PAC: LTAT could lose RM5b, be unable to pay dividends if it relies too much on Boustead

KUALA LUMPUR, November 19 — The Armed Forces Fund Board (LTAT) may lose RM5 billion, which is equivalent to 50 per cent of the board’s fund value if it does not revise its holding in Boustead Holdings Berhad, Public Accounts Committee (PAC) chairperson Datuk Mas Ermieyati said today.

In a statement, the PAC chairperson underscored that overreliance on the Boustead group was unhealthy for LTAT, citing critical cash flow problems and numerous financial crises plaguing Boustead Berhad and its subsidiaries.

“This issue requires urgent attention and action from all stakeholders, particularly the Defence Ministry and LTAT.

“This depreciation will not only make LTAT unable to pay dividends to contributors but could also cause LTAT to lose the RM5 billion fund,” she warned.

The Defence Ministry’s decision to cease the restructuring plan for Boustead Holdings launched in July 2023 had stunted LTAT’s transformation which needed to be done urgently and comprehensively, the statement said.

PAC asserted that the restructuring plan was a crucial one as it would reduce LTAT’s reliance on the company and diversify its assets.

On December 25 last year, English daily The Edge reported that LTAT’s restructuring was put on hold only a week after Datuk Seri Khaled Nordin was appointed as the new Defence Minister.

However, on April 4 this year, Khaled assured that the Ministry was committed to carry on with the restructuring plan.

“Based on the Defence Minister’s own testimony during the proceedings, the decision to postpone and order a rewrite for Boustead Holdings’ restructuring plan was made after only receiving input from the management of Boustead Holdings, and not from the management of LTAT.

“As LTAT owns 100 per cent of Boustead Holdings, it should have the sole authority to draft and implement a plan that aligns with LTAT’s needs and objectives, rather than the other way around,” Mas Ermieyati said in the statement.

PAC also called for an overhaul of Boustead Holdings taking into account the crises and scandals that have occurred under Boustead’s watch.

The restructuring to allow LTAT to directly own its subsidiaries instead of relying on Boustead Holdings as an intermediary was not a new idea.

A similar restructuring was carried out by Permodalan Nasional Berhad on Sime Darby, which resulted in the former directly owning Sime Darby’s subsidiaries involved in the plantation, property, and industrial sectors, the statement read.

Further, the chairperson also said that PAC did not take lightly the sales of land by Boustead Holdings including the RM742.4 million sale of land near Semenyih, Selangor, measuring 342.97 hectares to property developer EcoWorld.

She added that reports of a 485.6-hectare piece of land belonging to Boustead Holdings valued at RM400 million in the process of being sold also gave the impression that the proceeds would be used to pay dividends to LTAT contributors.