MCA: Selangor’s RM1 Billion Scandal Put State Entity at Risk

The list of financial allegations against the PKR-led state government continues to grow. Now it turns out the Selangor government may have even put a profitable state entity at risk during its controversial bailout of Talam Corporation Bhd in 2009.

Permodalan Negeri Selangor Bhd (PNSB), a wholly-owned subsidiary of the state government, was a debt-free company in 2009 and had RM76 million in cash balance and fixed deposits, according to MCA.

Chua Tee Yong alleged that in 2010 the state government sold RM450 million worth of assets it purchased from Talam to PNSB, saddling the latter with debt.

“The state sold plots of land in Bukit Beruntung 2 and Bestari Jaya, bought from Talam, to PNSB for RM450 million,” Chua told reporters.

“Based on a letter to the Registrar of Companies in May 2011, PNSB appears to have pledged a lot of its assets to borrow RM230 million from Maybank, where the interest itself is worth RM86 million,” he said, claiming that the loan was used to purchase the plots of land from the state government.

Chua, who is also the Agriculture and Agro-Based Deputy Minister, called on the Selangor state government to explain how it intended to help PNSB settle this RM316 million loan.

“Did the state government take into account the high interest rate? Why didn’t the state government sell the land to private entities instead of burdening a state agency?” he asked.

PNSB’s audited account for 2011 is not out yet, but Chua said it was clear that the company had used the loan money to purchase the land from the Selangor government.

“Though the account is not out yet, we can safely say the loan was used for the purchase. PNSB had lots of cash in 2009 and only borrowed after the acquisition,” he noted.

For the past week Chua has provided a series of exposés against the Pakatan state government’s “questionable” bailout of Talam.

He alleged that the Selangor government had paid RM181 million in 2010 for a piece of land worth only RM139 million, thereby paying Talam RM42 million more than the market price.

And on Wednesday Chua alleged that the PKR-led administration had overpaid Talam for a second piece of land in Danau Putra, this time by RM28 million.

These infamous land deals are in addition to the “questionable” bailout in 2009, in which the Selangor government had purchased RM676 million worth of Talam assets and supplied additional funds worth RM392 million. This totalled RM1 billion of public funds splashed on a debt-ridden company.

Selangor Menteri Besar Abdul Khalid Ibrahim first tried threatening MCA with a lawsuit to make the scandal go away. When that failed to silence Chua, Khalid announced that accounting firms would be invited to review the controversial bailout.

But it is not clear of the timeframe and nature of this proposed audit. And as Chua’s latest allegation shows, the mess in Selangor may go far deeper.