MoF vehicle used to invest in troubled assets, including 1MDB properties – report

PETALING JAYA (Jan 13): Aset Tanah Nasional Bhd (ATN), a company owned by the Ministry of Finance (MoF), was used to invest in a number troubled assets – including those owned by scandal-ridden fund 1Malaysia Development Bhd (1MDB), reported The Edge Malaysia.

Set up in August 2007 as National Content Development Corp Bhd, it was subsequently renamed to ATN in March 2011. It describes itself as being involved in real estate and provides managerial, corporate, technical, professional, financial and internal auditing services.

The spotlight was cast on the company early last week when it was revealed that ATN had pocketed RM780 million from selling land owned by the Malaysian Rubber Board (MRB) to the Employees Provident Fund (EPF).

To recap, the MoF had ordered the MRB to sell 2,800 acres of land in Sungai Buloh, Selangor to ATN for RM1.5 billion; a year later, ATN sold the land to the EPF for RM2.28 billion, making a 52% profit.

Today, the land is part of the 3,285-acre Kwasa Land mega township that was launched by former Prime Minister Najib Razak in 2010. The fund's unit Kwasa Land Sdn Bhd is the master developer.

However, ATN was also used to invest in some 1MDB-owned properties – most recently the 492m-tall The Exchange 106 office tower at Tun Razak Exchange in Kuala Lumpur.

Via a subsidiary two levels away called MKD Signature Sdn Bhd, ATN had quietly acquired a 51% stake in Indonesian-owned Mulia Property Development Sdn Bhd, which had bought the land for RM665 million in 2014.

It was revealed that MMKD Signature had a charge of RM2 billion from The Hongkong and Shanghai Banking Corp taken in September 2017, two months after it bought into Mulia Property Development.

Finance Minister Lim Guan Eng said Mulia must repay the amount his ministry had invested into TRX as capital, whereby they must pay up within a certain period plus a further RM100 million; if they repay a year later, the amount doubles to RM200 million; if they only repay the amount after that, the entire building then belongs to MoF.

ATN also  – via its unit Sentuhan Budiman Sdn Bhd – owns Ayer Itam Properties Sdn  Bhd, formerly known as 1MDB RE (Ayer Itam) Sdn Bhd.

1MDB RE had acquired 234 acres of land in Air Itam, Penang, for RM1.38 billion in 2013 just before the 13th general elections, ostensibly to build affordable housing.

However, the land was occupied by "ground tenants" –  long-time occupants of the area who own the houses but not the lands that their homes are built upon –  and it owned mere fragments of shares in the land itself, rendering the land undevelopable.

The land was subsequently transferred to ATN unit My City Ventures Sdn Bhd (formerly a 1MDB subsidiary).

Last year, Lim said on Aug 24, 2017, the land was sold to Cayman Islands-based Silk Road Southeast Asia Real Estate Ltd for RM2.7 billion, translating into a profit of RM1.32 billion on the original RM1.38 billion purchase price.

However, the shares in My City Ventures were strangely never transferred to the Cayman Islands company, leading sources to speculate that the transaction could be a case of roundtripping –  meaning the buyer and seller are the same people, and that the RM2.7 billion had come from the MoF's coffers.

ATN currently has invested in two assets in Langkawi that will take time to recoup their costs, and both of these properties are linked to Indonesian tycoon Tan Sri Peter Sondakh.

Its unit Twin Eagles Ventures Sdn Bhd holds 30% stakes in two companies – Garuda Suci Sdn Bhd which developed and managed the Langkawi International Convention Centre and Integrated Nautical Resort Sdn Bhd which owns the St Regis Hotel on the island.

The Langkawi Development Authority (Lada) has a 30% stake in both companies while Sondakh holds the remaining 40% in both.

Filings with the Companies Commission of Malaysia show that Integrated Nautical Resort had a RM246.54 million unsatisfied credit facility with MoF-owned Bank Pembangunan Malaysia Bhd while Garuda Suci has a RM57.75 million unsatisfied credit facility with the same bank and a RM15 million unsatisfied credit facility with the government.

Both companies have been unprofitable since 2013. The sustainability of the convention centre after the Langkawi Asean Summit 2015 has been cast in doubt, based on the bank's credit committee meeting minutes sighted by the publication.

Meanwhile, the hotel – which has among the highest construction costs per room in Malaysia – is unlikely to be able to repay its bank loan within 15 years, based on current projected cashflow, the committee surmised.