In a statement, PAC said the initiative would not only have reduced LTAT’s dependence on BHB but would also have diversified LTAT’s investments in quality assets. BHB is a wholly-owned subsidiary of LTAT.
PAC also said the proposed initiative had been vetted and approved by LTAT and the defence ministry (Mindef) at every level. The plan was also comprehensively researched by LTAT, it said.
“We are of the view that the decision by Mindef to discontinue the restructuring initiative by the former LTAT management hampered the transformation plan that LTAT needed to implement immediately and comprehensively,” the statement said.
PAC also noted that based on the explanation provided by the defence minister, the decision and order to defer BHB’s restructuring plans were made by BHB’s management, not LTAT’s.
PAC said this should not have been the case, noting that BHB is wholly-owned by LTAT.
“LTAT should have been given ample space to draw up and implement plans to meet its needs and objectives and not the other way round.”
FMT reported in February that Ahmad Nazim Abdul Rahman had resigned as LTAT CEO after the initiative to “reset” BHB and its core companies was put on hold.
A source close to the matter told FMT that Nazim, who was appointed in June 2021, had drawn up key initiatives aimed at addressing BHB’s RM3.5 billion debt and its dividend-trap structure.
These initiatives were aimed at protecting LTAT from impairment, creating value for the fund, and raising enough funds to meet its debt obligations for this year, the source said. It also involved a delayering of Boustead Group and an overhaul of its governance and operating models.
In July 2023, LTAT launched Mampan25, a two-year roadmap to improve its performance through 2025.
Officiated by then defence minister Mohamad Hasan, the roadmap focused on expanding the fund’s assets under management to RM15 billion, delivering consistent 5% returns to members, and recovering a RM3.3 billion investment in struggling Boustead-related businesses.
Among the key initiatives under Mampan25 was a proposed sale of 33% in Boustead Plantation Bhd to Kuala Lumpur Kepong Bhd. However, the deal fell through following a heated debate in Parliament where concerns were raised about the potential loss of a Bumiputera-controlled company.
On Dec 18, 2023, The Edge reported that LTAT’s restructuring plan had been put on hold pending a review by Khaled Nordin, who took over the defence portfolio following a Cabinet reshuffle six days earlier.