2nd October 2019
DO NOT POLITICISE THE ARMED FORCES FUND BOARD (LTAT)
There is a barrage of criticism against the Defence Ministry since the announcement made on the low dividend of 2% for Armed Forces Fund Board’s (LTAT) net profit of RM221 million for financial year 2018, a substantial drop of 51.9% from 2017. Former PM Datuk Seri Najib Razak and former Defence Minister Datuk Hishamuddin Hussein had the gall to criticise the current government for the poor performance of LTAT where in fact the problem was theirs in the making.
Najib is reported to have said that the “Government is embarrassed to reveal the main reason behind LTAT’s 2% dividend”. He further said, “under the BN government, the dividend was on average 14.1% recorded from 2009 to 2017”.
Hishamuddin criticised the PH government over the delay in the announcement on dividends. He went further to say that “LTAT’s two largest assets, i.e., Boustead Holdings and Affin Bank suffered the largest drop in their share prices after the 14th GE”. He further claimed that “Boustead had to sell off Hotel Bintang Royale Chulan to a Singapore company below market price”. This statement is untrue because the LTAT board has yet to make a final decision over the sale of the hotel.
LTAT’s auditor, Messrs Ernnst & Young, in its audit report for the period between Dec 31, 2017 and Dec 31, 2018 found “past transactions that contained potential irregularities and weaknesses in operational, accounting and legal areas”. There were seven key findings on the financial irregularities and weaknessses. Among the seven, two were serious and implicated negligence and incompetency of those previously were at the helm, including the former prime minister and defence minister.
The first was the overpayment of divident from financial year 2014 (FY2014) to FY2018 and this has affected the retained earning. The five-year asset returns were lower than the declared dividend rates, and had resulted in LTAT paying dividend at a higher rate than it should have.
The second was overstatement of LTAT’s assets between 2015 and 2017. This was due to failure to impair a large investment that went awry and has resulted in an overstatement of LTAT’s asset. Due diligence was not properly undertaken prior to investing in the company.
Patriot urges that all irregularities as discovered by the auditor be made known publicly so that depositors and investors may regain confidence in LTAT. Should there be abuse or conflict of interest in the financial management by any member of the previous board, then appropriate charges be pressed on the offender(s).
Until a thorough investigation is carried out and a final report concluded on the irregularities found by the appointed auditor, Patriot urges that politicians from both the political divide and members of the public should cease henceforth from politicising the LTAT financial mismanagement.
BG Dato Mohamed Arshad Raji (Rtd)
President, Persatuan Patriot Kebangsaan