LTAT announces 2% dividend after discovery of financial irregularities

LTAT chairman Mohd Zahidi Zainuddin (left) with CEO Nik Amlizan Mohamed at a press conference today.

KUALA LUMPUR: The Armed Forces Fund Board (LTAT) today announced dividends of 2% for the financial year 2018, a steep drop from that of previous years following alleged discrepancies within the board including overpayments under the Barisan Nasional administration.

LTAT chairman Mohd Zahidi Zainuddin said the unaudited net profit of RM221 million for the year marked a substantial decrease of 51.9% compared to RM459.5 million for the year before.

He added that the decline was due to various factors that had occurred over the past two years.

“As chairman of LTAT, we are committed to substantial dividends for members.

“I am truly emotional over what happens to LTAT. We will work hard,” he said in a press conference here.

The irregularities were found for the financial years ending December 31, 2017 and December 31, 2018.

Audit firm Ernst & Young found, among others, that LTAT’s earnings had been affected by the overpayment of dividends, even when its five-year asset returns from financial years 2014 to 2018 were lower than the declared dividend rates.

Zahidi recently said there had been an overstatement of the fund’s assets for 2015 and 2017 due to one of its large investments.

As a result, he said, an impairment of RM55 million had to be made for its 2018 results.

There was also a lack of proper financial and technical due diligence before investments were made, giving rise to unsold property assets worth RM45 million.

Zahidi said they were paying the 2% dividend based on what they could afford and promised to work hard “so that there is light at the end of the tunnel”.

Newly appointed chief executive Nik Amlizan Mohamed said the management would only lodge a police report if there was criminal evidence.

“It is too early for us to say if there is a criminal element,” she said, adding that the focus now was on “bringing the house in order”.

Amlizan, who took over the post following the resignation of long-serving Lodin Wok Kamaruddin, said she would also seek the views of the National Patriots Association, made up made up of military and police veterans.

She also said part of the mismanagement was premature income recognition of a RM238 million land sale in 2016 and another premature income recognition of RM202.7 million the following year.

Asked if they would lodge a report against the previous management for overstating their position, she said they would take into account the findings by the auditing firm.

Amlizan also announced that the current funds of LTAT stood at RM9.4 billion and that there were no plans to sell their assets.

She said the management had drawn up six strategic pillars to achieve in five years. Among them are strengthening corporate governance, setting up a board to evaluate investment risks, and strengthening the legal and secretariat department, human resource department, and compliance unit.

She said the board would enhance the one-stop centre for soldiers to check their accounts, and embark on a digitalisation process.

LTAT consists of active members who are required to withdraw their funds upon retirement.

Established in 1972, it is a statutory body to manage the pension fund for members of the Malaysian Armed Forces and owns controlling stakes in several public-listed companies, including Boustead Holdings and Affin Holdings.

It is overseen by the defence ministry.

LTAT underwent a major shake-up in its leadership after Pakatan Harapan took over the government in May last year.