MoF to take legal action against NFCorp for loan default

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KUALA LUMPUR: The Ministry of Finance (MoF) will initiate legal action against National Feedlot Corp Sdn Bhd (NFCorp) for failing to repay the soft loan it received for its cattle-breeding project. The soft loan was made to NFCorp after it was awarded a contract to undertake cattle breeding for the government’s National Feedlot Centre (NFC).

“The loan amounting to RM250 million to NFCorp has to be repaid between 2012 and 2028,” said Prime Minister Datuk Seri Najib Razak, who is also the finance minister.

“Until Sept 30, 2014, a sum of RM34.98 million [principal] had been recovered in 2012 and 2013, while the instalment repayment for 2014 which matured on Jan 9, 2014, has yet to be paid,” he said in Parliament.

As a result, the government recommended that a notice of non-payment be issued to NFCorp on May 5, 2014, and the firm was granted a 90-day period to comply with the notice, said Najib. NFCorp had again failed to settle the outstanding amount.

Following this, the government issued a notice in the event of default to terminate the agreement on Sept 4, 2014, and take legal action, he said.

Najib said this in his written reply to Shah Alam MP Khalid Abdul Samad and Pandan MP Rafizi Ramli, that was made available yesterday.

Abdul Khalid asked Najib in Parliament on Tuesday to reveal the status of the loan recovery process.

NFCorp, which is owned and operated by Wanita Umno chief Datuk Seri Shahrizat Abdul Jalil’s family, has been in the news after PKR secretary-general Rafizi Ramli revealed that it had used the loan money to buy luxury condos. Earlier, the Auditor-General’s Report had stated that the government’s NFC had failed to meet its milestones.

On March 12, 2013, Shahrizat’s husband Datuk Seri Dr Mohamad Salleh Ismail, in his capacity as a director of NFCorp, was charged with criminal breach of trust or CBT for using RM9,758,140 of the loan money to part finance two units of condominiums in Kuala Lumpur and transferring RM40 million into the account of National Meat and Livestock Corp Sdn Bhd in 2009.

Mohamad Salleh, who is also NFCorp executive chairman, has maintained that not all the RM250 million soft loan from the government was utilised, and the company was in fact still servicing the loan.

He argued that the purchases of high-end condominiums were investments to reap profits to service the loan. Rafizi said at the Parliament building yesterday that the government should not only recover the principal of the soft loan but also losses incurred on the 2.5% interest that was not collected from NFCorp.

“I hope the government does not sweep this under the carpet because it is the people’s money,” he said, noting that the amount has come  to between RM50 million and RM60 million in interest rates since the loan was given to NFCorp in 2006.

This article first appeared in The Edge Financial Daily, on November 6, 2014.