Is Selangor MB Azmin Ali's Darul Ehsan Investment Group (DEIG) Yet Another 1MDB?
The new investment arm is expected to provide returns on investments for Selangor by being responsible for the state's RM6.3 billion investment assets.
By Tang Ruxyn — 20 Aug 2015, 11:43 AM — Updated over 9 years ago
Restudy controversial DEIG and halt operations until November, Selangor MB Azmin Ali told
The Selangor Assembly wants the state government to restudy and present a written reply to the assemblymen on the Darul Ehsan Investment Group (DEIG) mooted by Selangor Menteri Besar Azmin Ali.
The state lawmaking house unanimously voted for the report on DEIG asking Azmin to present a written reply on the risk management firm to the assembly by November.
The decision was reached following a motion on a report prepared by the state’s select committee on government agencies, statutory bodies and state government subsidiary companies chaired by Hulu Kelang assemblyman Shaari Sungib.
They also wanted him to list the fine details on the risk management firm.
themalaymailonline.com
In his defence, Azmin said that the new investment arm was still in its infancy and that more information will come soon
“This is just a preamble. DEIG has only has launched three months, there is still a lot more to explain. We are doing it step by step. Why are you jumping the gun when it just was kicked off?” he told the assembly.
Azmin also insisted the DEIG was transparent unlike MBI, and was ever ready to submit constant reports to the state Public Accounts Committee including “in every sitting if necessary”.
themalaymailonline.com
Nonetheless, Azmin has given his assurance that DEIG will be properly managed
“We will continue to subscribe to the highest form of governance in Selangor,” Azmin promised in response to debates on DEIG.
Azmin said he agreed with the opinion that the state government should not be involved in business, but added there were sectors and areas where the state government should protect the interest of the people.
He said he would present a detailed report on DEIG at the next state assembly sitting in November. Azmin said he was not offended with the dissent raised by the assemblymen as it showed the Selangor government was different from other governments.
“I take the responsibility to ensure all suggestions and opinions made by the committee in the context of creating accountability, responsibility and transparency."
“I will give written replies to the committee to ensure this.”
therakyatpost.com
As reported by The Rakyat Post, the latest records at the Companies Commission of Malaysia (CCM) show that DEIG is only worth RM2
Darul Ehsan Investment Group Bhd shareholders. – Source: Companies Commission of Malaysia
Image via The Rakyat PostAround RM30 billion worth of assets previously handled by state asset management company Menteri Besar Selangor Incorporated (MBI Selangor) is now believed to be parked under a RM2 company Darul Ehsan Investment Group Bhd (DEIG).
The two RM1 shares in DEIG are held by two individuals — MBI Selangor group chief executive officer Raja Shahreen Raja Othman and chief operating officer Soffan Affendi Aminuddin — according to latest records at the Companies Commission of Malaysia (CCM) obtained by The Rakyat Post.
therakyatpost.com
Further findings show that the shareholding contradicts the stake structure posted on the DEIG website, in which DEIG is supposed to be 100%-owned by MBI Selangor
Darul Ehsan Investment Group Bhd corporate structure. – Source: DEIG website
Image via The Rakyat PostCCM records show DEIG was registered on June 5 this year, with Raja Shahreen and Soffan appointed directors of the firm on the same date.
While the DEIG website also names Selangor Menteri Besar Mohamed Azmin Ali, state secretary Datuk Mohammed Khusrin Munawi and state financial officer Datuk Noordin Sulaiman as directors, the CCM records show otherwise.
therakyatpost.com
19 AUG: Darul Ehsan Investment Group (DEIG), launched in May 2015, is getting quite a fair bit of attention lately after current Selangor MB Azmin Ali and his predecessor Tan Sri Abdul Khalid Ibrahim debated about the establishment during the Selangor State Assembly on 18 August
Former Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim and current Selangor Menteri Besar Azmin Ali locked horns during the state assembly sitting over the setting up of DEIG which is not under any state enactments and does not need to table its financial statements to the assembly, although it is responsible for the state's RM6.3 billion investment assets.
In defending the setting up of DEIG, Azmin said it is necessary because the state government needed a new entity to strengthen all existing assets in the 12 companies under MBI that manages investments and commerce
themalaysianinsider.com
"For the record of this state assembly, I want to state that before this, MBI was 'hidden' under Kumpulan Darul Ehsan Berhad (KDEB) because there was no proper management to run it," said Azmin.
He said that was why he corrected it so that MBI becomes a special entity directly under the government and the state secretariat, which means it has no more intermediaries.
Khalid has likened DEIG to 1MDB
The setting up of the DEIG by the Selangor State Government is akin to the Federal Government setting up the Finance Ministry-owned strategic investment arm 1Malaysia Development Berhad (1MDB), says former Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim.
Criticising the actions of his successor, Khalid said Azmin had ‘changed’ the Menteri Besar Incorporated (MBI) to DEIG, making it an entity whose operations would be hard to keep an eye on.
“Based on my experience it would be very difficult to for the State and Assembly to keep a watchful eye on DEIG, especially on their contracts,” he said at the State Assembly today after Azmin mentioned the setting up of DEIG.
therakyatpost.com
However, Azmin has stepped in to deny that his brainchild is not similar to debt-laden 1MDB
"1MDB is a different company and does not receive any directive from the Finance Ministry, but DEIG's role is not like a middleman as alleged by Port Klang," he said, referring to his predecessor Tan Sri Abdul Khalid Ibrahim who is Port Klang assemblyman.
"It is fully owned by MBI, of course, policy level will be decided by MBI. But in terms of investments, it will be managed by DEIG that is tied to the existing enactments and will be improved," he added.
He said the concept was similar to that practised by the federal government whereby MOF Incorporated was fully owned by the Finance Ministry but investments were done by Khazanah Nasional Berhad.
themalaysianinsider.com
But what exactly does DEIG do and how is it different from MBI?
Azmin explained that he is forming a new investment arm to protect the state from business risks and to get away from MBI that he claimed was “tainted”.
Azmin also said it was MBI’s mandate to only focus on welfare and community development programmes, as engaging in business dealings could jeopardise the state’s resources.
“You must understand that MBI is directly under the state and it is not the business of the state to do business, because once you enter into contracts and businesses, certainly you are exposed to certain levels of risk so it is about the issue of risk management here,” Azmin said.
themalaymailonline.com
The new initiative is expected to provide returns on investments made in state government-linked companies (GLCs) by measures such as return on equity and return on invested capital, said Azmin.
DEIG is also expected to invest in and develop business that supports the state government’s agenda of providing social and distributive justice.
therakyatpost.com
Besides Khalid, other Selangor state assemblymen have also voiced out their concerns
Sungai Panjang assemblyman Budiman Mohd Zohdi said since DEIG was set up under the Companies Act, it does not need to be audited or tabled by the state government.
“What is more worrying is because it was set up under the Companies Act, it can also get loans.
“These loans, if not managed well, could result in the assets being exposed to risk."
therakyatpost.com
DAP's Damansara Utara assemblyman Yeo Bee Yin expressed worry over the brainchild of Selangor Menteri Besar Mohamed Azmin Ali, as DEIG had free rein to manage the state's RM6.3 billion assets without accountability.
"We are talking about RM6.3 billion state assets under DEIG, a company which is not tied to any enactment, this means they do not have to table its report to the assembly, which worries us."
"We haven't seen, haven't heard and are less confident with its administration and we hope there is a clear explanation on its mechanism and accountability," Yeo said.
themalaysianinsider.com
Sungai Burung assemblyman Datuk Shamsudin Lias suggested setting up an enactment to “tie” DEIG forcing it to report updates in the company and table them in the state assembly.
“From the audit report, it will only report it to the board of directors which in a way is a restriction. We will not know and when there is a commotion. It will be too late."
therakyatpost.com
Azmin has responded by saying that he will work with the National Audit Department to ensure transparency and accountability
He added the state government will relook MBI's enactment to further streamline it as there are some weaknesses that needed to be improved.
"I've discussed with the National Audit Department to see how MBI can be audited yearly to ensure its financial management is more transparent and responsible."
themalaysianinsider.com