Malaysia ex-minister received nearly $1m from hotel sale, court hears on first day of graft trial

Former chairman of government agency Felda, Mohd Isa Abdul Samad is on trial for nine counts of graft and one count of criminal breach of trust.
PHOTO: The Star/Asia News Network

KUALA LUMPUR - Former chairman of government agency Felda, Mohd Isa Abdul Samad, allegedly received about RM3 million (S$988,600) from the sale of Merdeka Palace Hotel and Suites in Kuching to Felda Investment Corporation Sdn Bhd (FICSB) in 2014, the High Court heard on Monday (Oct 7).

On the first day of Isa's criminal breach of trust (CBT) and corruption trial, the court heard that the former Cabinet minister - who was then the FICSB director and chairman of FICSB's board of directors - received RM3.09 million as gratification from Gegasan Abadi Properties Sdn Bhd director Ikhwan Zaidel for assisting the company to sell the hotel to FICSB at a price of RM160 million.

Isa is on trial for nine counts of graft and one count of criminal breach of trust (CBT).

Deputy Public Prosecutor Afzainizam Abdul Aziz, in his opening statement, said that Isa was paid RM3 million after the sale of the hotel went through.

Mr Afzainizam told the court that the RM3 million was paid in batches of RM100,000, RM140,000, RM300,000, RM250,000, RM500,000, RM500,000, RM300,000, RM500,000, and RM500,000.

The payment, he added, was made by an agent appointed by Mr Ikhwan, JV Evolution Sdn Bhd, and was paid to Isa through Muhammad Zahid Md Arip, who was then Isa's special officer.

On the CBT charge, DPP Afzainizam said that Isa - in his capacity as the director of FICSB - played an active role in the purchase of Merdeka Palace Hotel and Suites by the Felda subsidiary from Gegasan Abadi Properties at an inflated price of RM160 million.

According to DPP Afzainizam, Isa had in 2013 ordered FICSB chief executive officer Mohd Zaid Abdul Jalil to study the proposal to purchase the hotel from Gegasan Abadi Properties.

At the FICSB board of directors meeting on Feb 26,2014, Zaid had informed the board that a property evaluator appointed by FICSB had put the price of the hotel at RM137,640,965.89, he said.

"The prosecution will establish that at the meeting, the accused - in his capacity of FICSB director and a member of the board of directors - had decided to discontinue the plan of buying the hotel on the reason that it was not a viable (business plan) and that it would not bring profit to FICSB."

"The decision by the board of directors to not go through with the plan to buy Merdeka Palace Hotel and Suites was relayed to Ikhwan on Feb 28,2014," he said.

However, about two weeks after the board of directors meeting, Isa had again asked Zaid to present a proposal on the purchase of the hotel again at another board of directors' meeting, he said.

"The prosecution will show that the accused had received a letter addressed to the then Felda chairman (Isa) from Gegasan Abadi Properties on March 28,2014 offering to sell the hotel to FICSB at RM165 million."

"On April 22,2014, Gegasan Abadi Properties sent a second letter offering a discount of RM5 million for the hotel, bringing down its price to RM160 million," he said.

He said that Zaid had also told Isa about the RM160 million offer for the hotel, and added that Zaid had also informed the accused that a new valuation had been made on the hotel by FICSB management valuing the hotel at RM153 million.

"Zaid also suggested to the accused that FICSB ask for a discount of RM10 million from Gegasan Abadi Properties," he said.

While seeming to agree, on April 29,2014, Isa however told Zaid that the price would stay at RM160 million, he said.

The court was told that Isa was by then also informed that the board of directors of FICSB had been informed that the valuation of the hotel was RM153 million.

"The prosecution will show that at FICSB's 10th board of directors' meeting on April 29,2014 that the accused - as the director and chairman of the board of directors - had approved the proposal to purchase Merdeka Palace Hotel and Suites for the price of RM160 million."

"Zaid had informed the accused that the proposal to purchase the hotel at RM160 million will need the approval of Felda," he said.

The court heard that the accused, however, had told Zaid that the purchase did not need Felda's approval.

"The prosecution will establish that the accused's act goes against the mandate set by Felda that FICSB's board of directors can only make a decision involving investment of RM100 million and below," said DPP Afzainizam.

"The prosecution will establish that the sale and purchase agreement of Merdeka Palace Hotel and Suites dated June 27,2014 and the payments made by FICSB under the agreement was made against the mandate made by Felda's board of directors," he added.

On Dec 14,2018, Isa was charged with nine counts of dishonestly receiving gratification for himself in cash totalling RM3,090,000 from Ikhwan for helping to approve the purchase of Merdeka Palace Hotel and Suites in Kuching, Sarawak, by FICSB, for RM160 million.

All the offences were allegedly committed at Level 49, Menara Felda, Platinum Park, No. 11, Persiaran KLCC, near here between July 21,2014, and Dec 11,2015.

The charges were made under Section 16a(A) of the Malaysian Anti-Corruption Commission (MACC) Act 2009, punishable under Section 24(1) of the same law, which provides a jail term of not exceeding 20 years and a fine of at least five times the bribe amount, or RM10,000, whichever is higher, upon conviction.

On the same day, Isa was also charged with one count of CBT by approving the purchase of Merdeka Palace Hotel and Suites without the approval from the Felda board of directors on April 29, 2014.

The offence under Section 409 of the Penal Code carries a jail term of between two and 20 years, whipping and a possible fine upon conviction.

The trial before High Court judge Justice Mohd Nazlan Mohd Ghazali continues in the afternoon.

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