Face of LTAT, Boustead to exit
THE STAR
Saturday, 25 Aug 2018
Right-hand man: Lodin is one of the heads of government linked companies who is expected to leave. Sources say it will only be a matter of weeks.
Lodin is poised to leave the two entities after serving 36 years at the helm and his departure may herald a change in the structure of LTAT
ALTHOUGH he spent 36 years overseeing the investments of the Armed Forces Fund Board (LTAT), Tan Sri Lodin Wok Kamaruddin would be better known as the person who was a Datuk Seri Najib Tun Razak-loyalist rather than the face of the fund.
Loyalty is a trademark associated with the 68-year-old Lodin, who is poised to leave the fund that manages assets of RM10bil. This includes a string of listed and unlisted companies ranging from finance to property and even in consumer manufacturers and distributors such as Kao (M) Sdn Bhd.
“For Lodin, loyalty is what counts most. He expects loyalty from his subordinates and he is also loyal to his superiors,” says an official who is familiar with the way the chief executive of LTAT manages the fund.
“He has several non-Malay senior executives in the top position of Boustead,” says the official.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/07406eed8ca649ea9fdd42ac2ce49c39.ashx
Outside the regimented world of LTAT, where serving and retired military personnel hold the reins, Lodin is seen as a person who is completely devoted to former Prime Minister Najib.
He stayed on the board of the beleaguered 1Malaysia Development Bhd (1MDB) even at the height of controversy when the government sacked and went after anybody who spoke out against the fund in 2015.
He remained as chairman of 1MDB even though many other corporate leaders left the board because they distanced themselves from the irregularities in the federal government fund.
Sime Darby Plantation group chief executive Tan Sri Mohd Bakke Salleh was the first chairman of 1MDB and resigned after the first few board meetings. By then, the board was told by the management of 1MDB that US$1bil (about RM3.2bil then) was transferred out – and the board was to ratify the transaction.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/14820401c6294ad2b83efec633859b98.ashx
The Auditor-General later discovered that of the amount, US$700mil (about RM2.3bil then) went to Good Star Ltd, a company owned by fugitive businessman Low Taek Jho, or better known as Jho Low.
Former chief executive of the Employees Provident Fund (EPF) Tan Sri Azlan Mohd Zainol had also resigned from the board of 1MDB because he did not agree with what was happening in the fund that raked up debts of RM42bil in five years from 2009.
However, Lodin stayed on in 1MDB until May 2016 even though there were numerous reports of irregular transactions involving the fund.
“Even when Najib was seen as shifting the blame in 1MDB to the board and management, Lodin kept mum. It is largely because he was loyal to Najib,” says the official.
After Najib lost in the May 9 general election, the former prime minister was reported during an interview with Reuters to have said that he was not told by the board and the management that things were not done in accordance with the law in 1MDB. He clarified later that he was not blaming the board members. However, Lodin had said then that he was just a “small fry” and did not want to be dragged into the controversy.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/772d45051b044ef8a167cc9a199337fc.ashx
But it is already too late. Under the new government, Lodin is one of the heads of government-linked companies (GLCs) who are expected to leave.
Sources say it will only be a matter of weeks.
“The Council of Eminent Persons (CEP) has come up with recommendations to the Prime Minister on his replacement,” adds the official.
Towards this end, the chairman of the CEP, Tun Daim Zainuddin, has said that they have made recommendations to the government on the future of LTAT but declined to elaborate.
There are three candidates being considered for the top post and the person tipped to replace Lodin is Nik Amlizan Mohamed, who is currently the chief investment officer of Kumpulan Wang Amanah Pencen.
“However, Prime Minister Tun Dr Mahathir Mohamad or Economic Affairs Minister Datuk Seri Azmin Mohamed Ali will have the final say on the matter.
“If we look at Khazanah Nasional Bhd, Dr Mahathir picked Shahril (Datuk Shahril Ridza Ridzuan) from the EPF. He was not the choice of the CEP or Azmin. Dr Mahathir chose him ahead of the candidate nominated by the CEP and Azmin,” says a source.
Politically-sensitive deals
Apart from the 1MDB, under Lodin, Boustead Holdings Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
undertook at least two transactions that were seen as politically-sensitive that other government-linked investment companies would stay away from.
The first was in December 2012 when Boustead bought 223 acres in Bukit Raja for RM180mil. During the transaction, Boustead purchased Astacanggih Sdn Bhd and Awan Megah (M) Sdn Bhd – two companies that were linked to persons close to the former government.
The other transaction was in February 2015 when LTAT, through subsidiary company Irat Properties Sdn Bhd, acquired two companies – Beta Tegap Sdn Bhd and A.T.E.S Sdn Bhd. The companies were given the concession in 2012 to undertake the controversial automated traffic enforcement system (AES). A month later, Boustead ended up with 50% of Irat Properties by taking up new shares and forking out RM128mil.
It was disclosed that LTAT was told by the Barisan Nasional government then to take over Beta Tegap and A.T.E.S. and it paid RM555mil for the companies.
However, Boustead has defended the deals, stating that the investments gave it good returns.
Apart from controversial deals, LTAT and Boustead under Lodin went into many more ventures in the last 15 years.
Boustead went into the petroleum retail business by acquiring the retail chain of British Petroleum in Malaysia and into the building materials business by acquiring UAC Bhd.
In the property sector, Boustead is best known for its development in Mutiara Damansara, which is located next to the famous 1 Utama shopping mall.
In the early stages of the opening of the retail complex in Mutiara Damansara, Lodin came up with the strategy to bring in some big names to anchor the development, including Tesco and Ikea.
“Boustead dropped prices to attract the anchor tenants. That was the only way it could go against the likes of 1 Utama,” says the official.
Under Lodin, Boustead also went into the pharmaceuticals sector by acquiring Pharmaniaga Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png from the UEM Group in 2010.
Lodin saw the listing of Boustead Plantations Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png, which has been on an acquisition drive in the last few months and the delisting of Boustead REITS.
“Over the years, Boustead under Lodin was never seen as a company that went on a reckless acquisition drive to drain the company of its cash reserves,” says the official.
“It is not like some other GLCs that spent billions raised from listing to buy plantations.”
Dwindling cash returns?
The biggest claim for Lodin is the returns that LTAT has been declaring for its members, which comprised mainly of non-officers.
Since 1973, LTAT has been declaring dividends of not less than 6.5% for its members. The returns were only in the form of cash until 1996 when members received a combination of cash and units in unit trust schemes.
Previously, members were given units in Affin Unit Trust and in the last few years, Amanah Saham.
The highest payout that LTAT has declared was in 1996 when it announced a dividend of 18.25% comprising cash of 13.25% and the rest in unit trusts. Since then, the cash portion of dividends has been on a downtrend.
In 2009, the cash portion of the dividend, that used to be between 10% and 13%, dropped to 8%.
During that year, the total dividend declared was 14%, of which the cash portion was 8% and the rest given out in the form of unit trusts.
Since 2015, the cash portion has dropped to 6% out of the total dividend of between 12% and 12.5%.
A financial executive says that if the returns in the form of unit trusts are stripped out of LTAT’s total returns, the cash portion is not much different from that given out by the EPF.
“In 2016, the EPF declared a 5.7% devidend and last year, it was 6.9%. LTAT’s cash portion was a flat 6% in 2016 and 2017,” says the executive.
“The headline figures will show that LTAT’s returns are higher than the EPF. However, if only the cash portion is taken into account, LTAT has only returned a marginally higher figure than the EPF,” says the executive.
In the last five years, the EPF’s dividends ranged from as low as 5.7% to 6.9% – averaging about 6.42% per annum over the last five years.
As for LTAT, the total returns during the period are from 12% and 16%. The cash portion is between 6% and 8% and the rest is in the form of units in unit trust schemes.
The average cash portion alone is 6.8% over the last five years.
However, an official close to LTAT says that the returns in the form of units in unit trusts are also considered as cash.
“When a member retires, he or she can take it out. It is still cash. LTAT returns should be seen in total and not broken down into cash and non-cash portions,” says the official.
A fund manager says that the leadership in LTAT and a group of companies is largely centred around Boustead and Lodin, which brings to question whether it has maximised its investments.
“Lodin is the chief executive of LTAT and also the group managing director of the Boustead group of companies. He sits on the LTAT investment committee. Boustead is severely undervalued for a reason apart from having a discount as the holding company,” says the fund manager.
“For instance, why must LTAT hold large stakes in companies such as Boustead Plantations and Affin Holdings Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png.
“A fund should spread out its investments on companies that give the best returns in the sector it wants to invest in instead of concentrating its resources in related companies,” the fund manager says.
Read more at https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/#oiG1OhovcRp6qTU8.99
Saturday, 25 Aug 2018
Right-hand man: Lodin is one of the heads of government linked companies who is expected to leave. Sources say it will only be a matter of weeks.
Lodin is poised to leave the two entities after serving 36 years at the helm and his departure may herald a change in the structure of LTAT
ALTHOUGH he spent 36 years overseeing the investments of the Armed Forces Fund Board (LTAT), Tan Sri Lodin Wok Kamaruddin would be better known as the person who was a Datuk Seri Najib Tun Razak-loyalist rather than the face of the fund.
Loyalty is a trademark associated with the 68-year-old Lodin, who is poised to leave the fund that manages assets of RM10bil. This includes a string of listed and unlisted companies ranging from finance to property and even in consumer manufacturers and distributors such as Kao (M) Sdn Bhd.
“For Lodin, loyalty is what counts most. He expects loyalty from his subordinates and he is also loyal to his superiors,” says an official who is familiar with the way the chief executive of LTAT manages the fund.
“He has several non-Malay senior executives in the top position of Boustead,” says the official.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/07406eed8ca649ea9fdd42ac2ce49c39.ashx
Outside the regimented world of LTAT, where serving and retired military personnel hold the reins, Lodin is seen as a person who is completely devoted to former Prime Minister Najib.
He stayed on the board of the beleaguered 1Malaysia Development Bhd (1MDB) even at the height of controversy when the government sacked and went after anybody who spoke out against the fund in 2015.
He remained as chairman of 1MDB even though many other corporate leaders left the board because they distanced themselves from the irregularities in the federal government fund.
Sime Darby Plantation group chief executive Tan Sri Mohd Bakke Salleh was the first chairman of 1MDB and resigned after the first few board meetings. By then, the board was told by the management of 1MDB that US$1bil (about RM3.2bil then) was transferred out – and the board was to ratify the transaction.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/14820401c6294ad2b83efec633859b98.ashx
The Auditor-General later discovered that of the amount, US$700mil (about RM2.3bil then) went to Good Star Ltd, a company owned by fugitive businessman Low Taek Jho, or better known as Jho Low.
Former chief executive of the Employees Provident Fund (EPF) Tan Sri Azlan Mohd Zainol had also resigned from the board of 1MDB because he did not agree with what was happening in the fund that raked up debts of RM42bil in five years from 2009.
However, Lodin stayed on in 1MDB until May 2016 even though there were numerous reports of irregular transactions involving the fund.
“Even when Najib was seen as shifting the blame in 1MDB to the board and management, Lodin kept mum. It is largely because he was loyal to Najib,” says the official.
After Najib lost in the May 9 general election, the former prime minister was reported during an interview with Reuters to have said that he was not told by the board and the management that things were not done in accordance with the law in 1MDB. He clarified later that he was not blaming the board members. However, Lodin had said then that he was just a “small fry” and did not want to be dragged into the controversy.
image: https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/~/media/772d45051b044ef8a167cc9a199337fc.ashx
But it is already too late. Under the new government, Lodin is one of the heads of government-linked companies (GLCs) who are expected to leave.
Sources say it will only be a matter of weeks.
“The Council of Eminent Persons (CEP) has come up with recommendations to the Prime Minister on his replacement,” adds the official.
Towards this end, the chairman of the CEP, Tun Daim Zainuddin, has said that they have made recommendations to the government on the future of LTAT but declined to elaborate.
There are three candidates being considered for the top post and the person tipped to replace Lodin is Nik Amlizan Mohamed, who is currently the chief investment officer of Kumpulan Wang Amanah Pencen.
“However, Prime Minister Tun Dr Mahathir Mohamad or Economic Affairs Minister Datuk Seri Azmin Mohamed Ali will have the final say on the matter.
“If we look at Khazanah Nasional Bhd, Dr Mahathir picked Shahril (Datuk Shahril Ridza Ridzuan) from the EPF. He was not the choice of the CEP or Azmin. Dr Mahathir chose him ahead of the candidate nominated by the CEP and Azmin,” says a source.
Politically-sensitive deals
Apart from the 1MDB, under Lodin, Boustead Holdings Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
undertook at least two transactions that were seen as politically-sensitive that other government-linked investment companies would stay away from.The first was in December 2012 when Boustead bought 223 acres in Bukit Raja for RM180mil. During the transaction, Boustead purchased Astacanggih Sdn Bhd and Awan Megah (M) Sdn Bhd – two companies that were linked to persons close to the former government.
The other transaction was in February 2015 when LTAT, through subsidiary company Irat Properties Sdn Bhd, acquired two companies – Beta Tegap Sdn Bhd and A.T.E.S Sdn Bhd. The companies were given the concession in 2012 to undertake the controversial automated traffic enforcement system (AES). A month later, Boustead ended up with 50% of Irat Properties by taking up new shares and forking out RM128mil.
It was disclosed that LTAT was told by the Barisan Nasional government then to take over Beta Tegap and A.T.E.S. and it paid RM555mil for the companies.
However, Boustead has defended the deals, stating that the investments gave it good returns.
Apart from controversial deals, LTAT and Boustead under Lodin went into many more ventures in the last 15 years.
Boustead went into the petroleum retail business by acquiring the retail chain of British Petroleum in Malaysia and into the building materials business by acquiring UAC Bhd.
In the property sector, Boustead is best known for its development in Mutiara Damansara, which is located next to the famous 1 Utama shopping mall.
In the early stages of the opening of the retail complex in Mutiara Damansara, Lodin came up with the strategy to bring in some big names to anchor the development, including Tesco and Ikea.
“Boustead dropped prices to attract the anchor tenants. That was the only way it could go against the likes of 1 Utama,” says the official.
Under Lodin, Boustead also went into the pharmaceuticals sector by acquiring Pharmaniaga Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
from the UEM Group in 2010.Lodin saw the listing of Boustead Plantations Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
, which has been on an acquisition drive in the last few months and the delisting of Boustead REITS.“Over the years, Boustead under Lodin was never seen as a company that went on a reckless acquisition drive to drain the company of its cash reserves,” says the official.
“It is not like some other GLCs that spent billions raised from listing to buy plantations.”
Dwindling cash returns?
The biggest claim for Lodin is the returns that LTAT has been declaring for its members, which comprised mainly of non-officers.
Since 1973, LTAT has been declaring dividends of not less than 6.5% for its members. The returns were only in the form of cash until 1996 when members received a combination of cash and units in unit trust schemes.
Previously, members were given units in Affin Unit Trust and in the last few years, Amanah Saham.
The highest payout that LTAT has declared was in 1996 when it announced a dividend of 18.25% comprising cash of 13.25% and the rest in unit trusts. Since then, the cash portion of dividends has been on a downtrend.
In 2009, the cash portion of the dividend, that used to be between 10% and 13%, dropped to 8%.
During that year, the total dividend declared was 14%, of which the cash portion was 8% and the rest given out in the form of unit trusts.
Since 2015, the cash portion has dropped to 6% out of the total dividend of between 12% and 12.5%.
A financial executive says that if the returns in the form of unit trusts are stripped out of LTAT’s total returns, the cash portion is not much different from that given out by the EPF.
“In 2016, the EPF declared a 5.7% devidend and last year, it was 6.9%. LTAT’s cash portion was a flat 6% in 2016 and 2017,” says the executive.
“The headline figures will show that LTAT’s returns are higher than the EPF. However, if only the cash portion is taken into account, LTAT has only returned a marginally higher figure than the EPF,” says the executive.
In the last five years, the EPF’s dividends ranged from as low as 5.7% to 6.9% – averaging about 6.42% per annum over the last five years.
As for LTAT, the total returns during the period are from 12% and 16%. The cash portion is between 6% and 8% and the rest is in the form of units in unit trust schemes.
The average cash portion alone is 6.8% over the last five years.
However, an official close to LTAT says that the returns in the form of units in unit trusts are also considered as cash.
“When a member retires, he or she can take it out. It is still cash. LTAT returns should be seen in total and not broken down into cash and non-cash portions,” says the official.
A fund manager says that the leadership in LTAT and a group of companies is largely centred around Boustead and Lodin, which brings to question whether it has maximised its investments.
“Lodin is the chief executive of LTAT and also the group managing director of the Boustead group of companies. He sits on the LTAT investment committee. Boustead is severely undervalued for a reason apart from having a discount as the holding company,” says the fund manager.
“For instance, why must LTAT hold large stakes in companies such as Boustead Plantations and Affin Holdings Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
.“A fund should spread out its investments on companies that give the best returns in the sector it wants to invest in instead of concentrating its resources in related companies,” the fund manager says.
Read more at https://www.thestar.com.my/business/business-news/2018/08/25/face-of-ltat-boustead-to-exit/#oiG1OhovcRp6qTU8.99
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