Is SRC International’s 50:50 joint venture with Mongolian company, Gobi Coal & Energy Ltd another multi-billion ringgit PetroSaudi-like scam waiting to be exposed?
SRC International Sdn Bhd is an anonymous-sounding company owned by the Ministry of Finance. However, a peek into the company’s short history and balance sheet raises plenty of suspicion-arousing question marks.
I have asked for my oral question yesterday on whether SRC International Sdn Bhd had invested in a Mongolian energy company and what are the details of the investment and its current status. I received the shortest of written response from the Minsitry of Finance late yesterday afternoon.
The Minister of Finance responded that SRC International had invested in “Gobi Coal & Energy Ltd, an energy company based in Mongolia. The investment was made jointly with international investors, with each owning 50%.”
However, the Minister refused to provide any other details, other than a waste of space statement that “every investment by the joint venture company is conducted in accordance to good business practices by taking a long-term perspective and considering the short-term volatile nature of market prices. At the same time, the company expects the prices and return on investment will increase in the longer term for natural resources.”
The answer is scary because it sounded exactly the same when I had queried the Minister over the past few years about 1Malaysia Development Bhd’s (1MDB) 2009 US$1 billion joint venture investment in PetroSaudi. It was only last month after the Joint Venture Agreement was exposed when we found out that the PetroSaudi joint venture was an elaborate scam to immediately siphon US$700 million into a company controlled by Jho Low and his associates.
Malaysians are extremely concerned because SRC International had secured a RM4 billion Islamic loan from Kumpulan Wang Amanah Persaraan (KWAP) which was guaranteed by the Federal Government. This loan was disbursed in two tranches in August 2011 and March 2012.
Interestingly, the latest financial statements ending March 2014, which was audited very coincidentally by Deloitte Malaysia and also filed on 5 November 2014 to the Companies Comission, the same day as that 1MDB’s financial statements were submitted after more than a month’s delay.
More worryingly, just like 1MDB, SRC International has no representatives from the Ministry of Finance. The Company is led by Nik Faisal Ariff Kamil with the 3 other directors being Datuk Suboh Md Yassin, Dato’ Che Abdullah @ Rashidi Che Omar and Dato’ Mohd Azhar Osman Khairuddin.
Nik Faisal has recently gained infamy as a loyal sidekick of Jho Low who followed the latter in UBG Bhd as the Executive Director of Investments in the late 2000s before also becoming the Chief Investment Officer of 1MDB. At 1MDB, as the email correspondence exposed in Sarawak Report reveal, he was the point man for Jho Low to coordinate multi-billion ringgit transactions, specifically the acquisition of UBG Bhd by PetroSaudi International (Seycelles).
Most coincidentally as well, SRC International which was set up only in 2011 as a wholly-owned subsidiary of 1MDB, was hastily removed from 1MDB’s books before the end of March 2012, and parked directly under the Ministry of Finance. This modus operandi appears similar to how the PetroSaudi joint venture was terminated and converted into a loan on the very last day of the March 2010 financial year to avoid having to report the details of the venture. On both occasions, the auditors were again, coincidentally, KPMG.
The latest financial statement states that SRC International made a loss of RM164.4 million and has total liabilities amounting to RM4.34 billion.
The circumstances around SRC International and 1MDB are perhaps just too similar, coincidental and suspicious to be ignored. We call upon the Minister of Finance to publish the Joint Venture agreement for Gobi Coal & Energy Ltd and give detailed financial status of the investment by SRC International. At the same time, we call upon the Auditor-General to investigate this highly mysterious company for any shenanigans together with the current special audit taking place in 1MDB.
Malaysia has faced enough of international scandals and embarrassments on its shockingly lack of corporate governance. We do not need another multi-billion ringgit scandal to make us the butt of jokes in the international diplomatic and financial community.