PETALING JAYA: Many irregularities were highlighted in the forensic study on Felda’s London investments, particularly the purchase of the Park City Grand Plaza Kensington hotel and two other properties in Wembley.
The common theme with the two investments were that they were done without the approval of Felda’s board of directors, and the involvement of third party companies in the deals, resulting in a breach of confidentiality in both instances.
In the case of the £60mil purchase of the London hotel, the white paper found that no sale purchase agreement had been signed between Felda Investment Corp (FIC) and the original owner of the property (Company H).
This was despite FIC making the full payment of £60mil, with the payments made in two parts, via a law firm it appointed in the UK.
According to FIC records, the agreement used in the purchase of the hotel was an Asset Purchase Agreement (APA) between Company H and another company (Company I), at a price of only £46mil.
The forensic study found that Company I was a British Virgin Islands (BVI) company owned by a Malaysian individual.
Among findings related to the case was a weakness in management, with FIC’s former directors and management making several moves without the approval of the board. The purchase of the hotel was also done without the approval of the Felda board.
“There was the involvement of a third party which was not appointed officially by Felda or FIC, in the setting of the terms of acquisition of GPK, which is a breach of confidentiality,” the document read.
The manner in which the deal was done also resulted in losses of £14mil for FIC.
In the case of the acquisition of two real estate units, Dexion 1 and Dexion 2, which were later named Felda House and Grand Felda House, the white paper highlighted eight key findings.
Among these were the fact that FIC failed to appoint experts to conduct due diligence on the exercise, despite its former directors having approved the appointment of the experts.
It also noted that FIC’s board of directors were informed that the cost of the takeover of the two properties was £163mil, when the actual cost was £167.76mil.
This, the document stated, meant that there was an increase in the takeover cost by £4.76mil (RM25mil) compared to the price approved by the FIC board.