KUALA LUMPUR, Sept 28 — A lack of oversight by the board of directors of the Malaysian Agricultural Research and Development Institute’s (Mardi) company, MardiCorp, for the Suriname Reverse Linkage Project led to a loss of income and risked legal action by its creditors, said the Auditor-General’s (A-G) Report 2019 Series 2.
The project, inked on March 20, 2016, was supposed to provide technical expertise in three areas, namely identifying and breeding suitable paddy varieties; strengthening soil fertility; and developing an integrated water management system.
However, an audit of the project’s Progress Report up to March 2019 — which was the end of the contract term — found that only eight of the 18 planned activities had been completed.
Under the contract, MardiCorp was to have received payment of US$5.79 million (RM24.24 million) from the Government of Suriname.
An audit of the Summary Account for the Suriname Reverse Linkage Project, as prepared by MardiCorp’s Finance and Procurement Division, found that the company had submitted invoices amounting to US$2.79 million based on the project’s scope of implementation.
As of December 2020, a total of US$1.48 million (53 per cent) claims had been received, with the remaining US$1.31 million (47 per cent) still outstanding.
The audit found that the outstanding claims amounting to US$1.31 million from the Suriname government had impacted MardiCorp’s financial position negatively.
“Minutes of the 80th Board Meeting No. 1/2020 show the expected cash flow on January 24, 2020 was a deficit of RM1.45 million. The meeting was told that MardiCorp will not be able to settle the debt in the near future unless a claim amounting to US$1.31 million from the Suriname Reverse Linkage Project is received.
“Overall, MardiCorp’s financial position for 2019 is stable. However, payment arrears by Suriname amounting to US$1.31 million affected MardiCorp’s financial position in terms of a drop in its liquidity level. This also caused MardiCorp to be exposed to the risk of legal action by creditors,” said the report.
The audit also found that the lack of monitoring by MardiCorp’s board of directors led to the project being transferred to its subsidiary, Mardi Consultancy & Services Sdn Bhd, as stated in a letter dated May 14, 2018 to the former MardiCorp CEO without their knowledge, as the directors did not discuss the matter during meetings held in 2018 and 2019.
In a reply to the audit this year, MardiCorp said that the chairman of Mardi Consultancy & Services Sdn Bhd, who was also the project director, had acted autonomously and sought government intervention through the Ministry of Agriculture to obtain its money.
“Weaknesses in board monitoring resulted in non-compliance with contracts, leading to the targets of the Suriname Reverse Linkage Project not being achieved.
“This also provided an opportunity for subsidiaries to act autonomously,” read the A-G’s Report.