press statement

17 Jun 2011

711 SETTLERS FILE SUIT AGAINST FELDA FOR FRAUD 7 BREACH OF TRUST

CLAIMING LOSSES OF UP TO RM344 MILLION RINGGIT

Tis morning at the Temerloh High Court, 711 FELDA Settlers from 16 Rancangan Felda Jengka in Jengka Pahang through their soloicitors M/s Daim & Gamany, filed a suit against Felda (1st Defendant) for fraud and breach of trust.

The settlers were contractually bound by the 1st Defendant to exclusively deliver their oil palm yield (hasil sawit) to the 2nd Defendant and they have always been paid at a lower rate of the oil extraction grade (Oil Extraction Rate "OER") for the last 15 years - averaging at 18.5% as stated in the Akuan Penerimaan BTS i.e. the receipt that is given for each truck delivery of fruit bunches. There is no clear basis or information on how the 2nd Defendant came to thesedifferent rates which were givven on a daily basis at the point of each delivery.

The settlers suspected something were amiss when they realised that they could never match the recommended rate from the Malaysian Palm Oil Board (MPOB) which were higher. In January 2010, the Federal Court orderd FELDA to pay11 million ringgit in damages to settlers in the Kemahang 3 scheme in Kelantan for cheating them over the oil palm extraction rate.

The settlers through their representatives sent raqndom samples of their fruit yields to independent laboratories to assess the actual rate of the OER. The results from the lab tests showed a much higherr average rate of 27%. This would mean a difference of an average 8.5% over the rate used by the 2nd Defendant.

We have evidence to show that in the year 2008, the 711 settlers from 16 rancangan Felda in Jengka had delivered at average of yield of 120 metric ton per settler. The settlers were paid by FELDA the average price of RM560.00 per ton the same year. Using the figure of 8.5% lost to the settlers, FELDA has caused a loss of RM257.60 per ton which works out to about RM30,912.00 to each settler fot he year 2008 alone.

FELDA has also deducted their fruit yields improperly by deducting an average of 200 kg per month for disqualified fruit bunches but they did not return the fruit bunches to the settlers. This led to a further loss of RM560.00 x 2.4 or RM1344.00 per year per settler or RM14,333,760.00 for all the settlers over the 15 year claimm period.

This means that over the last 15 years, FELDA has caused a loss to these 711 settlers to the tune of more than RM344 million.

Through this writ summons and the process of discovery in court, we will obtain the exact production figures for all the other schemes involved here to compute the exact loss over the claim period to the settlers.

The settlers are also claiming exemplary damages as they contend that FELDA, as the statutory authority set up by law to look after the welfare of the settlers has instead exploited its position of power and authority over the settlers and committed fraud and breach of trust.

Released by:

Sivarasa Rasiah (Lead counsel for the settlers).

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The Federal Land Development Authority (FELDA) is facing more legal suits from participants in its land schemes, the latest from 711 settlers in Jengka, Pahang, filing a RM344 million case against it for fraud and breach of trust in the High Court in Temerloh.FELDA has already seen suits from settlers in Kelantan, Johor and Negri Sembilan, with the case taken up by the settlers in Jengka being the latest – and largest – in Peninsular Malaysia.

The suit was filed through solicitors M/s Daim & Gamany this morning, with Subang MP Sivarasa Rasiah acting as lead counsel.The settlers named FELDA and FELDA Palm Industries Sdn Bhd, as defendants.

In their statement of claim, they said they were contractually bound by Felda to deliver their oil palm yield exclusively to FELDA Palm Industries. They have always been paid a lower oil extraction rate the last 15 years – averaging at 18.5 percent as stated in the Akuan Penerimaan BTS, the receipt that is given for each truck delivery of fruit bunches, they said.

The settlers suspected something amiss when their oil extraction rates could never match the higher recommended rate of the Malaysian Palm Oil Board, and they then sent random samples of their fruit yields to independent laboratories to assess the actual oil extration rate.

The results from the lab tests showed a much higher average rate of 27 percent, which would mean an average difference of 8.5 percent over the rate paid them by FELDA Palm Industries.

Statistics in question

The 711 settlers, who are from 16 Felda programmes in Jengka, also claim to have evidence to show that they had delivered at an average yield of 120 metric tonnes per settler in 2008, for which Felda paid them an average of RM560 a tonne.

Using the figure of 8.5 percent lost to the settlers, they said, FELDA Palm Industries paid them RM257.60 less for every tonne, which worked out to be a loss of RM30,912 for each settler in 2008 alone.

They also claimed that FELDA had deducted their fruit yields improperly by subtracting an average of 200kg a month for "disqualified" fruit bunches, without returning the fruit bunches to the settlers. This led to a further loss of RM1,344 a settler a year, or RM14,333,760 for all the settlers over the 15-year claim period.

They claimed that over the last 15 years, FELDA caused the 711 settlers to suffer losses of more than RM344 million.

Through this writ of summons and the process of discovery in court, the settlers said, they hoped to obtain the exact production figures for all the other schemes involved to compute a more accurate measure of their losses over the claim period.

The settlers are also seeking exemplary damages as they contend that FELDA, as a statutory authority set up by law to look after the welfare of the settlers, had instead exploited its position of power and authority over the settlers and committed fraud and breach of trust.

Suit comes after FELDA Kemahang success

The suit by the Jengka settlers follows the success of the FELDA Kemahang 3 settlers, who were awarded RM11 million last year in their suit against felda. On Monday, the High Court in Kota Baru awarded the FELDA Kemahang 1 and 2 settlers RM1.2 million in a similar suit they took up.

Felda was ordered to pay the FELDA Kemahang 3 settlers RM11 million for cheating them by stating the grade of their oil palm fruit to be of a lower grade. FELDA appealed, but the appeal was thrown out.

With this decision, the FELDA Kemahang 3 settlers are expected to receive between RM25,000 and RM30,000 each in the first suit of its kind against Felda.  The landmark decision has been seen to be a big blow to FELDA and the government, for FELDA is regarded as a backbone of the Malays and bumiputera community and a 'safe deposit' for BN, for it could lead to more law suit.

And this happened, with 766 Felda settlers from Rancangan Serting and Gugusan Raja Alias in Negeri Sembilan seeking damages totalling RM200 million from Felda in a suit filed last August.

Prior to this, 400 settlers from FELDA Maokil in Labis, Johor, filed a RM71.8 million suit against Felda on June 12, 2009.

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