KUALA LUMPUR – The Human Resources Development Corporation (HRD Corp) said the National Audit Department (NAD) had unfairly implied that it did not adhere to proper governance when securing the Human Resources Ministry’s approval for renewing equity investments linked with Widad Group Bhd.
In a response to NAD via documents sighted by Scoop, HRD Corp said it had informed the department that a proposal paper and investment analysis must be attached to all investment approval applications.
However, the document dated July 11 claimed NAD officers had only requested HRD Corp for the investment agreement and proof of approval by former human resources minister V. Sivakumar.
“(The audit report’s finding) gives the impression that HRD Corp only provided the (investment) analysis after a request from NAD. This statement is prejudicial,” HRD Corp asserted in the document, which is believed to have been presented to the corporation’s board as a response to findings in the Auditor-General’s (A-G) Report 2024/2.
It is understood that the statement referenced by the embattled corporation is a footnote in the A-G’s report stating that the corporation had presented the equity investment proposal paper to NAD “separately from its initial response”.
“(NAD) was unable to verify whether or not the (investment proposal paper) in question was presented to the former human resources minister in (HRD Corp’s) application (to renew equity investments),” the audit report detailed.
It also said HRD Corp, a government-linked entity, has a duty of care to provide a comprehensive picture to the human resources minister to allow him to make an informed decision regarding equity investment renewals.
The audit report found that while Sivakumar had acted in accordance with the Pembangunan Sumber Manusia Berhad Act 2001 in approving the renewal for a company referred to as “Company A”, the corporation’s management should have supplied the minister with information on performance ranking and investment potential.
While the audit report merely refers to the company in question as a Bursa-listed entity, HRD Cop detailed its dealings with investment holding company Widad Group under a section on its response to the A-G’s report concluding irregular approval of equity investments.
The A-G’s report said HRD Corp recorded an unrealised loss amounting to RM18.25 million due to its equity investment in the Bursa-listed company.
According to the chronology attached in the HRD Corp internal document, an initial share sale agreement as well as a put and call option agreement (POCA) were first executed with Widad Group, which primarily deals with construction and integrated facilities management services, on October 15, 2020.
The POCA was then renewed for the first time on October 12, 2021. However, on October 30, 2022, HRD Corp’s investment panel committee rejected a second renewal of the POCA as Widad Group had failed to pay the premium on investment.
About six months later, on April 5, last year, the committee rectified the above decision and approved the renewal, with the then-human resources minister approving the renewal on October 16, thus allowing the renewal to take effect on October 30.
The A-G’s report found, however, that the approval application letter submitted to the then-minister on October 16 last year “did not align” with an analysis of “Company A” conducted by HRD Crop’s treasury department dated October 10 of the same year.
While the letter to the minister concluded that the company has firm potential with HRD Corp’s investment objectives expected to be fulfilled amid a recovering equity market, the Treasury Department found that the company’s decreased cash flow shows a lack of funds to pay interests.
HRD Corp is now the focus of an investigation by the Malaysian Anti-Corruption Commission, with the graft buster focusing on elements of alleged corruption, power abuse and fund misappropriation.
The Human Resources Ministry is also set to appoint an independent auditor to conduct a third-party audit of HRD Corp’s operations from 2019 to 2023, while a special task force chaired by ministry secretary-general Datuk Seri Khairul Dzaimee Duad has also been formed. – July 13, 2024
