Ex-chairman defends LTAT’s involvement in AES project

The Armed Forces Fund Board (LTAT) was invited by the previous government to take over two companies running the Automated Enforcement System (AES). (Bernama pic)

KUALA LUMPUR: A former chairman of the Armed Forces Fund Board (LTAT) today defended its involvement in the Automated Enforcement System (AES) which has come under fire from the transport minister and the National Patriots Association.

Admiral (rtd) Mohd Anwar Mohd Nor called on the new government, in cancelling the AES project, to be fair and pay LTAT whatever sums due in accordance with the concession agreement LTAT signed with the previous government.

He said the Barisan Nasional government had invited LTAT to take over two companies running the AES and that it did so because the project would help reduce road accidents, allow LTAT to have a sustainable income, and offer job opportunities to armed forces veterans.

Anwar said this in response to remarks made by Transport Minister Anthony Loke who had described the AES agreement as one that “only a fool would sign” as the proceeds from the AES summonses would go to the two concessionaires – ATES Sdn Bhd and Beta Tegap Sdn Bhd – and not the government.

That was why, Loke said, the government had decided to cancel the AES.

The National Patriots Association had demanded a full investigation into the alleged lopsided agreement. Its president Mohd Arshad Raji called on the Malaysian Anti-Corruption Commission and police to act over recent reports that the LTAT had been instructed by the previous government to use its funds to pay RM555 million to the two companies to take over the AES.

“Why did the managing director and the board of directors of LTAT allow the RM555 million to be taken from the fund?” Arshad asked.

Arshad said the use of LTAT funds in this manner was tantamount to a criminal breach of trust as the fund was set up primarily to take care of the welfare and retirement benefits for servicemen.

In a statement today, Anwar, who is also president of the Malaysian Veterans Association, said LTAT was invited by the previous government to take over ATES Sdn Bhd and Beta Tegap Sdn Bhd, the two companies which had been awarded the contract to supply, install and maintain 1,093 cameras at strategic locations on roads and highways and traffic lights throughout Malaysia in 2014.

He said LTAT decided to take over the AES after “a thorough study and due diligence” and after the project was deemed commercially viable “with a strong double-digit return on investment for LTAT besides helping to create opportunities for employment to armed forces veterans and reducing accidents and fatalities on Malaysian roads”.

“In accordance with LTAT’s investment procedures, the proposal was presented to and approved by LTAT, investment panel and board of directors.”

He said in 2015, the Cabinet approved the proposed acquisition of the AES project by LTAT and in November 2016, the Cabinet approved a new financial model, including a new fee structure for the AES project.

However, he said, in November 2017, the government, through the finance ministry, decided to take over the AES project from LTAT and to pay back all LTAT’s investment cost in the AES project plus 12% return per annum.

He said it would be unfair if the government today were to “pay back only LTAT’s money used to acquire the two companies without paying back all other expenses spent to-date by LTAT on the project plus the 12% return per annum as agreed by the previous government upon the takeover of AES in November 2017”.

It would also be a violation of the concession agreement signed by the two parties, he added.

“The flip-flopping of decisions on the AES project by the previous government should not impact the return to LTAT of an investment which was taken on with due commercial considerations.

“For the record, LTAT has been paying an average of 11.3% per year dividend to its members who are the serving Armed Forces personnel for the last 46 years.

“In addition, to date, LTAT has also spent RM428.6 million on various corporate social responsibility (CSR) programmes, including giving scholarships, subsidising affordable houses built and sold to armed forces personnel and veterans, subsidising sale of consumers products in Pernama shops and donating to various servicemen and veterans programmes.

“The LTAT’s companies, especially the Boustead Group, have also provided employment and vendor development opportunities to veterans, especially in the sectors of shipbuilding, ship repair and maintenance, retailing, hospitality (hotels) and plantations.”