JAKARTA (TheInsiderStories) – The dispute between Indonesia’ PT Rajawali Capital International and the Federal Land Development Authority (Felda) over the former’ decision to sell back its shares in PT Eagle High Plantations Tbk (IDX: BWPT) is at the arbitration stage, said the Malaysia’ economy minister in a letter to Dewan Rakyat on Tuesday (07/28).
The statement from Datuk Seri Mustapa Mohamed came after the parliament asked about the main terms and conditions in Felda’ acquisition of shares in the company owned by Indonesian tycoon, Peter Sondakh, worth of US$505 million. The state-owned firm filed a notice in April of 2019 to sell back its 37 percent stake in Eagle High to Rajawali Group.
Last year, the management of Felda said there has been a cheating on the shares sales of Eagle Plantations. The director general, Othman Omar, submitted a police report, claiming that it was cheated into entering into a one-sided deal for the purchased three years ago.
According to him, the deal benefits Rajawali Group, which include more than $505 million of payment, whereas the finance ministry and Felda realised there are many risks involved. The price was more than 300 percent inflated, he adds.
Omar mentioned that the value of its 37 percent acquisition was only $114 million but Eagle Plantations held $547.4 million debt in 2014 and its liability was $676.9 million in 2016. Moreover, the plantations company does not possess the Roundtable on Sustainable Palm Oil accreditation and would not be able to achieve the certification even after 10 years.
Eagle High Plantations, subsidiary of Rajawali Group, is owned by Sondakh, friend of former Malaysia’ Prime Minister Najib Razak. When Razak lost the election and feared of being arrested over the 1MDB graft-case last year, Sondakh was reported planning to help him running away through the private jet.
Omar suspects that the agreement is due to Razak directing Felda for its investment on Sondakh’ interests in Eagle Plantations and he used his influence on Razak, resulting in Felda purchasing the stake at an inflated price. He asserted, the direction for Felda to invest in the plantation firm’ 37 percent stake was stated in the finance ministry letter to Felda on Dec 8, 2015.
The purchase of the shares was done through its special purpose vehicle FIC Properties Sdn Bhd, although it was against consultancy advice made by KPMG Malaysia, BDO Malaysia, Indonesian law firm Hiswara Bunjamin, and JPMorgan in 2016.
He suspected that some of the previous board of directors are involved in criminal conspiracy to cheat and cause Felda to suffer losses through the Eagle Plantations agreement resulting in the Malaysian state firm entering a deal to get a loan from GovCo.
Omar added that Razak’ allies had caused Felda getting RM2.5 billion ($588.23 million) loan from GovCo, a subsidiary of the finance ministry under prime minister’ watch. By taking this loan, Felda suffered RM1.576 billion loss in 2017.
He further named seven individuals who he claimed are involved in criminal conspiracy, criminal breach of trust, possible graft involving public officers and cheating, and asked the authorities to investigate them.
In February 2019, Felda requested to give back Eagle Plantations shares. The management said that the company holds too many debts.
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