The Employees Provident Fund (EPF) approved loans worth an astounding RM55.1 billion not backed by government guarantees.
However, the Auditor-General’s Report 2010 found only one of the 13 debtors was qualified to obtain a loan without such a guarantee. That particular debtor was extended credit worth RM21.3 billion.
Of the remaining 12 debtors, all of whom are not named in the report, two were exempted from producing government guarantees as they had high credit ratings.
The loans to the two parties totalled RM7.3 billion.
The report also revealed that the EPF had also given out 15 loans worth a total of RM35.69 billion as of the Dec 31, 2010.
Of the 15 loans given, two were made to non-government entities despite having government guarantees. The loans are worth RM5 billion and RM1.24 billion respectively.
EPF in its response said one of the debtors is an incorporated body of the Finance Ministry, while a government agency has a 66 percent stake in the second debtor company.
The EPF Act 1991 allows it to extend credit to the federal and state governments, as well as to companies incorporated under the Companies Act 1965, or set up with the Finance Ministry’s written permission.
The report said that as of the end of 2010, EPF had given out a total RM95.79 billion, earning RM2.52 billion in interest payments for the year.
RM4 bil loan skipped procedure
The year before, EPF was found to have not followed procedure for the approval of a loan worth RM4 billion for a government housing loan scheme.
The application was not tabled at the investment management committee meeting, before being approved on July 3, 2009.
“EPF said this was because the investment proposal was presented directly to the investment panel as an urgent decision was required,” it read.
The audit nevertheless found that EPF was “satisfactory” in its investment and loan activities, and had acted in accordance with Section 26 of the EPF Act.
“However, it should ensure that all department operation manuals for investment and loans are finalised and implemented.
“EPF must also ensure that all loan applications are tabled in the investment management committee meetings before it is passed by the (investment) panel,” it advised.
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