Friday, June 29, 2012

1MDB Paper Profits

Pakatan: 1MDB account 'manipulated' to show profit

S Pathmawathy
5:38PM Jun 28, 2012

1Malaysia Development Berhad's (1MDB) accounts are "not as sound" as made out to be, claimed three opposition members of the Public Accounts Committee (PAC).

This is because the profits shown in the balance sheet submitted by the government's strategic investment arm had been propped up by the re-evaluation of parcels of prime land as well as the injection of loans, said Petaling Jaya Utara DAP MP Tony Pua (right).

At a press conference today, he said PAC chairperson Azmi Khalid claiming that the company is financially sound was an "unfair assessment".

Citing the company's statement of cash flow from March 2011, Pua noted that 1MDB's profits of RM544 million that year were paper gains.

As for the profits recorded in 2011, they were from the evaluation of 1MDB's property from RM194 million to a whopping RM827 million bringing the total value of 1MDB's property to RM1.02 billion, a 426 percent jump.

Record balance from loan

Pua said the parcels of land included government-owned plots in Jalan Cochrane and Jalan Imbi, were transferred to the company for the development of the Kuala Lumpur International Financial District (KLIFD) at a "much lower" cost.

He added that the company's cash flow also showed that the record[ed] balance was due a RM 2.06 billion loan.

"If it was not for the borrowing, the cash flow would have been negative, resulting in a loss for the financial year 2011.

"The reality is that 1MDB's accounts are manipulated to (reflect profit). It is not fair to conclude that the accounts are in order. Let's not assume that their cash flow is healthy," he said.

Selayang PKR parliamentarian William Leong reminded Azmi that it is wrong to come to that conclusion when 1MDB had refused to furnish six out of seven documents requested by the PAC.

The sole document furnished by the investment arm to PAC was its financial balance sheet for the year financial ended 2011.

"Once when we have everything required then we can conclude," said Leong with concurrence coming from Tumpat PAS MP Kamaruddin Jaffar (left).

[...]

In the past, when the PAC was probing the Port Klang Free Zone (PKFZ), every document sought was handed over to the parliamentary committee, he said.

"Why should it be any different with 1MDB?" he asked.

Kamaruddin added that they had expressed their concerns on the issue at yesterday's PAC's meeting and the Auditor-General's office has been asked to look into the company finances.
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