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

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[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