CTRM- Another sick investment

Only RM25m recovered from investment in US firm

KUALA LUMPUR: After investing RM537.04mil in the US-based Columbia Aircraft Manufacturing Corporation (CAMC) through Composites Technology Research Malaysia Sdn Bhd (CTRM), the Government only managed to get back RM25mil.
The 2007 Auditor-General’s Report stated that CTRM, owned by the Finance Ministry Incorporated and Petronas, invested and lent RM537.04mil to CAMC as of September last year.
CAMC, which produced four-seater light aircraft suffered an accumulated loss of US$132.28mil (RM480.18mil) at the end of 2006 and filed a bankruptcy notice at an Oregon court on Sept 24 last year.

On Nov 27 last year, Cessna, which produces two-seater light aircraft, bought over CAMC for US$16.50mil (RM56.27mil).

The US court then awarded the Finance Ministry of Malaysia loan and interest of US$4.29mil (RM14.63mil) and US$3.04mil (RM10.37mil) to CTRM as payment for debtors in possession.
The A-G's Report said CTRM’s investment failure was due to unscrupulous spending by its senior management officers, CAMC’s board of directors being unable to tackle production of aircraft quickly and the Finance Ministry Incorporated's lack of monitoring of CAMC.

CTRM, set up in 1990 with the aim of expanding into the aerospace and the composite industry, recorded an unusual sum of profit in 2006. The A-G's Report stated that the profit recorded was not generated from its business activities but due to the government’s decision to waive interests on the loan given to CTRM.

From 1999 to 2003, CTRM received government loans amounting to RM362.10mil.
In 2006, CTRM recorded a pre-tax profit of RM191.19mil but in 2005, it suffered losses of RM38.18mil. In 2007, its pre-tax profit was RM1.44mil.

In its reply to points raised in the A-G's Report, it said the profit in 2006 was due to loan restructuring from the Government where interest was waived and CAMC shares, bought with funds from the Government, was transferred back to the Government.
It said pre-tax profit in 2006 without taking into consideration CAMC shares and the interest waiver was RM2.1mil.