PUTRAJAYA is reviewing a RM323 million land deal by the Social Security Organisation (Socso) in March last year after questions were raised over its failure to generate immediate income for the organisation.

A high-ranking Socso official told The Malaysian Insight the Human Resources Ministry’s Integrity Unit is reviewing the approval and governance process related to the investment. 

The 0.755ha land is located on Jalan Kia Peng in Kuala Lumpur, which was the site of the residence of the German envoy to Malaysia. 

Questions were raised on the purchase of the land as it is currently not generating any return as it is undeveloped.

“While people may question the motive, I think the idea of buying the land was for future investment,” the source said. 

“It depends on perception. Whatever it is, the intention is clear, that is to look into getting better returns in the short term or long term and it is up to the board and investment panel to decide.”

The official, who confirmed that the review is being done by the ministry, said the decision to purchase the land was made after it was discussed by the previous investment panel.

However, it is understood that current line-up is in the midst of deciding on what to do with the land, taking into account the market conditions at this time.

The initial plan was to undertake infrastructure development on the land. 

The land was acquired from the Malaysian Resources Corp Bhd via Legasi Azam Sdn Bhd, a wholly owned subsidiary of MRCB Land Sdn Bhd in March last year.

A sale and purchase (SPA) agreement was signed between Socso and the MRCB unit on March 19 and the deal was completed on July 3.

The completion of the SPA was also subject to Socso obtaining the approval of the Economic Planning Unit.

Asked if Socso overpaid for the land, the officer said due diligence was conducted before the deal was sealed.

The source said the option open to Socso included developing the land as per initial plans or to dispose of it when market conditions improve.

A fresh valuation is also being undertaken to determine the current market price.

Socso has also been submitting reports on its investment activities to the ministry on a consistent basis. 

The ministry is also monitoring the fund’s strategic asset allocations in certain sectors to ensure that they are in line with Socso’s risk profile. – February 14, 2019.