A special fund channelled to several states for the purpose of helping the poor has been used for unrelated matters, according to the Auditor-General's Report 2005.

Among others, the money has been used to renovate the official residences of menteris besar and to buy equipment for private television station ntv7.

Apart from this, money from the fund was also used to erect billboards advertising impending visits by Prime Minister Abdullah Ahmad Badawi as well as his deputy, Najib Abdul Razak.

According to the report, the fund is made up of money from national oil giant Petronas, which is channelled by the Treasury to certain state governments via the state development and finance agencies.

The fund was initially Petronas' royalty payment to Terengganu but this was later converted to a special government fund after PAS won power in the state in 1999 so as to deprive the Islamic party from accessing the money.

For the period between 2001 and 2005, a total of RM1.63 billion has been allocated. Of this figure, RM1.04 billion has been spent.

Apart from Terengganu which received the lion share of the fund, it was decided later that other poorer states also received some the money - Kedah, Kelantan, Perlis, Pahang and Negeri Sembilan.

Carpets and pin labels

The report said Kedah was allocated RM40 million between 2003 and 2005.

Apart from putting up billboards on the premier and deputy premier's visits, the state government had also used the money to buy pin labels for dignitaries as well as hats and clothes for the state assembly's march pass team in conjunction with the Merdeka celebrations.

The state government also used money from the fund to pay for the carpets and 'timber blinds' in the menteri besar's office as well as filming equipment for ntv7 crews.
According to the report, based on the feedback received from the Treasury, these expenses occurred on the orders of the Kedah menteri besar.

The report also revealed that RM110,000 from the fund was channeled to Puteri Umno Sungai Petani based on a working paper to set up a tuition centre.

The payment should have been made based on the monthly claims submitted by the centre's teachers instead, said the report.

The report also disclosed that 700 computers worth RM2.10 million were bought with the fund's money without calling for tender in 2004. The computers were to be distributed to the village security and development committees in the state.

Another RM190,374 was spent by the state without the Treasury's approval for among others, congratulatory messages in newspapers and office equipment.

Meanwhile, Negeri Sembilan took out RM5.44 million from the special fund allocated to it to acquire furniture for the Seremban and Port Dickson district councils administration office.

Another RM4.50 million was used to convert the state's official guest house into the menteri besar's residence.

Religious and cultural complex

Terengganu, where the allocated special fund for 2004-2005 amounted to RM665 million, used the money to pay for the management and development cost of the state.

Although the money was used for matters unrelated to the fund's objectives, the state government had obtained the approval from the Treasury, read the report.

Perlis, on the other hand, used RM17,800 from the fund to pay for a nation building course attended by its employees. The report said the Perlis state development agency should have paid for this.

Pahang spent RM0.92 million from the fund to finance the additional cost incurred in the construction of the Islamic Council and Malay Cultural complex.

The report stated that the additional cost should have been borne by the Pahang Islamic Council.

In Kelantan, projects involving the special fund were implemented after obtaining the agreement from the state Umno liaison committee chairperson instead of the implementation coordination unit director-general or the Prime Minister's Department.