A RM17 million price tag

On 4 December 2009, Sime Darby Bhd, through its plantation arm, Sime Darby Plantation Sdn Bhd, bought the entire issued and paid-up capital (50,000 shares of RM1 each) of an obscure new company, Nature Ambience Sdn Bhd, for RM16.8 million.

What makes Nature Ambience, which was incorporated only a year ago (on 12 December 2008), so special? Although it will become an oil palm plantation firm, a company search reveals its nature of business to be “general trading”.

On 2 October 2009, the Ministry of Land Development, Sarawak granted Nature Ambience approval to be the investor/developer for 26,211ha of Native Customary Rights land in Kapit and Julau, Sarawak reportedly in line with the Sarawak state government’s “new concept of development on NCR land”.

This means Sime Darby will now be allowed to develop oil palm plantations in the Sarawak NCR development scheme.

A joint venture is expected to be established between:

• Nature Ambience, as the joint venture vehicle, Sime Plantation and
• Pelita Holdings Sdn Bhd, a subsidiary of the Land Custody & Development Authority of Sarawak (Pelita), acting for itself and as trustee for the natives holding the native customary rights in the NCR lands.

Under the Sarawak NCR development scheme, the usual joint-venture structure is

• Investor – 60%
• NCR native landowners (with Pelita acting as trustee)- 30%
• Pelita’s own stake in joint venture – 10%

Under the scheme, leasehold title (usually 60 years) is given to the joint-venture firm with the natives getting a 30 per cent stake in the firm in return.

Back to the purchase of Nature Ambience: Sime Darby paid close to RM17 million to buy the firm from Common Enhance Sdn Bhd. “The total cash consideration for the acquisition was RM16,816,212 which has been paid on even date (4 December) from internally generated funds,” Sime Darby reported to the Bursa on 7 December 2009.

Company searches reveal an interesting three-tier hierarchy of ownership of Nature Ambience:

Of Nature Ambience’s 50,000 shares of RM1 each, 49, 998 shares were owned by Common Enhance Sdn Bhd.

Common Enhance, which was registered on 15 September 2009, in turn has an issued capital of 50,000 shares of which 49,998 are owned by Fuji Perfect Sdn Bhd.

And surprise, surprise, Fuji Perfect, which was also registered on 15 Sept 2009, also has an issued capital of 50,000 shares, of which 49,998 are owned by a Chew Chiaw Ann.

The two remaining shares in each of the three companies are held by a Yap Liee Mee and a Loh Kuan Chween. All three firms have an identical registered address: First floor, Lot 2137 and 2138, Jalan Utama, Pending Industrial Estate, 93450 Kuching.

Several questions spring to mind:

• How does the Ministry justify granting an approval letter to Nature Ambience? What is Nature Ambience’s track record, bearing in mind that the company was set up a year ago?
• Why was the approval letter not given directly to Sime Darby?
• What sort of work has Nature Ambience done in two months since getting the approval in Oct 2009 to justify the RM17 million price tag?
• Where did the RM17 million that Sime Darby paid actually end up?
• How much have the natives who own the NCR land actually received so far? Where did the balance go?