Malaysia investigates third hotel purchase by Felda investment arm

A Felda signage at the headquarters outside Malaysia's capital Kuala Lumpur, on June 8, 2017.
A Felda signage at the headquarters outside Malaysia's capital Kuala Lumpur, on June 8, 2017. PHOTO: REUTERS

KUALA LUMPUR - Anti-corruption authorities are now investigating a Sabah hotel purchase by a subsidiary of Malaysia's troubled land development agency, in addition to current probes on property deals in London and Sarawak.

The New Straits Times (NST) reported on Friday (Aug 18) that Felda Investment Corp (FIC), the investment arm of the Federal Land Development Authority (Felda), bought the three-star Grand Borneo Hotel in 2012 for RM86.4 million (S$27.4 million). The hotel is part of the 1Borneo Hypermall.

Citing sources, NST said the Malaysian Anti-Corruption Commission (MACC) is investigating if the acquisition was conducted in the same manner as the other two deals involving Park City Grand Plaza in Kensington, London, and Merdeka Palace Hotel & Suites in Kuching, Sarawak.

Those investigations centred on the issue of inflated prices as well as possible abuse of power and corruption.

FIC is alleged to have purchased the hotel in London for RM330 million, thrice its supposed market value, while the hotel in Kuching was bought for RM160 million, when it was supposedly worth RM110 million.

Former Felda chairman Mohd Isa Samad, once Negeri Sembilan's chief minister, was remanded on Wednesday for five days to help in the probe. His former aide Muhammad Zahid Md Arip, and former FIC chief executive officer Zaid Abdul Jalil were also held on remand.

Isa was appointed Felda chief in 2011 but was replaced in January this year after financial problems and the dismal performance of the agency and its listed arm Felda Global Ventures resulted in rising debt among the 112,000 first-generation families that have settled on Felda land.

Isa's arraignment is closely watched in Malaysia because Felda is a government agency that looks after some 1.2 million Malay farmers and their multi-generational families, who are mostly staunch voters of the ruling Barisan Nasional coalition.

These families form the majority of voters in 54, or nearly a quarter, of the 222 Malaysian parliamentary constituencies.