Set up new entity instead of taking over ailing firm with sukuk funds, Shafie tells Sabah govt

KOTA KINABALU: SMJ Energy Sdn Bhd (SMJE) should have set up a new company instead of taking over an ailing one using its sukuk funds, says Parti Warisan president Datuk Seri Mohd Shafie Apdal.

Shafie said the explanation by Sabah Finance Minister Datuk Seri Masidi Manjun, that the funds were used to pay off the RM700mil loan to Sabah International Petroleum (SIP) from Sabah Development Bank (SD Bank), was not a rational business decision.

“Why take over an ailing company (SIP)? Wouldn’t it have been better to start a new company without debts to undertake the oil and gas business?” Shafie told reporters at his home here on Friday (June 14) after a courtesy call by US Ambassador to Malaysia Edgard D. Kagan.

Using the sukuk funds to pay off SIP’s loan looked more like a bailout than a restructuring of state government-linked companies, he added.

“Is it wrong for me to ask why we are using money (sukuk) raised from the public to pay for a restructuring exercise that involves three state-owned companies – SMJE, SIP and SD Bank?” he said.

Shafie said he was worried said that he feared that the state government would incur additional debts.

“If you are using public funds to settle debts, you will have to repay it,” he said, adding that SD Bank was already saddled with non-performing loans of RM3.1bil from 20 companies.

Shafie, the state Opposition leader, had questioned the deals made by SMJE.

In response, Masidi accused him of making baseless statements.

Masidi said the restructuring of the state-owned companies and the use of the sukuk funds would benefit both SMJE and SD Bank.

Shafie said SMJE, a Chief Minister of Sabah Inc. company, posted a loss of about RM7mil last year and the government should have channelled the sukuk funds, totalling about RM900mil, to see to the state’s water and energy needs instead.

Shafie added that Masidi should name the companies with non-performing loans.

He said lessons should be learned from the 1MDB fiasco.

“It initially took loans from the Employees Provident Fund and then chalked up debts of RM40bil and could not pay.

“Then the prime minister asked the Cabinet to incorporate 1MDB. The government became responsible for 1MDB debts,” he said.