Felcra went ahead with RM62.3mil plantation buy despite poor feasibility study result, says AG Report
The report stated that the non-executive director representing the Finance Ministry had disagreed with the acquisition, citing the feasibility study's findings that the soil series and topography were only moderately suitable for development.
It also highlighted that another independent non-executive director believed that external consultants should have been appointed to provide a professional assessment of the proposed acquisition.
"The acquisition was nonetheless proceeded with, even though the feasibility report indicated that the Telupid palm oil plantation estate was not economically viable," said the report, which was released Monday (July 21).
The board of directors had agreed to defer the purchase and to issue a request for proposal (RFP) to appoint external consultants to conduct a new feasibility study and cost-benefit analysis of the investment, the report said.
"The board member representing the Economy Ministry also expressed the view that management should obtain confirmation from the Finance Ministry regarding the investment approval procedures for Ministry of Finance Incorporated companies," it said.
The audit review also found that the board of directors' Meeting No. 203 in 2022 did not make any decision on appointing external consultants to carry out the feasibility study.
"There was no evidence of discussion on the appointment of external consultants in that meeting, and no resolution was tabled to the board to amend the decision made at an earlier board meeting (Meeting No. 202)," the report added.
"This was due to the company secretary, who acted as the meeting secretariat, not recording the matter in the minutes.
"However, the board of directors proceeded to approve the purchase of the oil palm plantation 22 days later during Meeting No. 203, despite some members of Felcra Berhad's board disagreeing with the acquisition and requesting the appointment of external consultants to conduct a new feasibility study.
"There was also no evidence that proper action was taken on concerns raised by board members before the acquisition decision was finalised.
"Subsequently, Felcra Berhad took 51 days to sign the agreement with the seller," the report stated.
In response, Felcra Berhad said it estimated the Telupid estate's yield for 2025 at 12 metric tonnes per hectare (mt/ha), with a projected gross profit of RM1.37mil.
"The Environmental Impact Assessment (EIA) report was approved by the Sabah Environmental Protection Department on Jan 23, 2025," it said.
Following this approval, Felcra Berhad said it had implemented several plans to improve the viability of the estate and optimise palm oil production.
These included a phased replanting programme from 2025 to 2028, approved by the board on Feb 20, 2025, starting with 215 hectares under Phase 1.
"This work is expected to begin in May 2025 and will be coordinated with the proposed EIA monitoring and compliance measures," it said.
Felcra Berhad also said it had taken steps to increase income and control expenditure to ensure the estate would generate profit following recovery efforts.
"This is reflected by the reduction in losses from RM2.49mil in 2022 to a recorded profit of RM110,000 as of February 2025," it said.
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