Audit Report: RM4.22 mln in loans still unrecovered due to management weaknesses of JPVNP

KUANTAN, April 1 (Bernama) — Weaknesses in the management of accounts receivable by the Pahang Veterinary Services Department (JPVNP) have resulted in RM4.22 million or 51.2 per cent of the Livestock Loan Scheme (SPT) loans still unrecovered even though the loan repayment period has expired.

According to the Auditor-General’s Report on the financial statements of the state government and state agencies as well as the state departments’ compliance audit tabled at the Pahang State Assembly today, the state government is at risk of losing revenue, as RM1.18 million of the total loan arrears had exceeded the enforceable period under the Limitation Act.

SPT was introduced in 2000 to replace the Pawah Scheme which was started in 1959, and offers loans for livestock such as cattle, buffaloes and sheep.

“Based on the SPT agreement, the borrower will repay all loans together with service fees from the second to the fourth year for goats or sheep, and the third to the fifth year for cattle and buffaloes.

“The total loan to be paid is the livestock price including a service fee of four per cent of the livestock value. The last SPT grant by JPVNP was in 2014, and repayment should end in 2018 and 2019 (according to livestock type),” according to the report.

However, an audit review of 236 samples with total arrears of RM4.22 million as of October 2020 found that 113 or 47.6 per cent of borrowers had not repaid their loans since the loans were approved, amounting to RM1.71 million, with 100 of them being individual borrowers.

Of the 113 borrowers, 69 borrowers with loans of RM1.18 million have loan arrears of more than six years, while nine individual borrowers and cooperative representatives have died and two company category borrowers have been dissolved.

Apart from that, the audit also found that 123 or 52.1 per cent of the borrowers still had outstanding loan balances amounting to RM2.51 million, where 10 individual borrowers and five representatives of cooperative and association borrowers have died, while three companies have been dissolved.

“The audit found that the warning notice to the borrowers was not issued according to the period stipulated in the SPT agreement. The notice was only issued starting in 2007. Legal action was taken late because the Notice of Reminder (NOR) was only issued by the Legal Adviser in 2019, while the Notice of Demand (NOD) against 29 borrowers will only be issued in 2020,” according to the report.

In addition, the JPVNP monitoring mechanism was also found to be less effective because monitoring through meetings was not carried out according to the set period while physical visits were not carried out according to standard operating procedures (SOP) making it difficult to monitor borrowers who still had arrears at the district level and action taken against them delayed.

Meanwhile, JPVNP in a reply on April 30, 2021, informed that as of April 12, 2021, a total of RM95,023.32 SPT payments were successfully collected including payments made by the heirs of deceased borrowers and six borrowers who had never made payments since the loan was approved.

It said a meeting on March 31, 2021, had decided that the problem of borrowers would be looked into for further action such as deciding on those who need to be taken to court, those who could have their payments reduced as well as those whose livestock died soon after receiving them.

Source: BERNAMA News Agency