Loss of prized land poses more questions than answers

TWENTY years ago, SAP Holdings Bhd, a unit of Kumpulan Hartanah Selangor Bhd (KHSB), got a 94.69ha land in Gombak.

But 20 years later, it lost it because the state land office felt the land should not be used for illegal quarry activities.

The fact that a state agency can lose a big piece of land puzzles many.

But what is more puzzling is why it took the land office 20 years to realise there were illegal activities on the site.

As for KHSB, why did it not develop the land and why did it allow the land to be used for illegal quarrying?

Obviously, there are more questions than answers.

For now, KHSB is in the centre of a controversy for losing a prized land in Gombak. Its shareholders want to know why it lost the land which could have been developed.

The gross development value could have been in billions of ringgit and that could have translated into some dividends for them, if not, a better showing of the company’s share price.

The land is said to be worth Rm250mil now.

To recap, KHSB was set up in 2001 and listed on Bursa Malaysia in 2003. It is57% owned by kumpulan perang-sang Selangor Bhd, which in turn is 61% owned by Kumpulan Darul Ehsan Bhd, the state government’s investment arm. SAP is KHSB’S wholly-owned unit.

All this started 20 years ago when SAP got a 202ha plot from the state. Half of it has been developed into Bandar Baru Selayang and the remaining, valued at Rm250mil now (Rm6mil then), was supposed to be developed into an adjoining township.

After getting the land, SAP entered into a joint-venture with Cergas Tegas Sdnbhdto develop the 94.69ha into a mixed development township.

Unfortunately, things did not work out as planned and several years later the venture with Cergas was terminated. Subsequently, SAP entered into a new joint-venture with Star Everest Sdn Bhd to develop the said land.

Luck seems to be not on its side as again the venture with Star Everest did not take off as planned. As a result, SAP terminated the venture with Star Everest.

Because of that, both Star Everest and Cergas Tegas took SAP to court seeking damages for what they claim was wrongful termination of the joint-ventures and in turn SAP is counter-suing them.

One thing led to another and on Aug 25 last year, the land office forfeited the 94.69ha. SAP is appealing for the state to return the land but it is doubtful if it can really get the land back, at least for now.

To lose such a big piece of land sets the company back in terms of its potential earnings from a development.

Now that the whole land forfeiture issue has come under the spotlight, the heat is on KHSB to explain itself. Hence, the blame game within KHSB has also begun.

Some people have been issued show-cause letters and some others removed. The question is, in doing all this, are the innocent being compromised?

KHSB may be a state-owned unit, but it is also a listed a company and cannot do what it feels like doing. It has a fiduciary duty not just to its major shareholders but also to the minority.

Being state-owned also does not give it the right to ignore the highest level of corporate governance. If matters have been breached, then those responsible should be made accountable. It must remember that it is a PLC first and a state-owned agency second, and it should have been more vigilant.