Isa Samad’s trial: Ex-Felda DG gives conflicting testimony on whether board approved Kuching hotel purchase

KUALA LUMPUR (Oct 9): Former Federal Land Development Authority (Felda) director-general Datuk Hanapi Suhada appeared to give conflicting testimony today on the question of whether or not approval was given by the Felda board for Felda Investment Corporation Sdn Bhd (FIC) to purchase Merdeka Palace Hotel and Suites in Kuching for RM160 million.

Testifying in the criminal breach of trust and graft trial of former Felda chairman Tan Sri Mohd Isa Samad (pictured) at the High Court today, Hanapi initially stated that no approval was given by the board for the purchase.

However, when cross-examined by defence counsel Datuk Salehuddin Saidin, he agreed with the lawyer that there was an implicit approval by the Felda board in December 2014 when the board approved a RM100 million advance to FIC to finance the purchase.

Hanapi, 62, was director-general from April 1, 2015 to May 15, 2017.

He told the court that any business deals involving RM100 million or more involving FIC or other subsidiaries required the Felda board’s approval.

“There was no approval given by the board in the hotel purchase as there was no working paper on the matter tabled before the Felda board. This had been checked by my officer Erwan Aman, who briefed me on the matter,” he said.

The witness said he had been briefed by FIC that the hotel purchase took place on April 29, 2014 with the approval of the FIC board on that day for the price of RM160 million.

He added the decision to make the purchase was made by the then-FIC board that was chaired by Isa, and consisted of former Kota Tinggi MP Datuk Omar Salim, Datuk Noor Ehsanuddin Mohd Harun Narrashid, Datuk Nik Azman Mohamed Zain and former FIC CEO Zaid Abdul Jalil.

Hanapi said sometime in May 2015, when he had just assumed the post of director-general, Isa directed him to hasten the payment of RM100 million to Gegasan Abadi Properties Sdn Bhd (GAPSB), the company that owned the hotel, as the deadline to give the final payment was approaching.

“If FIC did not make the payment to GAPSB on time, it would create a problem for FIC to acquire the hotel,” he said.

Replying to a question from Deputy Public Prosecutor Afzainizam Abdul Aziz, Hanapi said he wrote to GAPSB on May 25, 2015 to inform them that the payment would be made for the hotel purchase soon.

“This letter was prepared to assure GAPSB that the payment would be made the latest by June 3, 2015,” he said, adding he did not know GAPSB board member Ikhwan Zaidel, who received the payment.

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Isa is charged with approving the hotel’s purchase for RM160 million without Felda’s board approval. He is also accused of dishonestly receiving RM3.09 million for gratification from Ikhwan, through one Muhammad Zahid Md Arip, between July 21, 2014 and Dec 11, 2015, in order to approve the project.

Board yet to approve hotel purchase
Hanapi said Isa directed him to bring the application for payment to the Felda board for approval as the RM100 million must be given in advance to FIC before the purchase is approved by the board.

“I confirm that a sum of RM100 million from Felda was transferred to FIC on May 29, 2015. This is based on documents of its payment kept at Felda’s finance department,” he said.

Afzainizam asked the witness if he had noticed that the Felda board’s approval for the purchase had not been obtained at that time, and the witness replied no.

Afzainizam: Did you advise Tan Sri Isa regarding the RM100 million payment?

Hanapi: No I did not as he is the leader (chairman) and I complied.

Afzainizam: When the directive came from Isa to hasten the (RM100 million) payment, there was no decision made by the Felda board to approve the purchase of the hotel?

Hanapi: Yes correct (no decision).

Afzainizam: If you had known there was no board approval you would not have signed to agree to transfer?

Hanapi: Yes I would not have signed.

Afzainizam: Hence, the RM100 million payment is made on Tan Sri Isa’s directive?

Hanapi: Yes.

Implied approval and no SOP
Hanapi, when cross-examined by Salehuddin, agreed that after FIC had purchased the Kuching hotel the standard operating procedure for Felda had changed whereby purchases of RM100 million or more required the Felda board’s approval.

The witness also agreed that as the director-general, he was also a Felda board member and he can disagree with Isa’s suggestion for the payment to be made.

He further agreed when Salehuddin said: “You have one vote, Isa has one vote and others have one vote which can override the chairman’s powers.”

Salehuddin further pointed to the December 2014 board meeting that approved the RM100 million advance paid to FIC.

“It is like a father (Felda) to son (FIC) meeting, where the son is asking for money, and the father approves it,” the lawyer said in giving an analogy.

Hanapi pointed out that he was not a Felda board member when he was invited to attend the December 2014 meeting, as he had not been appointed as the director-general then. The witness said he was only appointed to the Felda board in July 2015.

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Hanapi said he could not remember whether the issue of the RM160 million hotel purchase was discussed at the meeting.

Salehuddin: You attended the 2014 board meeting where approval was given for the RM100 million advance. Does this not imply that the FIC purchase was agreed to by the board?

Hanapi: Yes, I agree.

Salehuddin: So it is for this reason that the Felda board approved the RM100 million advance to be paid to FIC?

Hanapi: Yes.

Salehuddin: If you would not have known otherwise, then the advance would not be given?

Hanapi: Yes.

On re-examination by Afzainizam, the former Felda director-general maintained that approval was not given for the purchase of the hotel.

He said if there was approval for the purchase by FIC, then a working paper on it would have been tabled before the board, and as far as he can see according to the Felda board minutes there was no such paper tabled for the purchase of the hotel.

The prosecution later brought in several witnesses from local banks to testify on FIC and Felda’s banking accounts.

The trial before Justice Mohd Nazlan Mohd Ghazali continues on Monday.

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