YOURSAY 'How many of those unexplained idling funds had been channelled to purchase upscale condominiums and bungalows?'

KJ: Condo purchase to offset cost of NFC delays

Gusnargh: Umno Youth chief Khairy Jamaluddin (KJ) discredits himself by coming up with this sort of explanation. Buying luxury condominiums of this sort is rarely a ‘strategic move'.

How much rental yield can be generated out of it anyway? Let's say 5% a year, which will mean RM500,000 a year or RM40,000 a month. Good luck with finding a tenant for RM40,000 a month and you lose money for every month you don't rent it out.

I'm not even accounting for the fact that there's no guarantee that you will be able to sell the condo at a profit at the end of it. For that kind of return, one might as well buy MGS (Malaysian Government Securities) or equities in the most rock-solid companies which pay dividends. At least you don't have problems with liquidity.

There is only one word to describe Khairy's explanation - bollocks.

SusahKes: KJ, have you done project financing before? You're supposed to be from Oxford, and you had a go at investment banking with ECM Libra.

Tell me which bank would lend you a project facility, and later allow you to draw down and utilise/invest the said funds for something that has got no connection whatsoever with that project - unless of course, NMLC (National Meat and Livestocks Corporation) meant to house the cows in the condo?

Do you know how many rules a bank would have to compromise or neglect in respect of its corporate governance if it was to close one eye and allow its borrower use the credit facility for something other than its intended purpose?

Tell me which bank does that in Malaysia? Or is it only the Malaysian government that is so dumb to appreciate Banking 101?

CKL: Is this guy for real? The money was for a cattle/beef project. If the project was not ready, why draw down the loan? If it was already drawn down, then keep it safe in a bank FD (fixed deposit) and not use it to speculate on property. There is risk in this.

So what do they do, sell the property a few months later when the project needs money? Besides, this was not what the money was meant for. It is a clear abuse of funds.

This woolly thinking is coming from someone whom we thought had some brains - defend what is defensible and condemn what is not.

SusahKes: KJ, a couple of questions that I would like to pose to you:

1) Firstly, who appointed you to be spokesperson for NMLC? Did the management of NMCL appoint you? Why aren't the directors or minister Shahrizat Abdul Jalil answering the issues directly?

2) You say, the condo was purchased to ‘reap some returns'. Were this reasons minuted at the board of directors meeting? Could you please upload the said minutes as evidence for taxpayers to appreciate?

And even if the board did authorise it, could you give us the IRR (internal rate of return) of the condo purchase? What returns was NMLC looking for - capital gain or rental yield?

Please give details if the said return rate have been achieved based on the prevailing market conditions.

3) Why wasn't the money returned to the government instead of waiting for production to take off? Why must you deem buying the condo was the best option?

If NMLC had returned the said money, maybe a few more students of ours would have obtained scholarships instead of hearing "no allocation" from the government.

Josephine: This is very irresponsible on the part of this 'sister' company. This is not investing idle cash, but gambling.

Considering the time horizon as in, the project is expected to take place anytime soon, the correct and responsible place to invest is to put the funds in money market instruments or buy unit trust bond funds which will give returns of between 2% to 6% per annum.

DannyLoHH: Khairy's explanation just opened up another can of worms. How many of those unexplained idling funds had been channelled to purchase upscale condominiums and bungalows?

Ferdtan: This is a case of an Umno Youth chief defending his elder sister, the Wanita chief, for alleged misappropriation of fund. Since when Khairy becomes the self-appointed defence lawyer for Women, Family and Community Development Minister Shahrizat?

We have more brains that you think. A loan was given for a given purpose and you cannot divert it to other uses even if it is idle - you can only deposit it into the banks, like fixed deposits.

We can be sure the agreement between the lender, the government, and the borrower, NMLC, would spelt out, as in any standard contract, the purpose of the loan and its uses - and certainly not for buying condominiums.

That would be definitely ultra vires of the agreement. This whole affair is rotten to the core.

Malaysiasakit: KJ, you obviously have not heard of risk management. How can a company tasked with a narrow mandate of developing the livestock industry in Malaysia dabble in real estate?

What if prices of luxury condos drop due to oversupply (which is clearly the case now)? How would the management answer its stakeholders - that the company decided to try its luck in real estate and got their fingers burnt?

FellowMalaysian: If the government had insufficient funds to develop satellite farms under NFC as according to Khairy's blog , why then dished out the RM83 million loan to NMLC with alacrity?

Could the ministry concerned which handed out the loan was ignorant of the bottleneck delay by the Agriculture Ministry? Highly unlikely.

Khairy's remarks displayed reminiscence of an audacious and irresponsible senior officer who cared more for the returns of the loan given to NMLC than to seek for plausible reasons why the loan was given in such an inappropriate time.

Urkidding: The purpose of the soft loan, or whatever you called the money, is for cow farm development. Any abuse is deemed deviated from the original purpose of the loan, and therefore must be recalled on demand. That is, unless you can prove the cows stayed in the condo.

Here again is an issue of integrity. Why don't the parties involved made a declaration earlier that a portion of the loan has been used to purchase the condo? Who is staying in the condo now? Please do not forget the funds comes from the Treasury, and this is of public interest.

Blind Freddo: There's a new verb in the language: to ‘jamalude' - to make ridiculous statements, and then keep on making more and more nonsensical statements to cover your first boo-boo.

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