KUALA LUMPUR: The National Audit Department (NAD) has recommended that the acquisition of oil palm plantations under the Federal Land Consolidation and Rehabilitation Authority‘s (FELCRA) transformation plan be reviewed to ensure investments would bring ‘value-for-money’ returns based on its financial capabilities.
The Auditor-General’s Report 2/2025 presented at the Dewan Rakyat today also included recommnedations that the FELCRA Berhad board of directors be responsible in ensuring that oil palm plantation acquisitions were organised in line with their fiduciary duty and good governance practices.
Also, the agency was advised to make improvements to its administrative process and that all decisions regarding oil palm plantation acquisitions be made collectively and in line with previous resolutions and the company’s constitution.
“Any changes to the board of directors’ decisions need to be recorded and confirmation be obtained through a new and clear resolution, with minutes recorded in an organised manner and documented accordingly by the company secretary in line with the Constitution of FELCRA Berhad.
“In addition, FELCRA Berhad also needs to set a minimum timeline between approval and implementation of the agreement to provide room for adequate risk assessment and review,” the report stated.
The report also recommended that improvements be made to amendments of the Acquisition Manual that came into effect in September 2024, such as appointment of qualified external consultants to conduct objective due diligence and market value assessments before making any acquisition decisions, and that the consultant’s report must be presented to the board of directors as a vital supporting document in investment decisions.
Also, a comprehensive study must be conducted to assess financial aspects encompassing break-even points, return on investment, hidden costs, mortgage liabilities and physical rehabilitation needs before finalising any decision.
“Inspection and certification of the status of moveable access need to be conducted before and during the process of vacant possession for oil palm plantations to ensure ownership of the assets as listed in the agreement.
“Verification of physical assets, preparation of a complete asset register of all farm machinery and facilities must also be carried out as stated in the relevant agreement,” the report stated.
Auditor-general Datuk Seri Wan Suraya Wan Mohd Radzi issued a statement today stating that there were weaknesses in governance linked to the acquisition of four oil palm plantations by FELCRA Berhad - the Telupid Estate, in Sabah, the Dabong Estate, the Sungai Raiwt 2 Estate and the Aring Estate in Kelantan valued at RM241.76 million between 2022 and 2024.
The full AG’s Report can be accessed at the following link https://lkan.audit.gov.my/. – Bernama
