FIC in the spotlight over land deal

Felda to regain ownership of Jalan Semarak plots

FEDERAL Land Development Authority (Felda) is back in the spotlight this week.

The subject in question is whether Felda still has the ownership to four parcels of strategic prime land in Jalan Semarak, Kuala Lumpur worth RM270mil, which was transferred to a private company in a “dubious deal” back in 2015.

The plot of land, which previously houses Felda’s old headquarters, Anjung Felda and Wisma Felda, has been designated for the development of the Kuala Lumpur Vertical City (KLVC) project.

The KLVC project comprises of seven towers, whereby Dewan Bandaraya Kuala Lumpur (DBKL) has so far approved the constuction of Felda’s iconic tower, known as KLVC Tower1A alongside a 68-floor office building.

The overall value of the entire KLVC Tower1A project is estimated at RM107mil, with construction slated to begin in April this year and scheduled for completion on Aug 17, 2019.

A local media in its recent investigative report quoted sources questioning the “dubious deal” in the ownership transfer of the land which took place, when Felda’s subsidiary Felda Investment Corp Sdn Bhd (FIC) appointed a local company as its main developer for the KLVC project back in June 2014.

The local company was also granted full power of attorney to develop the land.

The report also claimed that all decisions pertaining to the appointment of the company was solely undertaken by FIC while the Felda board was only informed in September 2014, for retrospective approval.

While Felda did issue a letter of attorney to the company to develop the area, the report also said it was later discovered that the ownership of the land on the site had been transferred to the company in December 2015.

Gain back ownership

Meanwhile, Felda chairman Tan Sri Shahrir Samad ( pic) had said in press briefing on Thursday that Felda is intent on getting back the ownership of four plots of land along Jalan Semarak which was transferred to Synergy Promenade Sdn Bhd in 2015.

He points out that the sales and purchase (S&P) agreement involving the four parcels of land were discovered in January this year when he took over from Tan Sri Isa Samad, who was formerly the Felda chairman and FIC chairman.

Upon discovering the deal, Felda had immediately placed private caveats on the lands involved and also taken steps to revoke the power of attorney given to the company.

“We carried out an investigation to find out what had happened as well as how the S&P agreement were done without the knowledge of the Felda board of directors,” he adds.

Despite the purported change of ownership which easily involved millions of ringgit, Shahrir says: “Felda did not receive a single sen... no payment was made.”

He also did not discount the possibility of taking civil action against the company and a third party auditor be appointed by the Prime Minister’s Department to look into the deal.

London hotels business

In another development, Shahril tells StarBizWeek that Felda is maintaining its stand on FIC to con- sider disposing all its Londonbased hotels despite uncertainties over the recent tax changes proposed by the UK government.

FIC which recently put for sale its four-star boutique hotel Park City Grand Plaza Kensington could face slight hiccups from the UK government’s plan to introduce a capital-gains tax on foreign buyers of commercial property, potentially disrupting the flow of money into London office buildings in the wake of Brexit.

The hotel comprises 62 units of guest rooms and two units of three-bedroom apartments housed across seven Georgian terraced building.

Shahrir says: “We are closely monitoring the tax situation in the UK. We actually have many interested parties and the process to dispose this asset has been ongoing but suddenly, the tax change happens.

“So while waiting for the final decision on the tax changes, we will need to look at other ways to dispose the asset and recoup back our investments,” explains Shahrir.

The Felda board also believes that FIC should stop the hotel business in London and “the message has been given to FIC dispose them”.

For that matter, both its student accommodations, Felda House comprising 450 units of studio and cluster flats as well as Grand Felda House comprising 802 units of studio and cluster flats – would also be put up for sale.

According to Shahrir, Felda has put in a lot of money in FIC investments.

“By right, the FIC investments should be generating returns for Felda and not requiring Felda to fund them.

“If your investments are not yielding any returns then cut your losses and bring back the money and re-invest in Malaysia where it can create better returns here,” Shahrir points out.

Hence, FIC will need to restructure its assets portfolio whereby its non-core assets will be sold.