HRDF’s puzzling buy
Purchase done without the knowledge of board of directors
The scandal-ridden Human Resources Development Fund has been hit with yet another allegation of mismanagement. This time, the authorities have been asked to investigate the multi-million ringgit acquisition of part of a skyscraper in Bangsar South, done supposedly without the knowledge of the fund’s board of directors and investment panel. The ex-CEO, however, denies the claims.
PETALING JAYA: The clean-up at scandal-hit Human Resources Development Fund (HRDF) appears to be far from over.
In fact, to add to its woes, details have recently emerged about the possible mishandling of a multi-million ringgit property acquisition.
The HRDF management has made police reports claiming there was misconduct or abuse of power in the purchase of part of a building in Bangsar South, Kuala Lumpur, four years ago, because it was done without the knowledge of the board of directors and the investment panel.
HRDF bought six floors of a “landmark skyscraper” for RM154mil, including goods and services tax (GST). It has been alleged that some RM40mil was paid even before the issuance of the tax invoice.
But the bigger issue, according to sources, was that the HRDF’s board of directors had actually approved the purchase of a different piece of property – another building, also in Bangsar South, for RM141mil before GST.
It was learnt that the investment panel was only informed of the switch five months after the first tranche of RM15.4mil had been paid.
The sources confirmed that the HRDF has gone to the police and investigations are underway.
An agency under the Human Resources Ministry, the HRDF manages a fund comprising contributions from employers for the purpose of training and development.
In November last year, minister M. Kulasegaran said staff and management personnel were running HRDF as if it was their own company and that the management had in some instances exceeded authority and approved projects beyond its approval limits.
This latest accusation regarding the Bangsar South purchase reflects the same governance problems.
“The board was also informed that the minister (at that time) approved the change of the property to be acquired,” said a source. “The sale and purchase agreement was signed by the chief executive officer prior to the approval of the investment panel and the board.”
The first RM40mil of the purchase price was paid in eight tranches.
The source said under the Pembangunan Sumber Manusia Bhd Act 2001, the minister could only direct the board on matters and was not empowered to approve or consent to entering into agreements.
The remaining RM114mil was paid after the signing of the agreement. The six floors of the Bangsar South building were handed over to the HRDF in March 2017.
Documents sighted by The Star showed that the investment panel voiced its intention to invest in property in a meeting at the end of 2014.
In February 2015, the board of directors approved a proposal to set up a reserve fund and an allocation of RM250mil.
It was stated by the CEO then that the property would be for HRDF’s use.
Another approval came two months later for the RM141mil property.
In May that year, the first payment of RM15.4mil was made, but for the property that cost RM154mil. This was also when the agreement was inked, said the sources.
Five months after receiving the keys in 2017, the investment panel decided to rent out the office floors. The board agreed with this move.
In May last year, the HRDF began paying service charges of RM66,670 per month for its Bangsar South property. Only one floor out the six has been rented out, giving a monthly income of RM115,168.
Surprisingly, the board of directors agreed in March last year to purchase two additional floors in the same building to be used as HRDF’s office.
Kulasegaran had previously said that high-ranking staff of the HRDF misappropriated about RM100mil, around a third of the fund’s RM300mil coffers.
He also said certain management staff members were overpaid with high salaries and bonuses and there was collusion between managerial staff and external parties to award contracts.
When contacted about the Bangsar South acquisition, former HRDF CEO Datuk C.M. Vignaesvaran Jeyandran said the board of directors had given approval before any property was bought.
On the claims that the property purchased was not the one which the board had approved originally, he clarified that it was part of a better building by the same developer and was adjacent to the first building.
“Everything was done according to the appropriate procedures, that’s for sure. There’s no such thing as buying before getting board approval.
“It went through our legal adviser, the investment committee and the audit committee. When we bought the six floors in the other building from the same developer, we also went back to the board and rectified it,” he said.
Asked on the purpose of the acquisition, Vignaesvaran said when he stepped down on June 21 last year, it was still an ongoing discussion at the board level whether the property was to be used as HRDF’s office or for investment purposes.
Bukit Aman Commercial Crimes Investigation Department acting director Deputy Comm Datuk Saiful Azly Kamaruddin said the department received two reports on this matter.
“We have since referred the case to the Malaysian Anti-Corruption Commission as it is under their purview,” he said.
At the time of the Bangsar South property purchase, the HRDF chairman was Datuk Dr Abdul Razak Abdul, who also chaired the investment panel.
Datuk Seri Richard Riot was the then human resources minister.