Wednesday, July 23, 2008

Millions paid to RM650 company - The Sun

LONDON (July 23, 2008): by R. Nadeswaran and Terence Fernandez

The Youth and Sports Ministry entered into a multi-million ringgit agreement to host a football tournament with a company with a paid up-capital of just RM650 and accumulated losses exceeding RM6.5 million. If it had carried out a due diligence test, as is required by practice and convention, before entering into an agreement involving such a big amount of money, it certainly would not have parted with RM17 million as "bidding fees" to host the Champions Youth Cup (CYC) tournament last year. And certainly, it would not have parted with RM8 million as "advance" for this year’s tournament, which has since been aborted.

For the record, the tournament held in four venues was a failure in terms of crowd support, gate collections and television viewership, despite promises of "Malaysia being mentioned several hundred times in international dispatches".

Both the ministry and the London-based Gifted Group Ltd are now embroiled in a controversy over the now-aborted tournament after the Football Association of Malaysia (FAM) refused to sanction the tournament. Both Gifted and the ministry have threatened to sue each other for breach.

All this could have been avoided if only officials in the ministry had carried out checks.

Gifted Group’s Jonathan James Price and former youth and sports minister Datuk Seri Azalina Othman Said had always maintained that the monies paid to the company were "bidding fees" but nowhere in the world does any country "bid" to host any tournament for three consecutive years.

But an examination of Gifted Group’s filings with the Companies House here (the equivalent of Companies Commission of Malaysia) revealed that the RM17 million from Malaysia may have pulled Gifted Group out of financial trouble.

According to its accounts, it had accumulated losses of £1.044 million as of June 30, 2006. No further returns have been filed.

Price holds 74% of the shares (the other 26% being held by Indigo Holdings Ltd) and has six other subsidiaries of which only one – Gifted Management Ltd – is active. It, too, incurred losses of £58,000 (RM375,000) in 2005, which was carried forward the following year although records show there was no trading or transactions.

The records also show that the company has an outstanding loan of £600,000 (RM3.8 million) from an unnamed investor at an interest of 2% per annum. Interest due was £46,358 (RM299,000) and was to be settled on or before Nov 8 last year. The CYC was launched on March 16, 2007 and the tournament held in August. There have been no subsequent filings of company accounts.

Efforts by theSun to seek comments from Gifted Group drew a blank as it is operating from an office suite complex in upmarket central London, a stone’s throw from Parliament House, to which access is restricted by receptionists who control access to all offices there.

Reached by phone from the reception at the ground floor, Price’s secretary, someone who gave her name as Marissa, said her boss was out of town. They have yet to return calls to theSun.

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