Ex-prime minister blames Felda losses on weak palm oil prices
PETALING JAYA: Datuk Seri Najib Razak has claimed that Felda is suffering from losses because palm oil prices have dipped below production cost, and not because of an investment in Indonesia-based PT Eagle High Plantations TBK (EHP).
Calling on the government to reveal the “put option” included in the agreement between the two parties, Najib said Felda’s interests were protected as it had an option to sell back its shares in EHP at the original purchase price on top of a 6% interest charge imposed on the Indonesian firm.
He said the put option in the agreement would negate unwarranted claims that Felda was suffering losses after it bought the EHP stake.
Najib said this in response to a police report lodged by Felda director-general Othman Omar yesterday, claiming that the former prime minister had allegedly cheated the firm into investing US$505mil (RM2.1bil) to acquire a 37% stake in EHP.
Othman alleged that the purchase price was 344% higher than its actual value of US$114mil (RM466mil).
Najib said he had already anticipated the attack after the government remained mum when he demanded it to reveal the put option a couple of months ago.
“Just admit that the main reason Felda is suffering losses now is because the prices of palm oil fell below production cost post-GE14,” he said in a Facebook posting yesterday.
Najib said the put option would allow Felda to sell back the 37% stake at the original purchase price on top of 6% annual interest charge borne by EHP.
The government would still profit if it sold back the shares because the interest subjected to EHP was higher than the 3.85% interest on the loan taken to acquire the stake.
“In other words, we could get back the amount invested with additional 6% annual interest if we opted to pull out,” he said.
Najib said Felda would enjoy a good return if EHP recorded gains with higher palm oil prices.
“At the end of the day, public funds would still be protected and the government would not suffer any loss – thus proving that Pakatan Harapan is making an unfounded allegation that Felda will suffer losses for acquiring EHP,” he said.
In the report, Othman alleged that Felda took a RM4.8bil loan from GovCo Holdings Bhd, a subsidiary of the Finance Ministry then headed by Najib, to finance the deal.
Othman described the deal endorsed by then Felda chairman Tan Sri Isa Samad as “one-sided and risky”, as EHP had debts amounting to US$547.4mil (RM2.2bil) in 2014 with liabilities recorded at US$676.9mil (RM2.8bil) in 2016.