From Malaysiakini

By Syed Jaymal Zahiid

An independent audit company’s probe into the controversy-ridden government tourism development company, Pempena Sdn Bhd, has shown that the company, despite its multi-million ringgit investments, has been performing poorly.

PriceWaterhouseCoopers (PWC) in its report, released to the press today, stated that as of June 2008, Pempena had invested a total of RM54.4 million in 24 companies but only four managed to generate profits.

The independent audit firm in its report also showed that Pempena had invested in five non-functional companies. PWC has proposed the company to pull out of these investments, a move that would incur “a loss of approximately RM20 million”.

The companies mentioned in the report are Malaysia Tourism Executive Sdn Bhd (Matex), Sri Kebaya Restaurant Sdn Bhd, Malaysia Restaurant Hyderabad Limited (Awana Hyderabad), Dalamasa and Nathena.

Another major flop was Pempena’s RM18.3 million investment in luxury taxi project, Executive Taxi Services (Pets), which recorded a profit of just RM369,000 as of June this year.

According to the report, the Pets project has failed to take off and has so far recorded losses of up to RM7.8 million.

PWC, however, believes that the investment could turn profitable should the project be enhanced through proper management and better research.

Another one of Pempena’s investments slammed in the report was the My Destination project, which cost the company RM7.5 million in losses.

No clear or documented investment policies

The report said the project was in a “dormant” state and that “liquidating” the investment would incur a loss of up to RM 6.7 million.

Attributing the company’s poor performance to its decision-making process, PWC’s review showed that the government subsidiary lacked proper “policy and procedure” which could have helped the company generate profits instead of incurring loses.

“Our review shows that there is a lack of investment analysis, critical assessment of the background, credentials and relevant experience of the respective investee companies’ business partners, financial projections and strategic business plans,” read the report.

“(It also lack) considerations of tourism-related initiatives or key performance indexes for most of its investee companies and (proper) documentation which clearly outlines the procedures for operational and financial review of investments.”

PWC was commissioned to do the audit after Malaysiakini published an expose on Pempena.

The report, however, made no mention of the other financial scandals reported by Malaysiakini, such as the RM10 million investment in an e-tourism portal project.

Kit Siang wants more answers

According to DAP stalwart Lim Kit Siang who had obtained the PWC report yesterday from Tourism Minister Azalina Othman in Parliament three weeks ago after persistently demanding for it, information in the report was limited due to the terms imposed on the audit company by the ministry.

“The minister had led the Parliament to believe that it (summary report) is an audit of the various financial scandals of the Pempena group of companies but clearly this important brief was excluded from PWC’s terms of reference,” Lim told a press conference in Parliament today.

He released copies of the report to the media.

He claimed that the report is merely a “high-level business review of selected investments and specifically does not include any investigative audit or forensic work”.

Lim also said that other alleged financial scandals were separately probed by the Tourism Ministry in an internal audit of Pempena.

“Why did Azalina hide the fact from Parliament that there had been an internal audit by the ministry and that it had been completed by Aug 14, 2008?” asked Lim, adding that he would write to Azalina demanding a copy of the ministry’s report.

He further said that he would lodge a police report tomorrow and also urge the Public Accounts Committee to launch an inquiry into the financial scandals of Pempena.