Loan agreement shows NFCorp broke terms, says Pua

Petaling Jaya MP Tony Pua today revealed the contents of the much-sought loan agreement between National Feedlot Corporation (NFC) and the government, affirming the perception that it was lopsided and the purchase of luxurious properties breached the agreement.

The 35-page document clearly states that the purpose of the RM250 million government soft loan at two percent annual interest is solely for the National Feedlot Center project.

"The Borrower shall use the Loan Facility to part finance the Project as described in the First Schedule of this Agreement," read Clause three of the document under the topic ‘Purpose'.

Hence the earlier statements made by NFC directors that the loan can be used for property investment, said Pua, were "complete rubbish".

"The fund can only and strictly used to part finance and set up the center, nothing else," he said.

Clause 18.1 of the agreement under the topic "Particular Covenants", it was again stated that as long as the loan is still not repaid, NFC shall use the loan for the purpose of the project.

During the press conference at the DAP's Kuala Lumpur national headquarters today, Pua distributed copies of the agreement to reporters which he described as "one of the worst loan agreements I have ever seen".

He claimed that the document is genuine and provided by an unnamed source.

Pua was CEO and founder of a Malaysian IT company listed in Singapore before his venture into politics.

MOF took no action

According to Pua, the parliamentary Public Accounts Committee (PAC) where he is a member, is supposed to disclose the agreement at the next meeting but its chairperson Azmi Khalid has yet to call for one after last November's.

Although the agreement contains provisions for the government to monitor NFC's operations, it was not fully utilised by both the Agriculture and Agro-Based Industry Ministry (MOA) and the Finance Ministry (MOF), claimed Pua.

The agreement requires the NFC to submit a project progress report before being allowed to withdraw funds from the special loan account.
 
The report has to be certified by an authorised technical committee comprising four representatives, one each from the MOA, the veterinary department, Universiti Putra Malaysia (UPM) and Universiti Kebangsaan Malaysia (UKM).

However, Pua noted that despite the Auditor-General's Report revealing that the project had failed to meet its target, NFC continued to draw from the loan.
"The Agriculture Ministry is equally culpable for the mess," he said.

At the same time, the MOF took no action although NFC is required to provide monthly bank statements of the special loan account to the ministry on a quarterly basis, detailing how the loan was used, Pua noted.

"Unless NFC submitted false reports... We don't know if they submitted false reports. The MOF has to verify the reports," said Pua, adding that MOF officials had told the PAC that no NFC report mentions the purchase of condominiums.

Apart from the ministries' failure to supervise the project, the agreement gives favourable conditions to NFC should there be a default by the company.

The agreement was signed by NFC chairperson Mohamad Salleh Ismail and his son, Wan Shahinur Izran, who is also NFC director, and two MOF officials representing Malaysian government, on Dec 6, 2007.

Salleh is the husband of Women, Family and Community Development Minister Shahrizat Abdul Jalil who has been under tremendous pressure to resign from cabinet after the scandal exposed.