Pembinaan PFI, another possible 1MDB?

okm-650x400An opposition leader has revealed another possible debt-laden company apart from 1 Malaysia Development Berhad (1MDB) in the form of Pembinaan PFI Sendirian Berhad.

The 99.9 percent Ministry of Finance incorporated company may have accumulated debt of up to RM 47.4 billion by the end of 2014, as pointed out by Serdang MP Ong Kian Ming in a statement today. At the end of 2012, the company had accumulated RM 27.9 billion debt, he said.

pfi liability

According to the Attorney General’s report in 2013 (Series 3)

The company had been listed in the 2013 Attorney General’s report as having the third highest liabilities amongst all government owned entities at the end of 2012 behind the Petronas (RM 152 billion) and Khazanah (RM69 billion).

“But unlike Petronas and Khazanah, Pembinaan PFI does not have any operational income as shown by the same Auditor General’s report,” he said.

The report showed that the RM 1.94 million revenue in 2012 was derived from interest income.
“This means that Pembinaan PFI cannot service its liabilities without help from somewhere else, namely the federal government.”


Third in terms of assets, but Pembinaan PFI does not really have any assets of its own, says Ong Kian Ming

Ong added that the company “didn’t really have any real assets of its own”, despite being listed in the report as having the third most assets among all government owned companies.

“..its assets consists of land is being leased to Pembinaan PFI by the Federal Lands Commission (FLC).
This was part of a complicated deal where Pembinaan PFI then sub-leased the land back to the FLC in exchange for rent totally RM29 billion to be paid over 25 years,” he said.

The Federal Lands Commission owns one share in Pembinaan PFI.

Ong said that the company has not filed its accounts for 2013 to date, and that the its liabilities was likely to have gone up in 2013.

Ong arrived at the RM 47.4 billion figure after including a loan it took out of Bai Muajjal Islamic Loan Facility with the Employee Provident Fund (EPF) on the 22nd of August, 2014 with a maximum amount of RM19.5 billion.

According to him, the terms of this facility was not disclosed in Pembinaan PFI’s submission to the Companies Commission of Malaysia (CCM).

“This means that the total liabilities of Pembinaan PFI can potentially increase to RM47.4 billion (RM27.9 billion at the end of 2012 plus the RM19.5 billion Bai Muajjal Islamic Loan Facility with EPF in August 2014) at the end of 2014.”

Ong said that he submitted a parliamentary question asking for the latest loan figures for Pembinaan PFI and the reason for the late submission of its company accounts.

He also said that Pembinaan PFI’s spending did not appear in the federal government budget accounts and that they were “off budget items”. These debts were also not listed as a part of the federal government’s contingent liabilities.

“One cannot help but raise the possibility that the lack of transparency on the part of Pembinaan PFI is to ‘hide’ government spending from the actual budget,” he said.

Ong said that without government accountability on how Pembinaan PFI was servicing its debts, it could easily turn in to the next 1MDB.

-The Rocket

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