• Why did PEMANDU Corporation take over BFR Institute and why are its accounts ‘empty’?

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 22nd of May, 2016

    Why did PEMANDU Corporation take over BFR Institute and why are its accounts ‘empty’?

    I refer to PEMANDU’s statement dated 19th May 2016 in response to my press conference in parliament on the same day.[1] My statement referring to Dato’ Sri Idris Jala’s 51% ownership of BFR Institute Sdn Bhd was based on a company search I did on the 25th of February, 2016 (See below). The transfer of Idris Jala’s 51% stake to PEMANDU Corporation was not reflected in the Companies Commission of Malaysia (CCM)’s accounts as of the 25th of February.

    According to the company search I did today, 22nd of May, 2016, Idris Jala now holds 51 out of 400,000 shares of BFR Institute Sdn Bhd with the remainder being held by PEMANDU Corporation.

    According to PEMANDU’s statement, Idris Jala held his shares of BFR Institute Sdn Bhd in trust as PEMANDU Corporation was not allowed to have a greater than 49% stake in another company.

    I apologise to Idris Jala if I have caused anyone to think that Idris Jala benefitted financially from his then 51% share of BFR Institute which was held in trust which has now been diluted down to 51 shares as per the latest CCM records.

    At the same time, I would like PEMANDU or Idris Jala to clarify if the remaining 51 votes he holds in BFR Institute is still being held in trust or whether the latest CCM records are not up to date and that he no longer holds any shares in BFR Institute. This is related to PEMANDU’s statement which says that PEMANDU Corporation currently owns 100% of BFR-I directly. As long as Idris Jala still holds on to a single share in BFR Institute, whether directly or in trust, it is not accurate to say that PEMANDU Corporation currently owns 100% of BFR Institute directly.

    However, the takeover of BFR Institute by PEMANDU Corporation raises a whole set of new questions. Firstly, why should PEMANDU be involved in the business of giving government consulting services, presumably for profit, to other governments and entities overseas, as it has been doing?

    Secondly, why should the tax payer have to bear the net cost of RM3.9m of hosting the 3 day Global Transformation Forum in 2015 given that budgetary cuts were being implemented left and right on other government agencies, including our public universities?

    Thirdly, the statement by PEMANDU that the balance of the RM10m allocated to the Global Transformation Forum 2015 is sitting in the accounts of PEMANDU and not BFR Institute should not be seen as an assurance.

    Since PEMANDU Corporation was incorporated on the 26th of October 2009, it has submitted four annual accounts to the CCM – for Financial Year 2010, 2011, 2012 and 2014. For each of these annual accounts, the revenue and the profit / loss recorded was zero (See below). Does this mean that PEMANDU Corporation did not receive any grants from the federal government for its operating costs? Does this also mean that PEMANDU Corporation did not spend a single sen of operating expenses, especially for its many labs held, payments to consultants, and rental for their many open days? Is there another entity which PEMANDU uses to park its expenses and grants? I hope that PEMANDU can answer these questions in as speedy a fashion as when they clarified the facts pertaining to the share ownership of BFR Institute.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] https://www.pemandu.gov.my/assets/publications/annual-reports/Idris_Jala_Holds_No_Shares_In_BFR-I.pdf

  • The Government of Malaysia should put an immediate stop to funding activities of BFR Institute, a private company that is 51% owned by its PEMANDU CEO, Dato’ Seri Idris Jala

    (Update on the 22nd of May, 2016:

    My statement referring to Dato’ Sri Idris Jala’s 51% ownership of BFR Institute Sdn Bhd was based on a company search I did on the 25th of February, 2016 (See below). The transfer of Idris Jala’s 51% stake to PEMANDU Corporation was not reflected in the Companies Commission of Malaysia (CCM)’s accounts as of the 25th of February. I apologise to Idris Jala if I have caused anyone to think that Idris Jala benefitted financially from his then 51% share of BFR Institute which was held in trust which has now been diluted down to 51 shares as per the latest CCM records.)

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 19th of May, 2016

    The Government of Malaysia should put an immediate stop to funding activities of BFR Institute, a private company that is 51% owned by its PEMANDU CEO, Dato’ Seri Idris Jala

    The BFR Institute[1] (BFR stands for Big Fast Results) organized its first Global Transformation Forum in October 20165.[2] One of the headline speakers invited to speak at this forum was Arnold Schwarzenegger, the former Governor of California, and Hollywood actor. In a reply to my parliamentary question dated 16th of May, 2016, it was stated that the government allocated RM10 million to BFR Institute to organize this forum. (See attachment below)

    Under normal circumstances, I would already be sceptical of the government spending RM10 million to organize a single forum especially given the high speaker fees which some of these celebrities charge. For example, Arnold Schwarzenegger charges an estimated US200,000 per speaking engagement, not inclusive of air and other travel expenses.[3] I am even more sceptical of the long term benefits to Malaysia for spending this exorbitant amount of money for a 3 day forum.

    However, what is totally unacceptable is the fact that BFR Institute Sdn Bhd is 51% owned by none other than the PEMANDU CEO, Dato Seri Idris Jala, who is also the Managing Director of BFR Institute (The other 49% is owned by PEMANDU Corp. See attachment below). There has been much speculation that PEMANDU will be significantly downsized in the near future and that Idris Jala will transition into a new role, most probably via the BFR Institute. In fact, many PEMANDU staff have been sent overseas to places like Tanzania to help governments ‘deliver’ the big fast results which were seemingly so successfully implement in Malaysia.[4]

    While Idris Jala is free to utilize his experience as PEMANDU CEO to sell his services via BFR Institute to whomever he chooses, including foreign governments and to profit from the provision of these services, the Malaysian government should not play any role in funding a private company that is majority owned and controlled by a private individual, namely Idris Jala. While Idris Jala and the government of Malaysia may try to ‘spin’ the activities of BFR Institute as part and parcel of our country’s overseas ‘outreach’ to developing countries, it should be obvious that this is ethically indefensible.

    The Clinton Foundation, for example, has and is facing criticism and public scrutiny over allegations that government funding had been channelled to pay its staff salaries[5] and for receiving grants from the State Department when Hillary Clinton was the secretary of state.[6]

    As a man of principle and integrity, I am surprised that Idris Jala was comfortable with this funding arrangement especially since he has been in the forefront in promoting transparency and accountability.

    I call upon the Government of Malaysia to put an immediate stop to funding the activities of BFR Institute and for PEMANDU Corp to divest its 49% interest in BFR Institute so that any conflicts of interest between the government and the activities of BFR Institute as a private entity can be avoided.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    References:

    1) Parliamentary Answer on BFR Institute

    2) (SSM) BFR Institute Company Profile

    ———————————

    [1] http://bfrinstitute.com/

    [2] http://globaltransformation.com/

    [3] http://www.businessinsider.my/celebrity-booking-rate-list-2014-6/?r=US&IR=T#KAl2xPkpz5lI0egg.97

    [4] https://dfid.blog.gov.uk/2013/03/19/big-fast-accountable-results-now-mr-president/

    [5] http://www.politico.com/story/2015/03/taxpayer-tab-for-clinton-inc-16-million-116008

    [6] http://freebeacon.com/politics/clinton-charities-raked-in-millions-of-taxpayer-dollars/

  • Outcome of my meeting with Chairman of Yayasan NAAM, Datuk M.Saravanan

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 31st of March 2016

    Outcome of my meeting with Chairman of Yayasan NAAM, Datuk M.Saravanan

    I would like to thank Datuk M.Saravanan, Chairman of NAAM, for inviting me to the office of NAAM this morning and for giving me a thorough explanation of the activities and programs undertaken by NAAM. Based on our meeting, I take note of the following explanations given:

    1) That the RM19m grant given to NAAM was via the Economic Planning Unit under the development expenditure of the budget from the Prime Minister’s Department. RM15m was spent in 2014 and RM4 million was spent in 2015. No additional funds have been allocated to NAAM in 2015 despite the initial announcement that a total of RM37 would be allocated to NAAM.

    2) That none of the members of the board of trustees of NAAM, nor its coordinators (“pelaksana”) at the state levels receive any compensation or salary from NAAM. That the rental of NAAM’s office and salaries of clerical staff do not come from NAAM’s allocation from the EPU.

    3) That NAAM is a training service provider that does not provide any loans to those which it has trained. That NAAM has spent approximately RM9.6m out of its RM19 allocation in training services provided by 3 companies (including cost of materials) to 1330 people in order to equip them to start their own chili farms.

    4) That EPU provided guidelines to NAAM on the type of programs and activities which it can carry out and the proposed budget for each type of program and activity

    5) That the Ministry of Youth and Sports has done an internal audit for NAAM.

    While it is commended that the chairman of NAAM was willing to explain the details behind its programs and activities, there are still some areas of ongoing concern including:

    1) Success rate of those trained to start their own chili farms is still very low

    For example, 1330 participants were trained to start their own chili farms but only 129 had started their own chili farms (approximately 10%) due to a variety of factors such as the lack of capital and not having access to land to plant these chilies. Given the amount of funds spent on training these participants (a total of RM9.6m or RM7300 per person), this low conversion rate raises issues about the effectiveness of NAAM’s flagship program of chili farming.

    2) The inability of many of these participants to obtain financing to start their own chili farms is also worrying

    Out of these 1330 participants, only 11 were successful in obtaining loans from TEKUN to start their own chili farms and the amount they could borrow was RM19,000 whereas the estimated cost of starting a chili farm was given by the chairman at RM40,000. This means that for most of the participants of NAAM’s training program, which comprised of marginalized Indian youth with very little capital, it is almost impossible for them to find the funds to start their own chili farms.

    3) More disclosure of information is needed e.g. training companies

    While the chairman of NAAM did show me a breakdown of the expenditure of NAAM in 2014 and 2015, I was not given a copy of this expenditure. I am interested in the identities of the companies given the contracts to do agricultural training for the chili farms and to check their backgrounds. I have asked the chairman to publish this information on its website. I will wait to see if this is done or not. The identity of these companies is important in order to confirm that none of these contracts went to companies which are linked to MIC or to the chairman himself.

    4) Possible conflict of interest via NAAM Trading House Sdn Bhd

    NAAM set up a private company called NAAM Trading House Sdn Bhd which acts as the middleman between the chili farmers and the marketplace. NAAM Trading House Sdn Bhd is 49% owned by NAAM. A possible conflict of interest exists because NAAM Trading House may benefit from charging the chili farmers a transaction or commission fee from buying the chilies from the farmers and selling them to the marketplace.

    The chairman explained that NAAM Trading House Sdn Bhd is no longer active because the farmers sell their produce directly to FAMA and the markets. We are not sure how much profit was made by NAAM Trading House given that its 2014 accounts did not provide information on its revenue and profits.

    5) Suitability of government funds being allocated to an NGO headed by a Deputy Minister still questionable

    Finally, despite the extent to which the chairman was willing to disclose information regarding NAAM’s activities, I stand by my earlier position that it is not suitable for an NGO where half of its board of trustees are comprised of members of a political party – MIC, in this case – to receive government funding for it to conduct activities and programs.

    I will follow up with the chairman’s promise to provide me with a full list of details of all the 129 participants who have started their own chili farms. After getting this list, I will work with my colleagues and other interested parties to conduct a selected audit to evaluate the success of these chili farms.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

  • 10 Questions for Yayasan NAAM

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 31st of March, 2016

    These are the 10 questions which I will be asking Datuk M.Saravanan, Chairman of YAYASAN NAAM and Deputy Minister of Youth and Sports, when I visit NAAM’s office later today.

    10 Questions for Yayasan NAAM

    1)      What is the organization structure of NAAM[1] and who are its staff?

    NAAM’s website only shows the board of trustees. The management staff of NAAM is not listed. I would like to know who is its CEO / Executive director and the rest of the management staff as well as the chairman / head of NAAM at the state level. I would also like to know how many of them are MIC leaders at the branch, division, state and national levels. For example, it is reported here that a Datuk VS Mogan is the chairman of NAAM in Negeri Sembilan.[2] He also happens to be the MIC information chief and member of the MIC Central Working Committee.

    This is to evaluate the extent to which NAAM is comprised of MIC leaders at various levels and hence whether NAAM is an MIC entity pretending to be an NGO.

    2)      What is the compensation structure of the board members of NAAM as well as its staff?

    I would also like to know the compensation arrangement (salary / allowances) for the board of NAAM, the management team as well as the state chairmen.

    This information is to evaluate to what extent NAAM is being used as a vehicle to reward MIC leaders financially.

    3)      What are the details in audited accounts for NAAM in 2014 and 2015?[3]

    NAAM submitted its accounts for Financial Year End 31st December 2014 on 30th June 2015. The accounts showed that NAAM did not have any income or expenditure. Why was this the case? Was NAAM not operational in 2014? Did it not receive any funds or incur any expenses in 2014?

    If the 2015 audited accounts are not ready, I would be satisfied with a copy of NAAM’s unaudited accounts showing the preliminary balance sheet, the P&L statement and the cash flow statement. This is to ensure that the funding which NAAM says that it has received is indeed being channelled through the accounts of NAAM and not through another entity.

    4)      What are the content of NAAM’s board meetings?

    If there were any board meeting minutes in 2014 or 2015 which documents the activities of NAAM, I would also like to inspect them. It is not uncommon for foundations / NGOs like NAAM to have quarterly board meetings to report on the progress of its activities.

    Having access to these minutes would allow me to check whether NAAM has regular progress reports to its board so that the board can evaluate the effectiveness of NAAM’s activities.

    5)      Can NAAM furnish me with a list of all its programs and activities run in 2014 and 2015, the participants of these programs and how much each program cost?

    Chairman or NAAM and Deputy Youth and Sports Minister, Datuk M. Saravanan promised that he would give me a full breakdown of the activities of NAAM in a press conference yesterday.[4] I hope that he can follow through on this promise.

    Having this list of participants would enable the public know who exactly were the beneficiaries of NAAM’s programs and how much was spent to train each of them. It would also enable the press and other interested parties to contact the participants themselves to see the extent to which they benefitted from NAAM’s programs and to ascertain if a majority of them were MIC members.

    6)      Where is the budget item from which NAAM obtained its funding from?

    It was reported that Saravanan had said that the RM19 million received by NAAM in 2015 was given by the Economic Planning Unit (EPU) under the Prime Minister’s department. A check of the EPU’s operating expenditure in 2015 showed that it was allocated RM48.8 million out of which RM40 million was for the payment of salaries. Did NAAM’s allocation in 2015 come from EPU’s operating expenditure? Or did it come from another budget item under the Prime Minister’s department? Is NAAM’s allocation classified under operating expenditure or development expenditure?

    What is NAAM’s budget allocation for 2016?

    This information is important from a transparency standpoint since Saravanan had said that the money did not come from the Ministry of Youth and Sports.

    7)      Is NAAM also involved in other business activities in order to seek profit for itself?

    NAAM is the 49% and controlling shareholder of NAAM Trading House Sdn Bhd which lists its core business as the export and import of fruits and vegetable food products. On the 15th of January, 2015, NAAM Trading House Sdn Bhd signed an MOU with DRS Trading Sdn Bhd which is also involved in the distribution of agriculture products.[5] What are the details of this MOU? What is the purpose of NAAM getting involved in business for itself?

    Is NAAM getting involved in business so that the other shareholders of NAAM Trading House Sdn Bhd can earn a profit for themselves? The other shareholders of NAAM Trading House Sdn Bhd include Kesavan A/L Kandasamy (MIC Youth National Leader, Office Bearer in charge of New Media) with a 30% share, G. Padmanathan (former MIC FT Youth Chief) with a 19% share and M.Mathuraiveran (MIC CWC Member) with the remaining 2% share.

    8)      What are the standard operating procedures (SOPs) used by NAAM to process claims and expenditures it has incurred and does NAAM claim these expenses from the Ministry of Youth and Sports under which NAAM’s funds are supposedly parked?

    This is an important point since NAAM signed an MOU with the Ministry of Youth and Sports to support the Corporate Integrity Pledge (CIP). I would like to see a sample of the claim forms and procedures used by NAAM and how the Ministry of Youth and Sports ‘signed off’ on NAAM’s expenditures as part of the monitoring mechanism. The transparency of this monitoring mechanism is all the more important given the recent investigations into large scale corruption in the Ministry of Youth and Sports by the Malaysian Anti-Corruption Commission (MACC).

    9)      How successful has NAAM been in helping Indian Youths obtain access to TEKUN loans for their chili planting and other entrepreneurial endeavours? Can these records be revealed?

    There have been numerous news reports on how NAAM wants to help Indian youths to obtain loans from Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN), an agency under the Ministry of Agriculture.[6] At the same time, it has also been reported that NAAM will act as the middleman to collect the loan payments from these young Indian entrepreneurs to pay back TEKUN.[7] I would like to examine the records of how many individuals have NAAM help to obtain loans from TEKUN and what is their track record in paying back these loans.

    Furthermore, I would like to ask why NAAM needs to spend the bulk of its expenditure to help the chili farmers when many of them are able to borrow money from TEKUN?

    10)   Why is there a need for NAAM when an existing agency – SEED – has already been set-up to help Indian entrepreneurs?

    The Secretariat for the Empowerment of Indian Entrepreneurs (SEED) which sits in the Prime Minister’s Department was established in 2012 with the specific purpose of providing assistance to Indian entrepreneurs especially at the SME and individual levels.[8] Under the SEED program, RM180m of funds was set aside under 5 discreet programs to help different groups of Indian entrepreneurs. This includes RM30 million for the “Skim Pembangunan Usahawan Masyarakat Indian (SPUMI)” which is parked under TEKUN. SEED also works with other agencies such as SME Corp and Amanah Ikhtiar Malaysia (AIM) in order to assist Indian entrepreneurs obtain funding and loans. Given that there was already an existing government organization under the Prime Minister’s department, why is there a need for NAAM, especially when it seems to be duplicating the efforts of SEED?

    Hopefully, I will be able to have satisfactory answers to these 10 questions when I visit NAAM’s office later today.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] For the rest of this statement, NAAM refers to Yayasan NAAM.

    [2] http://www.bernama.com/bernama/state_news/bm/news.php?cat=sl&id=1205456

    [3] The assumption here is that the activities relating to chili planting and youth development is related to YAYASAN NAAM, the company registered with the Companies Commission of Malaysia (CCM) rather than an entity which is registered with the Registrar of Societies (ROS). I stand to be corrected on this point since it is possible that NAAM also registered itself under ROS as well as CCM.

    [4] http://www.malaysiakini.com/news/335808

    [5] https://www.facebook.com/datuksaravanan/posts/768011720009801

    [6] http://ww1.utusan.com.my/utusan/Selatan/20140712/ws_05/500-belia-terima-faedah-projek-NAAM, http://www.nst.com.my/news/2016/01/121186/saravanan-wants-tekun-assist-indian-youths and http://www.therakyatpost.com/news/2014/07/21/naam-pilot-project-help-500-indian-youths/

    [7] http://superteks.rtm.gov.my/index.php/berita/tempatan/6364-yayasan-naam-tekun-jalin-kerjasama-bantu-usahawan-belia-india

    [8] http://www.seed.org.my/aboutus/index.php?id=8

  • Totally unacceptable and unethical for the Ministry of Youth and Sports to give an MIC-controlled foundation RM19 million in government funds

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, 29th of March 2016

    Totally unacceptable and unethical for the Ministry of Youth and Sports to give an MIC-controlled foundation RM19 million in government funds

    In a parliamentary reply on the 8th of March, 2016, to a question asked by MP for Batu Gajah, V.Sivakumar, on the effectiveness of the chili planting program conducted by NAAM and the amount of funds that were channelled to NAAM, it was revealed that an amount totalling RM19 million was given to Yayasan NAAM via the Ministry of Youth and Sports (See Appendix 2).[1]

    Yayasan NAAM or the New Affirmative Action Movement is a registered company chaired by the Deputy Minister of Youth and Sports, M. Saravanan.[2] The other board of directors / trustees include Krishnan A/L Letchumanan or L. Krishnan (former MIC MP for Teluk Kemang)[3], Mathuraiverna A/L Marimuthu or M.Marimuthu (current MIC CWC Member)[4] and Selva Kumar A/L Mookiah (MIC Legal Advisor)[5]. (Appendix 1)

    The awarding of government funding to an NGO that is effectively controlled by a political party is totally unacceptable and unethical. One can imagine the furore that would have been caused if the Penang state government had channelled state funding to an NGO that was controlled by the DAP and has a free hand to use the funds to conduct its political activities. MACC would have been unleashed to investigate this NGO immediately.

    The signing of the Corporate Integrity Pledge (CIP) Memorandum of Understanding (MoU) between the Ministry of Youth and Sports and Yayasan NAAM in May 2014 does not make this abuse of government funding any more acceptable.[6] The recent revelation of a corruption case involving the embezzlement of RM107 million in the Ministry of Youth and Sports shows that the abuse of funds and corruption can happen under the nose of the Minister. What more when it involves a company that is not audited by the Auditor General and that is not under the control of the Ministry of Youth and Sports? More than two years after it was first registered, Yayasan NAAM only has a bare bones website and for a foundation that is supposed to reach out to the youth, it does not even have a facebook or a twitter account.[7]

    I call upon Minister of Youth and Sports, Khairy Jamaluddin, to explain why funds from his Ministry were allocated to this MIC controlled NGO and to give us his assurance that there has not been any abuse of government funds by Yayasan NAAM.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    Appendix 1: List of Directors of Yayasan NAAM

    Appendix 2: Parliamentary Answer on Yayasan NAAM being allocated RM19 million from the federal government

    [1] According to this report, a grant of RM37m had been allocated to Yayasan NAAM http://www.freemalaysiatoday.com/category/nation/2014/04/30/naam-aims-to-give-indian-youth-a-lift/

    [2] http://www.naam.org.my/v1/index.html

    [3] http://www.lions308b1.org/home/our-district/district-governor/

    [4] http://www.mic.org.my/about-us/leadership/cwc

    [5] http://www.mic.org.my/news-events/press-statements/2014/press-statement-mr-selva-mookiah-legal-advisor-malaysian-indian

    [6] http://www.kbs.gov.my/my/ucapan-menteri-kbs.html?download=11:majlis-menandatangani-memorandum-persefahaman-dan-ikrar-integriti-korporat-oleh-yayasan-naam-dan-kementerian-belia-dan-sukan and http://www.pemandu.gov.my/gtp/upload/NAAM_KBS_CIP_Press_Statement_PEMANDU.pdf

    [7] There is a facebook account for Persatuan NAAM Wilayah Persekutuan (https://www.facebook.com/NAAMWP) and a twitter account for NAAMWP (@naamwp) but there is no account for the foundation or the organization at the national level.

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