Datuk Seri Najib Razak cannot have his cake and eat it too by calling for the Auditor-General to conduct a full investigation into 1Malaysia Development Bhd but clears the Company of any misconduct in the very next breath!
We are pleased that after literally years of pressure, the Datuk Seri Najib Razak Cabinet has finally succumbed to instructing the Auditor-General to conduct a full investigation into the financially stricken 1Malaysia Development Bhd (1MDB). Unfortunately, it has taken an explosive expose by the Sarawak Report which published documents and emails pointing towards brazen shenanigans in the deals transacted all the way back in 2009 for the Cabinet to act.
However, we are at the same time flabbergasted that the Prime Minister, in the very same breath cleared 1MDB of any wrongdoing.
Cabinet expressed confidence that no wrongdoing has been committed within 1MDB, and their desire for the company to be allowed to implement the proposed outcomes of its strategic review.
Cabinet was told that the recent allegations directed at 1MDB relate to transactions undertaken by third parties such as Petrosaudi, not 1MDB. The relevant investments of 1MDB have been returned in full with significant audited profit.
This half-past six Cabinet must think Malaysians are complete fools, for how can 1MDB be cleared before even the Auditor-General starts his investigations? How can the Cabinet listen to 1MDB and its external auditors for less than 2 hours, without listening to any other parties and immediately accept all the explanations without question?
Just because our half-past six ministers didn’t understand the complex financial shenanigans which took place within 1MDB does not give them to right to “clear” the financially stricken firm. After all, if 1MDB was managed so well, why has the company accumulated more than RM42 billion in debt and had to beg local tycoon Tan Sri Ananda Krishnan for a RM2 billion emergency loan? Subsequently, 1MDB had to further appeal for another RM3 billion bailout by Putrajaya.
In fact if the Cabinet Ministers had even bother to read and understand the documents and emails exposed by the Sarawak Report, they would have realised that 1MDB may have been stupid, but they were fully complicit in the various shenanigans that took place resulting in massive losses for the company.
We call upon the Auditor-General to commence investigations on 1MDB immediately and deliver a preliminary report within 15 days to the Public Accounts Committee (PAC).
This report should include, but not be limited to:
1. Auditing and identifying the redemption trail of the investments in Cayman Islands and the whereabout of its proceeds. In particular, the Auditor-General should trace the money trail of the latest US$1.103 billion redemption in January from Cayman Islands to the overseas bank account the 1MDB where the cash supposedly parked. This is because 1MDB has refused to date, to repatriate these funds back to Malaysia where it nearly defaulted on a RM2 billion loan.
2. Auditing and identifying the exact investment holding, true value and whereabouts of RM13.39 billion of “Level 3 Assets” identified in the March 2014 Financial Report. The figure includes the RM7.71 billion of investment in Cayman Islands which was declared as “redeemed”. “Level 3 Assets” are where “fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).”
3. Confirm if 1MDB had to stoop to borrowing RM2 billion from local tycoon Tan Sri Ananda Krishnan to repay its debt and determine 1MDB’s cashflow shortage to meet its RM42 billion debt obligations as well as contract commitments which is likely to require Government bailout. This is especially pertinent given the failure of 1MDB’s external auditors to red flag the risk of insolvency when they signed of the latest financial report on 5 November 2014.
4. Confirm if all historical emails in the 1MDB mail server has been “wiped out” in December last year, as claimed by Sarawak Report.
Finally, the Auditor-General should conduct a forensic audit of 1MDB with the assistance of professional forensic auditors to uncover any financial shenanigans in the company particularly in the light of expose by the Sarawak Report and the mind-boggling PetroSaudi transactions from 2009 to 2012. The engagement of external professional forensic accountants is not new, as PricewaterhouseCoopers was engaged to conduct a special audit on the RM12.5 billion Port Klang Free Zone (PKFZ) scandal in 2009.
We look forward to working closely with the Auditor-General to ensure that any culprits who abetted or caused 1MDB to suffer from multi-billion ringgit losses will be prosecuted in court and punished for their treacherous conduct.