KUALA LUMPUR: The Public Accounts Committee (PAC) has criticised the Defence Ministry (Mindef) for blocking efforts to transform the Armed Forces Fund Board (LTAT) by halting the restructuring plan of Boustead Holdings Bhd last year.
In a statement today, following its parliamentary report, the PAC revealed that Mindef's decision to halt the restructuring of Boustead Holdings — a key initiative under LTAT's 2023-2025 Strategic Plan — hindered the necessary transformation of LTAT.
It said that the transformation required urgent, comprehensive, and thorough implementation.
The PAC further said that, according to Defence Minister Datuk Seri Mohamed Khaled Nordin, the decision to stop the restructuring plan was made after consultation with Boustead Holdings' management but without involving LTAT's management.
"LTAT, as the sole owner of Boustead Holdings, must have full authority to develop and implement a plan that aligns with LTAT's needs and objectives," said PAC chairman Datuk Mas Ermieyati Samsudin.
The committee believes that the proposed restructuring plan was practical and would have helped reduce LTAT's reliance on Boustead Holdings, while diversifying its investments into higher-quality assets.
The plan had undergone thorough screening and approval processes at various levels within both LTAT and Mindef.
Mas Ermieyati also pointed out that the structure of Boustead Holdings, as an intermediary between LTAT and profit-generating companies, needed a major overhaul, citing the various crises and scandals that have plagued the company.
PAC findings revealed that LTAT had failed to impair its investments in subsidiary companies.
It also said that LTAT's other comprehensive income reserve was negative, and that the dividends paid to contributors in 2021 and 2022 were based on non-cash profits.
In response to these findings, the PAC made several recommendations:LTAT should pay dividends based on realised gains, rather than the non-cash profits used in 2021 and 2022.
LTAT must intensify its efforts to diversify its investment portfolio, ensuring it does not rely on a single entity, thus reducing exposure risks and securing consistent, tangible dividends for contributors.
Mindef and LTAT are urged to provide the PAC with an update on LTAT's latest stock portfolio, Boustead Group's restructuring, and LTAT's future direction by the end of 2024.
The PAC also called on the National Audit Department to conduct a detailed audit of Boustead's finances and governance in line with the new powers granted under the 2024 Audit Amendment Act (Act A1720).
Mindef and LTAT have been given two months to update the PAC on the actions taken in response to the committee's recommendations.
The PAC's investigation into LTAT began after issues were raised in the Auditor-General's Report on Federal Agencies 2022.
The PAC conducted four sessions this year, two on June 20 and two on Aug 7, involving the Auditor-General, Khaled, the Mindef secretary-general, the CEO of LTAT, as well as former senior executives at LTAT who resigned in early 2024.