New Info From KPMG’s Leaked ‘Project Sunshine’ Report Opens Up Cans Of Worms On Felda’s Acquisition Of EHP


It should be noted that among the government institutions who were most against the purchase of EHP by FGV was the EPF which had a 5% stake in FGV shares at that time. The EPF is the guardian of the Malaysian people’s retirement money and if they distrust investing in a GLC, it’s a clear warning. EPF has released FGV’s stocks quietly and recently declared that it no longer owns any shares in FGV.


In December 2016, Felda suggested a price of US $ 505.4 million (RM2,26 billion) or Rp 582 per share just to have a 37% stake in EHP. This price is almost equal to the total cost of US $570 million used by Rajawali to own 68.6% of the shares in EHP. Peter Sondakh’s Rajawali held the EHP shares for only 5 months 15 day before trying to sell it to FGV and Felda.


Following the unusually quick Felda purchase using the privately-held FIC as the SPV (to avoid any shareholder scrutiny), Rajawali Group now has a 31.6% equity interest EHP at a price that is almost free – just US $ 64.6 million more was paid, while Felda ends up owning a 37% equity interest EHP at a price of US $ 505.4 million, 6.5 times more expensive than what the  Rajawali Group has paid.


Although Felda stated that “this is the last chance for Felda / Malaysia or any foreign parties to invest in an Indonesian company which has a vast storage area” and “the Indonesian government also agreed to provide an exception this once through this agreement”, the question remains why Felda had to borrow RM 1.5billion from the government to overpay Rajawali Group and allow it to make such huge net profits from just buying and flipping?


It is an open secret that Rajawali Taipan Peter Sondakh is close to top Malaysian officials.


Sadly, although Felda owns a larger percentage of shares in EHP at a higher value than Rajawali Group, Felda remains only an EHP investor. And the value it will derive from the enterprise will be not worth the money spent. As clearly reported by leaked KPMG Malaysia report, the dividend that will be paid by EHP  to Rajawali Corpora in its Singapore holdings will only trickle back to Felda in Indonesia.


In addition, ownership of land in Indonesia is complicated. Most of the land is leased for 30 years, and given an extension option for the next 30 years.


Should Felda plan to sell its stake in EHP, it woulds be prudent to ask if Felda would be able to recoup the US $ 505.4 million which it paid today? Felda needs to think about this as the key investor in EHP.


Newspaper reports also said that Felda would use bonds and take on debt to finance its acquisitions in of a stake in EHP. It has also sold its lucrative stake in Maybank to help pay for this purchase. The debt held by Felda at this time is the largest it has ever had since its formation more than 50 years ago. And yet, there has been significant or substantive investment in replanting its ageing tress, upgrading the living standards of its smallholders or ensure its investments in FGV are performing well. It is incredulous that as the largest shareholder in FGV, Felda has no board representation.


This is a new burden for Felda. Not only that, press reports have quoted Felda spokesperson that more investment is required in EHP operating costs to plant new trees in areas that have not been cultivated, from which results will be enjoyed only after 6 years (based on the estimated average time to produce fruitful  palm trees).


Felda certainly expects its financial resources to be sufficient to accommodate this new expense, and this will put pressure on FGV, which must pay RM250 million in cash per year for 20 years and 15% profits of the proceeds from the sale of fresh fruit bunches (FFB) as stated in The land lease agreement (LLA) between Felda and FGV .


What will happen to Felda’s finances if FGV fails to fulfill its financial obligations to Felda as FGV is now dealt with the production cost issues because the LLA is also the worst agricultural stock ever since it was listed on Bursa Malaysia.


In this context, what does the RM780 consolation money given to the Felda settlers mean?


  1. It’s my belief that Rajawali did not get all the money. A significant part of it certain made a detour to najib. Money is najib’s god & he needs loads of it to feed his unsatiable herds. As money from 1mdb has dried up, he needs other sources of money to replenish his depleting fund. Without money najib is dead. he has loyal & sincere follower, not even one. Even his hippo wife will desert him. Through Is “the shortiy” samad, he has bled felda dry. That why the shorty@msia’s danny de’vito is indispensable to najib. That’s why he appointed isa to helm SPAD, where the shorty will steal money from those mega projects and channel it to the Grand Thief.


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