If the Auditor General did not HIGHLIGHT these wrongs - would Minister Sim have highlighted it OR just 'swept' in under the carpet? Anyway, this issue affects not just HR(or KESUMA) Minister Steven Sim but also Finance Minister Anwar Ibrahim as one of that Ministry's representative sits in the Board of Director of HRD Corp, and its Investment Panel. It also highlights a wrongdoing of former HR Minister V Sivakumar
Human Resources Minister Steven Sim was appointed Minister in December 2023, and it has been about 7 months, and he FAILED to discover the wrongdoings in Human Resource Development Corporation(HRD Corp) until the Auditor General's report, which covers until end of 2023. How much more monies was lost by reason of these wrongdoings until July 2024?
HRD Corp and the said Investment Panel is governed under the PEMBANGUNAN SUMBER MANUSIA BERHAD ACT 2001 which is under HR(KESUMA) Minister Steven Sim - and thus the Ministry has also Law Enforcement obligations for violations of this Act.
The first thing, any HR Minister was supposed to do was to evaluate all aspects of the the Human Resource Ministry, including related agencies - and CLEAN it all up, including taking the needed steps to 'get rid' of bad officers, bad Directors, etc - sadly, Steven Sim failed.
It seems he only became aware of the failings of his Ministry and its related agencies only after the Auditor General's report came out. SHOCKING. Sad situation if Minister ONLY BECOMES AWARE when Auditor General reports....
What should Steven Sim do now?
1 - Immediately take action, suspend or 'terminate' the Chief Executive = The current HRD Corp CEO Datuk Shahul Hameed Sheikh Dawood. He was both in the Board of Directors and also in the Investment Panel - and, as such he is responsible for the wrongdoings. If he did not know, it indicates INCOMPETENCE.
2 - Immediate suspension or termination of the entire Board of Directors of HRD Corp, unless they can prove that they tried to raise the issue but was blocked. Ignorance is no excuse for Directors or Board of Directors. The Investment Panel did not report is also no excuse, as the Board is ultimately responsible - they should have 'ordered' regular reports. Note, 2 members of the BOD are also in the Investment Panel. Article 4 of Second Schedule of the Act gives the Minister the power to REVOKE appointment of the Board - '4. (1) The appointment of a member of the Board may at any time be revoked by the Minister.'
I was amused by the statement of the Chairman of HRD Corp's Chairman '...Datuk Abu Huraira Abu Yazid, said the training fund had implemented several improvements, which had helped increase levy collection over the years..."Several improvements have been implemented following these audit findings," he said in a statement on Thursday (June 27). The statement, however, did not address findings that HRD Corp had invested levies collected from employers in several high-risk investments, despite the training fund not being an investment institution..."Levy collection increased from RM475mil in 2020 to RM2.13bil in 2023."Levy utilisation rate increased from 63% in 2020 to 71% in 2023.'
If he was a Director during the period of the Audit Report - he is RESPONSIBLE for the wrongs and crimes. Did the Chairman make this statement for and on behalf of the BOD, or on his own - if on his own, again he has made a SERIOUS ERROR. Every Director are equal - and so even if he is the Chairman of the BOD of Directors, he has no right to unilaterally decide and speak on behalf of the Board of Directors(BOD) and certainly not HRD Corp?? Why did Minister Sim not say anything about this statement?
Will the wrongdoings or crimes be EXCUSED because of levy collection increase, or levy utilization increase? I think not.
Note Art. 8 of Second Schedule:- 8. No member of the Board shall incur personal liability for any loss or damage caused by any act or omission in administering the affairs of the Board or Corporation unless the loss or damage was occasioned intentionally or through recklessness or gross negligence.
3 - Immediate suspension or termination of the entire Investment Panel.
4 - Not so doing, i.e. suspending or terminating, also means a GREAT RISK of tampering or destruction of evidence.
5 - The Ministry must also commence their own independent internal investigation to identify also all officers, persons involved, and further crimes committed by the said Chief Executive, Directors and members of the Investment Panels.
6 - The Minister must also file police reports against the Chief Executive, individual Directors, individual members of the Investment Panels, officers of the Ministry and any others who are suspected to be involved in the crimes.
7 - The Minister must commence LEGAL ACTIONS with the object of recovering monies lost or illegally spent, and making all involved criminally liable or liable in civil courts for their wrongdoings.
8 - The mere lodging of report with the MACC is not enough - reports also need to be lodged with the police and relevant law enforcement bodies. MACC's scope is limited by law - even some corruption matters still come under the police. Of course, the Human Resource Ministry have the power to enforce the law...more so, since the HRD Corp comes under the jurisdiction of the Ministry.
Remember, the wrongs are highlighted by the Auditor General,is very credible. Reporting to MACC is a 'smart strategy' to delay action, and do nothing maintaining 'status quo' thus allowing the bad practice to continue OR crimes to continue.
9. The wrongs have come to light - Look at the PEMBANGUNAN SUMBER MANUSIA BERHAD ACT 2001, and make the necessary amendments. The act covers the offences of employers - maybe we need to add the offences(including stiff penalties) of the Chief Executive, Directors, Member of the Investment Panel, officers of HRD Corp and/or related Ministry officers associated or linked with the Board.
Today, it was reported that ...
KUALA LUMPUR: The Human Resources Ministry has not suspended officials from the Human Resource Development Corporation (HRD Corp) following findings in the Auditor General's Report and the Public Accounts Committee (PAC), presented in Parliament yesterday.
The ministry's secretary-general, Datuk Seri Khairul Dzaimee Daud, said today that such action would only be taken if the ministry conducts an internal investigation into the matter.- NST, 5/7/2024
Minister Sim must immediately ACT, not simply wait for MACC investigation to be completed - This is not a case, someone making a report or complaint - it is the AUDITOR GENERAL - so act now - SUSPEND or better still revoke the appointment of the Directors, the Chief Executive, and the Investment Panel immediately....
With regard the Investment Panel, according to the Auditor's report, it is ILLEGAL by fact that there was no representative of the Central Bank of Malaysia.
“According to the PSMB Act 2001, a representative from BNM must be appointed as one of the members of the panel, but there has been no BNM representative in the panel since 2017 and this is in violation of the Act,” the report said.
Thus, all actions and decisions of the Investment Panel was INVALID - as it clearly breached the law. Did Minister Sim fail to realize this? Section 26(1) uses the words 'shall consist', not 'may' - hence it is a MANDATORY requirement. No need to wait for MACC here - what is Minister Sim going to do about this? The LAW is crystal clear - thus the fault is also on the Board of Directors, and also the Chief Executive(who sits both in the BOD and the Investment Panel)
Section 26(1) In addition to the provisions contained in the Memorandum and Articles of Association of the Corporation, there shall be established an Investment Panel which shall, subject to such directions as may be issued by the Corporation, be responsible for matters pertaining to the investments of the Fund.
(2) The Investment Panel shall consist of-
(a) the Chairman of the Board or the person for the time being performing the functions of the Chairman of the Board, as chairman;
(b) two members appointed by the Board from amongst its members;
(c) the Chief Executive;
(d) a representative of the Ministry of Finance;
(e) a representative of the Central Bank of Malaysia; and
(f) two other persons with business and financial experience to be appointed by the Minister.
One major problem has been with Human Resources Development Corporation (HRD Corp) - and this has a Board of Directors(which has the responsibility for whatever done and not done). Oh, it seems that the ' ...HRD Corp’s investment panel failed to report substantial investment activities to its board of directors (BOD)...' Here, excuses of not reporting to the BOD does not excuse the BOD of its duties/obligations. The Directors should be on top of it - no excuses for their failure. Worse, the head of the Investment Panel is also a Director in the Board of Directors of HRD Corp.
“The HRD Corp investment panel did not report investment activities to BOD, in which its management justified that the chairman of the panel is also among the BOD.
“This has resulted in the BOD being unable to monitor HRD Corp’s investment activities as a whole and undermining the BOD’s role as the entity responsible for HRD Corp’s direction.
Conclusion:- All the Directors are responsible for the running of HRD Corp - no running away from this. The excuse 'they who was supposed to report did not report' is NO EXCUSE that the Board of Directors can now use. Remember, the MINISTER has the power Item 4. (1) The appointment of a member of the Board may at any time be revoked by the Minister.(Second Schedule, PEMBANGUNAN SUMBER MANUSIA BERHAD ACT 2001)
11(1) PEMBANGUNAN SUMBER MANUSIA BERHAD ACT 2001 - The board of directors of the Corporation, which shall be responsible for the policy and general administration of the affairs of the Corporation and the Fund, shall comprise of the following members who, notwithstanding the provisions of section 128 of the Companies Act 1965, shall be appointed by the Minister:
(a) ten persons representing employers;
(b) three persons representing the Government and public sector agencies responsible for manpower development or training;
(c) a representative of the Ministry of Human Resources;
(d) a representative of the Ministry of Finance; and
(e) the Chief Executive.
What the MINISTER should immediately do?
Immediate suspension, if not termination of the ALL the Directors of HRD Corp - unless it is proven that the particular individual Director proves that he tried to address this issue but was 'blocked' by the majority of Directors. The Director/s that tried to raise the issue but was blocked maybe could be retained.
Immediate appointment of a NEW Board of Directors - note if the same Directors are retained, they is also a RISK of evidence tampering/destruction.
The head of HRD Corp investment panel, who is also a HRD Corp Director, who failed to inform the BOD and 'hid the truth' from the BOD was immediately be terminated. In fact, there should be 2 members of the BOD in the Investment Panel. These 2 Directors should be terminated immediately just for the not reporting to the BOD.
Read the Report, but some of the 'wrongs' highlighted is here...
RM50 million in training grants were disbursed to the
same person multiple times
In the latest Auditor-General’s Report published today, she pointed out that more than RM50 million in training grants were disbursed to the same person multiple times while auditors deemed more than 200 as ‘suspicious’.
Responding to the issue of the award of multiple grants to single individuals, HRD Corp told auditors this was because grantees needed to undergo various training to upskill.
However, the auditors noted that the grant awarded by the government is for one course per person only, and not for 3,726 individuals to attend multiple courses.
ISSUE OF INVESTING IN PUBLIC-LISTED FIRMS WITHOUT APPROVAL OF INVESTMENT PANEL(OR BOD). Minister approved?
Among others, HRDF invested in public-listed firms, some of which were done without Investment Panel oversight.
Instead, the HRD Corps CEO sought approval directly from then-human resources minister V Sivakumar, who approved the investments in September and October last year, because the Investment Panel chairperson post was vacant.
The audit found that for one company, the report presented to the minister differed from the findings of the HRDF treasury department’s own analysis of the viability of reinvesting in the public-listed firm.
HRDF’s treasury on Oct 10, 2023, reported the public-listed entity was in a downturn and facing liquidity issues but in his letter to the minister six days later, the HRD Corp CEO said the same firm was solid and had the potential to rise.
The audit also found that the CEO continued to seek approval to reinvest in this firm, even though the Investment Panel had rejected it in two prior meetings in December 2022 and March 2023.
In its response to the auditor-general, HRD Corp stood by its decision to reinvest in the public-listed firm, arguing that the company had the potential to grow in the near future.
In response, the auditor-general said the HRD Corp management has the obligation to recoup the RM49.83 million in unrealised losses.
Here - it highlights that former Minister V Sivakumar, who approved the investments wrongly - Investments need the approval of the Investment Panel, and maybe the BOD. The fact that the Investment Panel did not have a Chairman is IRRELEVANT as the Investment Panel still exist - and power lies in the Panel, not the Chairman(who just have one vote in the Panel)
So, ex-Minister Sivakumar may have to be investigated - maybe a CRIME or maybe a CIVIL LIABILITY. For his actions resulted millions of ringgit of losses.
HRD CORP has a function - and if monies are lost, it is an ABUSE and it undermines the TRUE objects of HRD Corp.
WHAT DO YOU THINK WILL HAPPEN? WILL IT BE SLOWLY 'COVERED UP' OR FORGOTTEN? SERIOUS ISSUE HERE - LET'S SEE WHAT MINISTER STEVEN SIM(who ethically ought to have resigned in embarrassment because he did not find the faults b4 the Auditor General did) DO NOW? Will he immediately get rid of the Chief Executive, the Directors and the Members of the Investment Panels, for keeping them is a SERIOUS risk of tampering/destroying evidence - or will he still keep these 'wrongdoers' in place and hope no more wrongdoings?
MACC jurisdiction is limited. Here there was breaches of HRD Act, which is under the jurisdiction of Minister Sim - and thus the Ministry is the law enforcement agency here...Only the Ministry have right to get back the monies wrongly expended or lost because the procedure in the law was not followed...investment made without approval of Investment Panel(but Minisoter) that suffered large losses..
STEVEN SIM has got a MESS to deal with, and deal with fast. HOPE HE IS STRONG ENOUGH to do what is needed without fear or favour..
The Auditor-General’s Department has urged the Human Resources Ministry to refer the management of Human Resources Development Corporation (HRD Corp) to the relevant enforcement agencies after the government entity failed its audit.
“The ministry must take the necessary action against HRD Corp’s management on the identified mismanagement by referring the matter to the relevant enforcement agency,” said Auditor-General Wan Suraya Wan Mohd Radzi in the latest Auditor-General’s Report published today.
Among others, auditors found mismanagement of hundreds of millions of ringgit involving training grants, investments and property purchases.
For example, a total of more than RM50 million in training grants were disbursed to the same individuals multiple times while more than 200 were deemed “suspicious” (meragukan) by the auditors.
The 234 “suspicious” grantees were awarded grants under Skim Gerak Insan Gemilang from 2020 to 2023.
They were “suspicious” because the same identity card number was used for different names while in other cases there were multiple instances of the same name, but with different identity card numbers.
“As a whole, the corporate governance of HRD Corp is unsatisfactory. Decisions made by HRD Corp management did not follow procedures and did not protect its interests to achieve its objectives,” Wan Suraya (above) said in the report.
The audit’s scope is from 2019 to 2023.
HRD Corp’s CEO since 2020 is Shahul Hameed Sheikh Dawood.
Responding to the issue of the award of multiple grants to single individuals, HRD Corp told auditors this was because grantees needed to undergo various training to upskill.
However, the auditors noted that the grant awarded by the government is for one course per person only, and not for 3,726 individuals to attend multiple courses.
HRD Corp said it has also upgraded its digital infrastructure to address the issue.
High-risk investments resulted in losses
The auditors also found poor governance in HRD Corp’s investments of RM3.727 billion, resulting in unrealised losses of RM49.38 million.
The funds invested were from the Human Resources Development Fund (HRDF), which is a consolidated fund of employer levy contributions.
Among others, HRDF invested in public-listed firms, some of which were done without Investment Panel oversight.
Instead, the HRD Corps CEO sought approval directly from then-human resources minister V Sivakumar, who approved the investments in September and October last year, because the Investment Panel chairperson post was vacant.
The audit found that for one company, the report presented to the minister differed from the findings of the HRDF treasury department’s own analysis of the viability of reinvesting in the public-listed firm.
HRDF’s treasury on Oct 10, 2023, reported the public-listed entity was in a downturn and facing liquidity issues but in his letter to the minister six days later, the HRD Corp CEO said the same firm was solid and had the potential to rise.
The audit also found that the CEO continued to seek approval to reinvest in this firm, even though the Investment Panel had rejected it in two prior meetings in December 2022 and March 2023.
In its response to the auditor-general, HRD Corp stood by its decision to reinvest in the public-listed firm, arguing that the company had the potential to grow in the near future.
In response, the auditor-general said the HRD Corp management has the obligation to recoup the RM49.83 million in unrealised losses. - Malaysiakini, 4/7/2024
HR Ministry to file MACC report after A-G’s report uncovers irregularities in HRD Corp
KUALA LUMPUR, July 5 — The Human Resources Ministry (Kesuma) will lodge a report with the Malaysian Anti-Corruption Commission (MACC) following the publication of the Auditor-General’s Report 2/2024 yesterday.
In the report, Auditor-General Datuk Wan Suraya Wan Mohd Radzi said that HRD Corp had failed its audit due to management irregularities, and had recommended that the ministry report the management of the government entity to the relevant enforcement agencies for possible action.
The National Audit Department had scrutinised HRD Corp’s operations from 2019 to 2023.
“In line with the recommendations of the auditor-general, I have instructed Kesuma’s Secretary-General Datuk Seri Khairul Dzaimee and Chief Executive of HRD Corp Datuk Wira Shahul Dawood to report to the MACC about the findings of the reports,” said Human Resources Minister Steven Sim in a statement today.
Sim also said that the HR Ministry is open to any relevant party wanting to conduct further investigations into its agencies in response to the report’s findings.
“Kesuma takes the report by the National Audit Department and the Public Accounts Committee (PAC) very seriously,” Sim said in the statement.
“Kesuma will not tolerate any actions that contravene the law.”
In the same statement, Sim said that the auditing process covered HRD Corp’s operations from 2019 to 2023.
“I was informed about the auditing process by these two bodies when I took over the ministry portfolio in mid-December 2023, then instructed Kesuma and HRD Corp to give full cooperation to the Audit Department and PAC,” Sim said.
Over the past six months, the ministry, officially rebranded as Kesuma, has embarked on a “reengineering process” across all departments to ensure good governance and efficiency.
“My goal is to ensure that Kesuma achieves the highest standards of governance and corporate accountability,” he added. - Malay Mail, 5/7/2024
HRD Corp fails audit, mishandling of funds revealed
THE Auditor-General’s Department today urged the Human Resources Ministry to refer the management of Human Resources Development Corporation (HRD Corp) to the relevant enforcement agencies after it failed its audit.
Auditor-General Wan Suraya Wan Mohd Radzi said auditors found mismanagement of hundreds of millions of ringgit involving training grants, investments and property purchases, reported Malaysiakini.
In the latest Auditor-General’s Report published today, she pointed out that more than RM50 million in training grants were disbursed to the same person multiple times while auditors deemed more than 200 as ‘suspicious’.
“Overall, the corporate governance of HRD Corp is unsatisfactory.
“Decisions made by HRD Corp management did not follow procedures and did not protect its interests to achieve its objectives,” she said in the report.
The New Straits Times meanwhile said HRD Corp’s investment panel failed to report substantial investment activities to its board of directors (BOD).
This, said Wan Suraya, led to a lack of oversight over its investment activities.
The report also revealed that there was no Bank Negara Malaysia (BNM) representative on the panel, which is a violation of the Human Resources Development Fund Act 2001.
“The HRD Corp investment panel did not report investment activities to BOD, in which its management justified that the chairman of the panel is also among the BOD.
“This has resulted in the BOD being unable to monitor HRD Corp’s investment activities as a whole and undermining the BOD’s role as the entity responsible for HRD Corp’s direction
“According to the PSMB Act 2001, a representative from BNM must be appointed as one of the members of the panel, but there has been no BNM representative in the panel since 2017 and this is in violation of the Act,” the report said.
The audit’s scope is from 2019 to 2023.
HRD Corp’s CEO from 2020 is Shahul Hameed Sheikh Dawood. - July 4, 2024, Malaysian Insight
HRD Corp has addressed A-G's findings, says chairman
Thursday, 04 Jul 2024 8:55 PM MYT
PETALING JAYA: The Human Resource Development Corporation (HRD Corp) has acknowledged its shortcomings found in the Auditor-General's (A-G) report and the Public Accounts Committee (PAC).
Its chairman, Datuk Abu Huraira Abu Yazid, said the training fund had implemented several improvements, which had helped increase levy collection over the years.
"For context, audits in both reports were carried out on HRD Corp for the period 2019 to 2023.
"Several improvements have been implemented following these audit findings," he said in a statement on Thursday (June 27).
The statement, however, did not address findings that HRD Corp had invested levies collected from employers in several high-risk investments, despite the training fund not being an investment institution.
He said the training fund's levy collection and utilisation rates have improved significantly over the past few years, despite the initial impact of the Covid-19 pandemic.
"Levy collection increased from RM475mil in 2020 to RM2.13bil in 2023.
"Levy utilisation rate increased from 63% in 2020 to 71% in 2023.
"If the approved and unpaid levies (payments only made after training) are taken into account, the levy utilisation rate in 2023 reached 83%," he said.
Abu Huraira said HRD Corp's profit before tax also increased from RM25.8mil in 2020 to RM97.5mil in 2023.
"To address arrears issues, HRD Corp has strengthened its compliance and enforcement efforts, resulting in RM96.27mil in arrears collected in 2023, which increased from previous years."
He noted that HRD Corp has also implemented reforms under the Human Resources Ministry's "Rekayasa KESUMA" programme to improve its governance this year.
Some of the initiatives included the abolition of the Skills Passport project without any cost and loss to HRD Corp or the government, he said.
"Other initiatives included separating the previous 'Risk and Audit Committee' into 'Risk Committee' and 'Audit Committee'; introducing a Strategic Initiatives Account separate from the levy trust account; tightening investment approval processes; and facilitating and encouraging greater levy utilisation by employers.
"HRD Corp will ensure continuous improvements to ensure good governance so that the fund's mandate for national human capital development is effectively implemented," he said. - Star, 4/7/2024
HRD Corp fails audit, mishandling of funds revealed
THE Auditor-General’s Department today urged the Human Resources Ministry to refer the management of Human Resources Development Corporation (HRD Corp) to the relevant enforcement agencies after it failed its audit.
Auditor-General Wan Suraya Wan Mohd Radzi said auditors found mismanagement of hundreds of millions of ringgit involving training grants, investments and property purchases, reported Malaysiakini.
In the latest Auditor-General’s Report published today, she pointed out that more than RM50 million in training grants were disbursed to the same person multiple times while auditors deemed more than 200 as ‘suspicious’.
“Overall, the corporate governance of HRD Corp is unsatisfactory.
“Decisions made by HRD Corp management did not follow procedures and did not protect its interests to achieve its objectives,” she said in the report.
The New Straits Times meanwhile said HRD Corp’s investment panel failed to report substantial investment activities to its board of directors (BOD).
This, said Wan Suraya, led to a lack of oversight over its investment activities.
The report also revealed that there was no Bank Negara Malaysia (BNM) representative on the panel, which is a violation of the Human Resources Development Fund Act 2001.
“The HRD Corp investment panel did not report investment activities to BOD, in which its management justified that the chairman of the panel is also among the BOD.
“This has resulted in the BOD being unable to monitor HRD Corp’s investment activities as a whole and undermining the BOD’s role as the entity responsible for HRD Corp’s direction
“According to the PSMB Act 2001, a representative from BNM must be appointed as one of the members of the panel, but there has been no BNM representative in the panel since 2017 and this is in violation of the Act,” the report said.
The audit’s scope is from 2019 to 2023.
HRD Corp’s CEO from 2020 is Shahul Hameed Sheikh Dawood. - July 4, 2024, Malaysian Insight
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