Selangor govt asked to explain RM10 million investment in struggling company

The Selangor government has been urged to explain an investment into a local company facing accumulated losses of RM4.7 million for the e-wallet project in the state.

Gombak Setia assemblyman Hilman Idham said the company in question, WavPay System Sdn Bhd, had a cash capital of RM200,000.

"What reasonable justification could there be for the state government to inject RM10 million into a company that has no assets and no income?

"Even more surprising is that despite such a large investment, the state government only received a 49% stake and maybe some golden shares," he said during the debate at the Selangor legislative assembly today. 

The state government through Menteri Besar Selangor Incorporated made the purchase of RM10 million for a 49% equity holding.

It was part of efforts for the development of digital infrastructure, an agenda on the One Selangor Plan recently introduced by Selangor Menteri Besar Amirudin Shari.

The One Selangor Plan is a five-year roadmap for the state government, modelled after the Malaysia Plan. 

Hilman's review showed that the company had recorded losses of RM1.9 million for the financial year ending Dec 31, 2021, while accumulated losses since 2017 had topped RM4.7 million.

The company was expected to develop an e-wallet service as a payment gateway for state government affairs, departments and agencies. 

But despite the size of the investment, Hilman said, the state government would not have control over the management, assets or data of the company without a majority stake. 

"The due diligence report by consultants and state government officials shows a significant value gap between the amount of investment and the company's financial position," he said. 

"Does the state government doubt the ability and capacity of subsidiaries such as Selgate Corporation, the owner of the Selangkah application, to lead the Selangor e-wallet project?"