the Bukit Raja land deal in Klang in 2013 and the acquisition of companies with the concessions on the Automated Enforcement System (AES).

In the land deal, LTAT’s 60% subsidiary – Boustead Holdings Bhd purchased three plots of land in Bukit Raja in a transaction that involved two companies – Astacanggih Sdn Bhd and Awan Megah (M) Sdn Bhd.

The deal was criticised because it was done when the personalities involved in the companies selling the land were linked to former Prime Minister Datuk Seri Najib Tun Razak and Umno.

In 2013, Boustead’s subsidiary, Bakti Wira Development Sdn Bhd, announced that it would be acquiring an 80% stake in Astacanggih Sdn Bhd for RM30mil, after which both companies would buy three plots of land from Awan Megah (M) Sdn Bhd for RM130mil.

In a filing with the stock exchange dated Jan 3, 2013, Boustead said the 80% acquisition of Astacanggih formed a corporate exercise to acquire an interest in the 200-acre development land in Bukit Raja.

The company further stated in the filing that it was confident of the acquisition being able to generate a return on development cost of 25% from the RM160mil investment.

The timing of the deals had sparked criticism as the allegations were that the transaction was done to in a bid to silence businessman Deepak Jaikishan, who held a direct 18.99% stake in Astacanggih. Deepak had denied such allegations.

Deepak, through Astacanggih, had also earlier sued Awan Megah for the rights to the three parcels of land in Bukit Raja, Klang, after a business partnership between the two companies soured. Awan Megah is 99.99% owned by Selangor Wanita Umno chief Raja Datuk Ropiaah Raja Abdullah.

She had been earlier awarded three plots of land measuring 223 acres in Bukit Raja in exchange for building the National Defence Education Centre or Puspahanas in Putrajaya.

Astacanggih unexpectedly withdrew its suit at the end of December just before the Boustead deal was announced.

At that time, both LTAT and then Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi, clarified that Boustead did not use any of LTAT’s money to purchase the land.

The AES system

Recently, the government has decided to take over the companies with the AES concessions, which are A.T.E.S Sdn Bhd and Beta Tegap Sdn Bhd, for RM555mil from LTAT and Boustead.

Transport Minister Anthony Loke has announced that all 3.1 million outstanding AES traffic summonses, at a total value of RM435mil, would be written off. He also announced that the government had decided not to renew the contract with Beta Tegap and ATES and the operations would be taken over by the Road Transport Department beginning Sept 1.

Loke said since the agreement was signed in 2012, almost RM129mil had been paid to the two companies via two-tier payments.

Loke contended that the assets of the companies were only 47 speed cameras, each costing RM250,000, along the country’s highways.

LTAT’s involvement came about in 2014 through its subsidiary Irat Properties Sdn Bhd. Loke disclosed that LTAT, at the behest of the former government, forked out RM555mil to the concession companies to take over the management and operation of the AES.

LTAT’s rationale is that after conducting due diligence, the project was found to be commercially viable with a strong double-digit return on investment, besides creating employment opportunities for army veterans and reducing road accidents.

In response to Loke, former chairman of LTAT admiral (R) Tan Sri Mohd Anwar Mohd said that in 2017, the previous government had decided to take over the AES project (which was then called AWAS) from LTAT.

The previous government also agreed to repay LTAT’s investment cost with a 12% return per annum, he said in a statement.

He said it would be “quite unfair” if the current government decides to repay the money spent by LTAT to acquire the two companies without paying the 12% returns and other AES project-related expenses incurred so far.

The shareholders of ATES were Traffen Force Sdn Bhd, which owns 60% while Commercial Circle (M) Sdn Bhd holds the remainder.

The shareholders of Commercial Circle included Foong Yook Seng @Lawrence Foong Yook Seng, Michael Foong Ka-Meng, Norsiah Abu Asid and Mohd Zulkafli Ahmad Tazali.

Among the directors of ATES are Yook Seng, Norsiah, Chee Chwee Cheong and Hum Weng Yew.

Chee is one of Traffen Force’s shareholders, while another shareholder is Jendela Duta Sdn Bhd.

It has been reported that Chee is a founding director of Ethos Capital Sdn Bhd, a boutique private equity firm with stakeholders close to Najib. Datuk Omar Mustapha, who served as an aide to Najib, is the chairman of Ethos Consulting.

Beta Tegap, meanwhile, is owned jointly by Dr Andreas Teoh, Mohd Yunos Othman, Rozana Redzuan, general (R) Nik Ismail Nik Mohamed and Yap Kim See@Yap Ai Lin.

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