NFCorp proves in court that buying properties not against loan agreement

KUALA LUMPUR, March 13 – The NFCorp (National Feedlot Corporation) lawyer Datuk K Kirubakaran proved in court that the purchasing of properties by the company was not in breach of its loan agreement with the government of Malaysia.

Crossing government witness Tan Sri Ahmad Badri Mohd Zahir on Thursday, Kirubakaran showed a clause in the loan agreement which implied permission to purchase properties.

Badri is the current Secretary-General of the Treasury of Malaysia. As secretary-general, he also serves as Chairman of the Inland Revenue Board of Malaysia (LHDN), Retirement Fund (Incorporated) (KWAP) and the Public Sector Home Financing Board (LPPSA). He also currently sits on the board of directors of Permodalan Nasional Berhad (PNB), Central Bank of Malaysia (BNM), Tabung Haji and Perbadanan Insurans Deposit Malaysia (PIDM) as an ex officio member.

He was at the Ministry of Finance (MOF) and was involved in the termination of loan facility to NFCorp.

Tan Sri Ahmad Badri Mohd Zahir

When asked which agreement governs the NFC project, Badri said the Facility Agreement (Loan Agreement).

Kirubakaran suggested that the Facility Agreement is tied to the Implementation Agreement for the project, however Badri disagreed.

Badri told the court that he has no knowledge of the Implementation Agreement as it was not part of MOF purview.

He agreed with Kirubakaran’s suggestion that the loan agreement is similar to any business loan given by banks to a business.

He however disagreed when Kirubakaran suggested that similar to a business loan, businesses are to repay the loan from the revenue generated by the business.

The NFCorp’s lawyer then asked whether Badri thinks that the loan must be repaid even if the government fail to honor their obligations in the project; Badri said that it is outside of his knowledge.

Kirubakaran suggested that the obligation to repay the loan is tied to the obligation of both parties i.e. NFCorp and the government. Badri however disagreed.

He insisted that Ministry of Finance and his responsibility was to recover the loan given.

Government reasons for termination of loan agreement

Going back to the loan agreement, Kirubakaran proceeded to ask Badri the reasons for the termination of the loan facility.

Badri explained to the court that there were 3 reasons; NFCorp transferred part of the loan money to another company, they used the loan money to buy properties, and for failing to perform its obligations to serve the loan repayments.

When asked to explain why purchasing property is against the loan agreement, Badri told the court that it was against the purpose of the loan as per Schedule 1 of the agreement.

Having said that, Kirubakaran showed the court another part of the agreement which implied permission to purchase properties. The court also learnt that there is a condition that any properties bought must be charged back to the government as part of security for the loan.

Loan agreement allows property purchase

It is understood that the fact that there is a need to charge bought-properties as loan security implied that purchasing of properties is allowed as one could not have bought a property without having to buy the property first.

Badri begrudgingly disagreed and said that NFCorp must seek permission from the government in order to purchase properties.

Judicial Commissioner Anand Ponnudurai stepped in and asked Badri to show the court such condition in the loan agreement. However, Badri and the government lawyers failed to show the conditions in the agreement as claimed.

Kirubakaran then referred to evidence showing that the government did enter caveats to charge 3 properties bought by NFCorp, proving definitively that purchasing properties was not in breach of the loan agreement.

For many years the public had been led to believe that NFCorp blatantly misused the RM250 million loan provided to them without knowing the real issues faced by the company. Purchasing of properties were said to be one of the misuse.

The past few days in court have uncovered government’s fault in the failure of the project, including breaching of the implementation agreement and poor delivery of the feedlot facilities.

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