KUALA LUMPUR: The Public Accounts Committee (PAC) said the Armed Forces Fund Board (LTAT) has a RM5 billion reason to restructure its holding in the Boustead group.

In a statement today, it said Boustead Holdings Bhd and its subsidiaries' critical cash flow and financial crises heighten the fund's impairment risk, potentially affecting up to 50 per cent of the fund's value—nearly RM5 billion.

In a statement today, the PAC  said this impairment could not only prevent LTAT from paying dividends to contributors but also result in the loss of these funds.

"This issue requires urgent attention and action from all stakeholders, particularly Mindef and LTAT," it said in the statement.

The fund had a net book value of RM10.8 billion of assets under management as at April 2024.

According to PAC about 60 per cent of LTAT's investments are under the Boustead group.

PAC today released findingsissues raised in the Auditor-General's Report on Federal Agencies 2022.

PAC said Boustead Holdings, as an intermediary between LTAT and profit-generating companies, needs to be restructured, considering the various crises and scandals that have occurred under Boustead's oversight.

It went on to say that the restructuring of Boustead Holdings to allow LTAT to become the direct owner of subsidiaries involved in various industries is not a new idea.

A similar restructuring was carried out by Permodalan Nasional Bhd (PNB) on Sime Darby Bhd (SDB), which resulted in PNB directly owning SDB's subsidiaries involved in the plantation, property, and industrial sectors.

PAC also said that it is taking the reported sale of Boustead Holdings' parcels of land measuring 828.47 hectares for about RM1.1 billion seriously.

"These sales give the perception that the proceeds from these transactions are being used to pay dividends to LTAT contributors," PAC said in its statement.

To recap, the LTAT's 2023-2025 Strategic Plan which was halted by the Ministry of Defence upon the appointment of Datuk Seri Mohamed Khaled Nordin as Minister in December 2023, had planned to restructure LTAT's holdings in the Boustead Group.

Under the plan, LTAT's investment exposure was to change from just Boustead Holdings to six strategic companies, with new shareholdings planned for the 2023-2025 period.

This was to ensure that its debts could be settled and LTAT receives direct exposure to all relevant assets, with dividends paid directly to LTAT.

https://www.nst.com.my/business/corporate/2024/11/1136551/ltats-rm5b-reason-restructure-boustead-group