The Armed Forces Fund Board (LTAT) of Malaysia has yesterday announced its lowest-ever dividend of 2%, compared with a minimum of 6% paid over the past four and a half decades. The announcement was made following alleged irregularities within the board including overpayments under the previous Barisan Nasional administration.
LTAT chairman Mohd Zahidi Zainuddin said the statutory body recorded an unaudited net profit of RM221 million for the Financial Year (FY) 2018, compared with RM459.5 million for the year before – a drastic drop of 51.9%.
He added that the slump 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 in Kuala Lumpur.
The irregularities were unearthed in a position assessment for the financial years ended December 31, 2017 and December 31, 2018.
Audit firm Ernst & Young discovered, among others, that LTAT’s earnings had been affected by the overpayment of dividends. LTAT’s five-year asset returns from FY2014 to FY2018 were lower than the declared dividend rates. Thus, LTAT had been paying dividends at higher rates than it could afford.
There had been an overstatement of the fund’s assets between 2015 and 2017 due to failure to impair one of its large investments.
Consequently, an impairment of RM55 million had to be made for its FY2018 results.
There was also a lack of proper financial and technical due diligence before investments were made.
The assessment also found issues with unsold property assets worth RM45 million.
Zahidi said they were paying the 2% dividend based on what they could afford and are working 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”.
LTAT consists of active members who are required to withdraw their funds upon retirement.
Established in 1972, it is a statutory body that manages the pension fund for certain 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 Ministry of Defense.
LTAT underwent a major restructuring in its leadership after Pakatan Harapan took over the government in May last year.
Armed Forces Fund Board (LTAT) Building, Kuala Lumpur. Picture credit: Focus Malaysia