KUALA LUMPUR (July 16): MyCreative Venture Sdn Bhd (MyCV), a wholly-owned unit of Ministry of Finance Inc that is tasked to invest in viable Malaysian companies to foster the growth of the creative industry, has invested funds in the money market without obtaining Ministry of Finance (MoF)'s approval, according to Auditor-General (AG)'s Report 2018.

The investments were made in a variety of financial institutions that provide returns through an appointed asset management company, said AG. However, checks on documents in the investment division found no evidence approval had been obtained by the MoF.

"This is not in line with the terms set out in the approval letter for the allocation provided by MoF," the report said.

The AG's report did not reveal the invested sum in the money market. Government grants for MyCV's private debt and private equity programs amount to RM214.24 million, which is expected to be invested in the domestic creative industry.

However, in a written reply by MoF Inc to the AG dated April 26, 2019, it clarified that funds not channelled and instead invested into the money market were done to reap returns as well as to cover the operating expenses of MyCV.

"Accordingly, the MoF Inc is of the view the investment does not conflict with MoF's approval via a letter Nov 24, 2016," said MoF Inc.

Based on the audited statements, revenue generated from money market investments amounted to RM6.22 million for the financial year 2016 and RM6.5 million for 2017.

For 2018, the rate of return obtained from money market investments is between 3.25% and 3.70%, with returns amounting to RM7.67 million.

According to the AG's 2018 report Series 1 released yesterday, the RM214.24 million had been allocated for private debt, private equity as well as two other arts and cultural programmes. However, it was instead channelled to the money market.

Of the RM180 million allocated for private debt financing, MyCV had channelled 48.2% or RM86.71 million to 78 creative industry companies, said the report.

It said the MoF circular states that any ministry, department or agency should ensure all government projects are implemented by scope and that costs of original projects approved by the Economic Planning Unit (EPU) and MoF are in line with the guidelines.

"The MoF and EPU had also set terms in the approval letter issued that MyCV should apply for prior approval for use other than original purpose or use of balance for other purposes," it said.

For more stories on the AG's Report 2018, click here.