Missing the another elephant in the room

They say obsession overpower any sense of rational. All the concentrated attack on the purportedly ‘mismanagement, negligence, deceit and/or elements of criminal practices’ which include “Disappearance of monies” of 1Malaysia Development Berhad (1MDB) and all its history and dealings, in sundry, and phalanx against all attempts to answer and straight things right simply shut the eye towards the other elephant in the room.

The Malay Mail Online story:

Putrajaya confirms Pembinaan PFI debt pile near RM27b

BY YISWAREE PALANSAMY

Wednesday April 1, 2015
11:01 AM GMT+8
KUALA LUMPUR, April 1 — Putrajaya confirmed today that the little known Finance Ministry-owned Pembinaan PFI Sdn Bhd currently still has an outstanding debt worth nearly RM27 billion.

In a written reply to Serdang MP Ong Kian Ming yesterday, the ministry said that PPFI’s audited financial statement for the 2013 financial year was submitted to the Companies Commission of Malaysia (SSM) on March 4 last month and confirmed a debt of RM 26,609.6 million.

“For your information, PPFI is a Special Purpose Vehicle (SPV) fully-owned by the Finance Ministry Incorporated, formed on September 28 2006.

“The purpose for the company’s foundation is to obtain funding for development purposes and other programmes identified by the government,” the ministry said.

Ong had asked the ministry to state PPFI’s debt to date and why the firm’s annual accounting report for 2013 had not been submitted to SSM.

On March 11, Ong said that PPFI, an obscure firm that had that racked up RM27.9 billion in liabilities in 2012, could have easily doubled up on its debt by now if left unchecked.

He had claimed that just last year, the company took on an Islamic Bai Muajjal loan with the Employees Provident Fund with a RM19.5 billion ceiling, potentially bumping up PFI’s liabilities to over RM47 billion.

“The spending of the government-owned company does not appear anywhere in any of the federal government budget accounts which means that all expenditure are ‘off-budget’ items,” Ong claimed in a statement.

He also claimed that the lack of transparency on the part of PPFI is to “hide” government spending from the actual budget and could easily turn into another 1MDB.

According to the Auditor-General’s report in 2013, PPFI had the third highest liabilities among all government-owned entities at the end of 2012. Its total liabilities were RM27.9 billion, behind national oil giant Petronas and sovereign fund Khazanah Nasional.

Ong claimed that more questions arose after the Federal Land Commission signed a deal in November to pay RM29.2 billion in rental to Pembinaan PFI in staggered payments of 30 blocks spread out over 15 years from February 15, 2013 right up to August 13, 2027.

“The Prime Minister, who is Finance Minister, must ensure transparency in the spending, borrowings and debt repayment involving Pembinaan PFI to avoid another 1MDB scandal from occurring,” said Ong.

– See more at: http://www.themalaymailonline.com/malaysia/article/putrajaya-confirms-pembinaan-pfi-debt-pile-near-rm27b#sthash.axgLyRqT.dpuf

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PFI was a creature created as a commercial entity with MOF Inc as the only shareholder by then Second Finance Minister Tan Sri Nor Mohamed Yackop to expedite projects for underlined and planned by Federal Government in the 9th Malaysia Plan (9MP) and 10th Malaysia Plan (10MP).

This commercial entity shall undertake all the projects to be delivered under a privatisation scheme of ‘build-operate-lease’ programs with a ‘fast track’ project management system where the company raise the funds from Ministry grants and allocations and provide the project management team (PMT), as an in-house ‘One Stop’ facility to construct and manage.

Then these facilities shall be leased to the said government agencies.

Pembinaan PFI throughout raised a lot of borrowings, which include unsecured and without Federal Government guarantee to raise the financing for the projects undertaken.

The Star story:

Published: Wednesday March 18, 2015 MYT 6:39:00 PM
Updated: Wednesday March 18, 2015 MYT 6:50:41 PM

PAC: No issue with Syarikat Pembinaan PFI’s finances

BY RAHMAH GHAZALI
KUALA LUMPUR: The Public Accounts Committee (PAC) has found no issue with the financing of Finance Ministry- owned firm, Syarikat Pembinaan PFI Sdn Bhd.

PAC chaiman Datuk Nur Jazlan Mohamed said that the Federal Government has put together a “sound” vehicle to raise funds for public infrastructure projects.

He said the funds were raised via bond issuance, subscribed by the Employees Provident Fund (EPF) and the Retirement Fund Inc (KWAP) for 15 and 10-year tenures respectively.

“This is innovative financing. It is quite a safe venture in the sense that the Government still owns the land and the appeal to own the land is based on bonds.

“It is just a case of money going from the left pocket to the right pocket,” he told a press conference after a meeting with Treasury secretary-general Dr Mohd Irwan Serigar Abdullah in Parliament, Wednesday.

Nur Jazlan said based on Dr Irwan’s testimony, Pembinaan PFI had so far utilised RM28bil as of 2013 for public infrastructure projects, through “generally open tender”.

“Most of the projects were procured through open tender but they can still use other methods based on their needs,” he said.

Nur Jazlan, who is also Pulai MP, said the bonds were not secured on Government guarantees and the financing would not add to its debt.

He further assured that EPF and KWAP were getting a good deal with a return higher rate of than normal for Malaysian Government Securities (MGS).

“On top of MGS, the pension funds in turn, earn interest at 15 basis points,” he said, adding that that the mechanism was just to speed up funding for main public infrastructure projects.

Nur Jazlan said Pembinaan PFI had utilised the fund for 547 projects in the first phase and 339 projects in the second phase on public infrastructure works such as schools and police stations.

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What is interesting is that Pembinaan PFI was never under anything remotely ‘intense’ scrutiny, unlike the strategic investment group for the Federal Government 1MDB. The principle is the same; borrow money from market and undertake fast track projects, for the agenda and purpose of the government.

The mere difference is that Pembinaan PFI is a purely construction company and 1MDB does strategic investments, which include energy and taking on the role as a master developer and catalyst for ambitious high end property development programs.

Needless to say, there would be issues that could be found, highlighted and harped on, if and when the books of Pembinaan PFI  were to be scrutinised. However, it was and still is a potentially contentious ‘political issue’ which is quite nonchalant.

It is for the near obvious but simple reason. The PFI game is not under the eye-scope of the ‘Sarawak Report’ snipers and the likes.

Published in: on June 11, 2015 at 11:00  Comments (11)