KUALA LUMPUR (July 21): The Auditor-General (AG) has flagged serious governance lapses in Felcra Bhd’s RM241.76 million acquisition of four oil palm estates between 2022 and 2024. 

There were deficiencies in procurement, valuation, and yield performance, the AG stated in a report issued on Monday, in Parliament.

The acquisitions included one estate in Telupid, Sabah, which was purchased via grant ownership; and three leasehold estates in Gua Musang, Kelantan, namely Aring, Dabong, and Sg Rawit 2. The four estates cover a total of 4,016.89 hectares.

According to the AG’s Report, Felcra went ahead with the RM62.29 million Telupid purchase despite earlier considerations to defer the deal and internal concerns over the estate’s viability, in view of the poor soil conditions and challenging terrain.

It also noted that the lease agreements for the three Kelantan estates — valued at a combined RM179.47 million — were executed hastily within 12 days, raising red flags over due diligence and decision-making processes.

Two board members abstained from endorsing the Aring estate acquisition, the report pointed out.

“To date, the acquisitions have yet to yield returns for Felcra, as the estates’ palm-oil output has fallen short of targets and requires further recovery spending,” the AG’s Report said. 

It added that the payback period for the four estates ranges from 11 to 22 years, assuming rehabilitation efforts are undertaken.

The acquisitions were part of Felcra’s transformation plan and strategic roadmap, which targets the expansion of its commercial plantation land bank by 30,000 hectares over five years. The transformation aims to help fund its annual operating expenditure of RM210 million.

Felcra is wholly owned by the Minister of Finance Inc (MOF Inc), and operates under the purview of the Ministry of Rural and Regional Development (KKDW). 

The agency is responsible for rural development and economic upliftment by enabling rural communities to participate in income-generating activities. It is tasked to rehabilitate and develop underperforming state-owned land schemes into productive agricultural assets.

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