NFC: Will Barisan Nasional Do It Right?

November 19, 2011

by Kim Quek@www.malaysiakini.com

COMMENT: After almost one month of inexplicable silence, National Feedlot Corporation Sdn Bhd (NFC), which is the target of brick-bats and the center of a swirling controversy both inside and outside Parliament, finally broke its silence.

Mohamad Salleh Ismail (left), chairperson of NFC and husband of Women, Family and Community Development Minister Shahrizat Jalil, held a press conference on November 17 to defend NFC. He said everything was dandy; the project was right on target, and there was no impropriety.

But the facts given by him are far from convincing. In fact, they are merely cover-ups for a botched job, in line with a series of stubborn denials advanced by BN leaders before him.

Before we go into the main subject, let me touch on two side issues. FIRST: Salleh’s press conference was an exclusive event that admitted six media that consisted of only the Malay press and TV channels. All others, including all the Chinese press, were barred from the press meet.

If NFC is sincere about telling the truth, why should it be fearful of journalists other than those from the BN-controlled media, which are generally regarded as BN’s propaganda instruments?

Isn’t it obvious that the NFC has no confidence in fielding questions from reporters who are not under the tight control of the BN? Isn’t it obvious that the BN wanted to ensure that what the public read is what the ruling coalition wanted them to read?

Condo purchase excuse unacceptable

SECOND: Salleh wanted us to believe that his purchase of two luxurious condominiums for RM14 million was a legitimate deployment of the government soft loan by telling us that these condos fetch fantastic returns.

He said monthly rental for one condo is RM70,000, which no one seems to have believed. Credibility aside, who does Salleh think he is that the public wouldn’t mind lending his family a long term loan at 2 percent interest for them to earn returns (exorbitant or not) from real estate investment?

The excuse that it was only a temporary investment for surplus cash that could only be utilised later for the project is unacceptable, as NFC shouldn’t have requested and the government shouldn’t have granted the disbursement of such large amount of idle cash from the Special Loan Account in the first place, the disbursement from which were supposed to be under the strict scrutiny and control of both the Finance Ministry and Agriculture Ministry.

Or, is the NFC telling us that no projected cash flow and projected profit and loss account for the project had been presented prior to the government awarding this contract to it ?

That such misuse of funds has occurred indicates that the government has failed to safeguard public funds, or even worse, criminal conflict of interest (known as corruption) for awarding a contract to a crony without proper basis, if there was no proper project paper considered sufficient to justify such an award.

Now, let us look at the facts presented by Salleh to support his claim that this project is doing well.

Project success is an illusion

Salleh said this is only the third year of its operation, and teething problems are expected.Wrong. His own son, Wan Shahinur Izran, the then CEO, said during the signing ceremony for the RM250 million facilities on Dec 6, 2007 that “operations are scheduled to begin in February next year”. So, four years have lapsed since then.

Salleh said his company had “raised” 8,016 head of cattle in 2010, “surpassing its target of 8,000 head of cattle”. Wrong. The criterion should be the number of cattle slaughtered, not “raised”, as this is a beef supply project.

The number of cattle in the feedlot cannot be the measure of production, otherwise, large numbers of freshly arrived animals from overseas could be counted as “production”.

So, the Auditor-General was right in his report that the 3,289 head of cattle slaughtered in 2010 constituted 41 percent of the scaled down target of 8,000. The original target was 60,000 per year as announced by CEO Wan Shahinur Izran during the loan signing ceremony.

Salleh further said that “at the outset of operation in 2009, the NFC had yet to find the market while its abattoir was only approved in April that year, halal certification two months later and the Veterinary Health Mark, which was compulsory before meat could be sold, in 2010.”

Salleh also added that the NFC needed to send its employees for training to acquire specific skills to run the operation. These words from Salleh seem to be those uttered by a novice in this field who is appealing for understanding for his faltering performance. They stand in stark contrast to the stirring speech by CEO Izran back then in 2007 when he said: “We intend to play an instrumental role to lead, structure and transform the industry to meet 40% self-sufficiency”.

Izran further said that the company’s activities will “include cattle feedlotting and fodder production through contract and satellite farming, slaughtering, processing, marketing, and other upstream and downstream activities.”

As for contract farming, NFC would “assist the selected parties in getting financing, provide start-up and follow-up training in production and business administration as well as supply feeder cattle, feed materials and veterinary services”. In fact all these activities are also found in NFC’s website as its scope of activities.

Ineptitude since confirmed

It is apparent that there is a huge gap between rhetoric and realities in the NFC adventure. Salleh said, NFC only started operation in 2009. But why not in 2008 since it was already granted a huge loan earlier? (Incidentally, was the company operating completely on the soft loan without significant equity input from its shareholders? If so, this would be another anomaly that would pile on the case of criminal impropriety in awarding the contract to the recipient.)

Salleh indicated that market demand had been a constraint that caused its slow pick up even in 2010, but how could that be when the country has been importing 80% of its beef from overseas? Such complaint only reveals the lack of wherewithal to run a business.

As for the slow procurement of approval for this and that, these are lame excuses that reflect the ineptitude of the company to take on a project of this size.

The facts before us point irresistibly to abuse of power in the awarding of this project, as well as criminal negligence (of the government) and breach of trust (of the project operator) in the misuse of public funds.

The correct thing to do is to nail the culprits, recover the fund and appoint a competent entrepreneur to spearhead the project. Will the BN government do what is right, or will it be business as usual?