The Future of the Clubhouse and Golf Course

Photo: Khoi Tran (Unsplash)

A few residents have contacted us to express an opinion on the latest communications from the Homeowners Association on the future of the lease of the Malaysian properties. We have agreed to a brief article on the matter.

The Estate is in an untenable position whether it continues to lease the Clubhouse, Golf Course and Boat Club or not. Under the current usufruct lease agreement, the Homeowners Association is responsible for the maintenance of these properties. Should the properties be purchased by the Homeowners Association it will continue to be maintained by the members.

It is highly unlikely that the Malaysians will donate one of their prized balance sheet properties to the Homeowners Association. The R60 million bond registered by Country Heights Berhad in favour of its subsidiary Magnitude Knight may be a good indication, if the Malaysians agree to sell, of the cost involved for Homeowners. The Homeowners Association has been unable to secure financing from traditional financial institutions because it owns no fixed assets that can be used as surety. If it buys the Malaysian assets, it may offer the properties as security to obtain a bond. Should the bond application be successful, the cost of the bond will be recovered from members of the Homeowners Association in addition to the cost of maintaining the properties. Any suggestion that the proceeds from operations of these properties will pay for its purchase is a fallacy.

Country Heights Berhad is a profitable organization registered on the Malaysian stock exchange. It is in business to make a profit for its investors. The Homeowners Association is a not-for-profit organization which has morphed unsuccessfully into a for profit company since entering into the Malaysian lease agreement.

Both the Malaysians and the Homeowners Association have been unable to operate the properties on a profitable basis. Altering the Memorandum of Incorporation (MOI)

of the Association to a profitable enterprise will be meaningless and another funnel for corruption unless a solid, realistic, and actionable business plan with strict oversight policies is in place. As part of this plan the composition of the Pecanwood Board and the management style of the Association will have to change. This is highly unlikely to happen because of the entrenched corrupt practices of the ruling residents’ faction.

It is our view that the lease or purchase and the operations of the Malaysian properties be separated completely from the Homeowners Association. A separate for-profit company should be registered, and measures be put in place to operate it for the benefit of investors. Property owners on the estate should have an option to purchase shares in the enterprise and carry the costs involved rather than forcing all members of the association to carry the astronomical costs of the current financial arrangement. Investor funds should be used to either continue with the lease or fund the purchase of the property.

© Pecanwood Corruption Watch