KUALA LUMPUR, June 26 ― The Public Accounts Committee (PAC) has confirmed that the arrest of two senior officers of a statutory body last month was linked to its probe on the mismanagement of Felcra Berhad.

According to PAC the arrest was made based on the Malaysian Anti-Corruption Commission’s (MACC) own initiative.

"Throughout the process (proceeding), for instance, not just based on proceedings, if MACC see the need to take the next course of action on a certain matter they can do so, that is why they are present (during PAC proceedings).

"It wasn’t based on PAC’s recommendations. They (MACC) can at anytime based on their view ― if they feel like they want to investigate further ― they can do that,” PAC chairman Datuk Mas Ermieyati Samsudin told reporters in a press conference at the Parliament building here today.

On May 15, MACC had arrested two senior officers who were suspected of power abuse and misappropriating funds from Ministry of Finance (MoF) for a development project worth RM1.2 billion.

National news wires Bernama reported that the two suspects believed to have misappropriated the funds from the government by transferring part of the funds received from MoF to the contractors and consulting companies for purposes unrelated to the development cost as stated in the government loan allocation application.

Throughout PAC’s proceedings on Felcra Berhad, it found that the largest contributing factor to Felcra Berhad’s current debts was from the losses made by its subsidiary companies.

"This is clearly seen throng the subsidiary companies’ debt worth RM309.8 million and Felcra Properties’s debts to Felcra Berhad worth RM842.7 million, which resulted in the government granting a RM544 million to Felcra for the completion of a commercial development on Jalan Semarak ― Semarak20,” Mas Ermieyati said.

She added that PAC also found the development company designated to build Semarak20 did not have the expertise to handle such a huge commercial project.

Explaining further, PAC committee member Zahir Hassan said the PAC found that the Semarak20 project had a change in its project direction process from design, build and finance, to design and build only.

"In the early stages, this development was carried out or planned to be carried out as design, build and finance, but in the course of the project, it changed to design and build only, not including finance.

"So Felcra's financial position was insufficient to complete the project. However, they proceeded with the project, without a clear path which resulted in the government in 2019 injected RM544 million for the completion of the project,” Zahir said.

In the Auditor-General’s Report 2021 Series 2, it had stated that Felcra’s debt arrears amounted to RM312.22 million as of December 2021. This was not increased from the RM82 million of the preceding year.

The Auditor-General’s Department also found that Felcra owed the government RM3.67 billion as of December 31, 2021.

The PAC added that the federal government also did not receive dividends from Felcra between 2019 to 2021, while the government has converted a part of Felcra’s debt worth RM969.7 million to federal equity.