SHAH ALAM – The Public Accounts Committee (PAC) conducted a site visit and proceedings, interviewing two individuals regarding the multi million ringgit issues faced by the Langkawi Development Authority’s (Lada) property development activities.
PAC chairperson Datuk Mas Ermieyati Samsudin said two witnesses gave testimonies and explanations during the three-hour session that started at 10am in Langkawi.
The witnesses were Finance Ministry (MoF) deputy secretary-general (investment), Datuk Dr Shahrazat Ahmad, and Lada’s CEO, Datuk Haslina Abdul Hamid.
“The follow-up proceedings concerning the five recommendations from the PAC report on this issue have concluded. Both MoF and Lada provided detailed testimonies and explanations.
“During these proceedings, Lada organised a site visit for the committee to observe firsthand the follow-up actions taken in response to the recommendations in the PAC Report,” she said in a statement.
Mas Ermieyati added that PAC was also shown new tourism products and informed about Lada’s future plans to enhance Langkawi’s promotion, including the development of new public facilities.
“We acknowledge the positive efforts of Lada and MoF in ensuring that Langkawi remains a premier geo-tourism destination, attracting tourists worldwide,” she said.
Addressing the issues of the St Regis Hotel and Kampung Tok Senik, Mas Ermieyati said that PAC took note of all explanations and testimonies provided.
“PAC will provide feedback on all responses from MoF and Lada concerning the five recommendations, including those related to the St Regis Hotel and Kampung Tok Senik.
She said the follow-up report is expected to be presented to Parliament on June 27, during the Second Session of the Dewan Rakyat, which will convene on June 24.
“During the Second Session of the Dewan Rakyat, PAC plans to present seven more reports involving three PACs and four follow-up reports, including the Lada follow-up report,” she explained.
In March, it was reported that a failure to complete a land-ownership agreement between Lada and INR Sdn Bhd for the St Regis hotel resulted in a loss of RM3.19 million in uncollected land-lease payments.
Lada was unable to collect payments of RM660,000 per year for a period of four years and ten months, according to a PAC report on Lada’s real estate management.
The PAC found that the lease agreement to finalise land-ownership rights for the St Regis in Langkawi could not be signed due to a discrepancy in land status. The acquired land was a leasehold, while the shareholders’ agreement stipulated it should be a freehold.
The MoF had planned to sell the hotel to settle INR’s debts with Bank Pembangunan but faced difficulties finding potential buyers due to land status complications.
“INR Sdn Bhd’s inability to repay its loan instalments to the bank for 24 months turned into a ‘non-performing loan,’ exacerbated by the Covid-19 pandemic crisis. As of June 30, 2021, arrears amounted to RM27 million,” the PAC report stated.
Lada’s issues with the uncollected RM3.19 million in land-lease payments were highlighted in the 2022 Auditor-General’s Report, leading to a PAC investigation.
The PAC recommended that Lada and the MoF take immediate steps to finalise the land status to collect the lease payments. It said the ministry should also develop a comprehensive rescue plan for the St Regis, including debt restructuring and hotel management plans, to be submitted to the PAC.
The PAC also found that Lada failed to collect share proceeds for another project, the Tok Senik Village Resort, as Maju Holdings Sdn Bhd (MHSB) did not register Lada’s 30% share ownership. This prevented Lada from collecting RM8.30 million in proceeds.
The PAC criticised Lada for allowing MHSB to mortgage the land to Perwaja Terengganu Sdn Bhd (PTSB), exposing Lada to the risk of losing the land if the mortgage debt is unpaid.
These management issues with the St Regis Langkawi Hotel and the Tok Senik Village Resort resulted in Lada being unable to collect a total of RM11.49 million.
The problems with the St Regis Hotel date back to 2018, and to 2003 for the Tok Senik Village Resort.
The PAC emphasised that Lada needs to improve management competency, and the MoF must better regulate companies under the Minister of Finance Incorporated to prevent negligence affecting government interests.
The 2022 Auditor-General’s Report on Lada found that its performance from 2018 to 2022 was unsatisfactory and it did not fulfil its goals as a catalyst for world-class tourism in Langkawi. – June 12, 2024