Malaysians can only react in horror when the Treasury-General can claim that the RM42 billion 1MDB scandal is only a “small issue involving one firm”.
Bernama reported yesterday that 1Malaysia Development Bhd (1MDB) is a “small issue involving one company, which is current undergoing a restructuring process,” according Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah.
1MDB is a wholly-owned subsidiary of the Ministry of Finance and it has accumulated a litany of financial and governance scandals over the 5 years resulting in its current inability to service its monster RM42 billion of debt.
1MDB signed a joint venture with PetroSaudi where US$700 million was immediately siphoned off to a completely unrelated third party. The Company took billions of ringgit of additional loans to lend to PetroSaudi, a company with no track record.
It overpaid for all its power plant acquisitions in its attempt to “diversify” its business. In turn, 1MDB took on even more debt, RM20.9 billion to acquire these overpriced RM12.1 billion of assets.
In March 2013, 1MDB took on another US$3 billion of bonds purported for another joint venture that never materialised and the money has since been abused for other purposes and “invested” in funds which are not properly accounted for.
The Cabinet Ministers and the Government persistently told Malaysians that everything is in order and that 1MDB is a healthy company with a strong balance sheet. The Finance and Prime Minister Dato’ Seri Najib Razak himself, assured the Parliament in October last year that neither 1MDB will not require a bailout nor will the Government bail it out.
And now it requires 1MDB has been given the first cash injection by the Ministry of Finance amounting to RM950 million to help the company service its debts. More debts will be due in the coming months where 1MDB will be unable to repay.
Second Finance Minister, Dato’ Seri Husni Hanadzlah, for the first time, conceded that the current monster RM42 billion debt structure in 1MDB was “unsustainable” and admitted that 1MDB was facing a liquidity crunch.
The question must be asked as to how the Treasury-General allowed 1MDB to degenerate to such a deplorable financial state? Where was the governance which Tan Sri Irwan Serigar should and could have put in place to prevent such a gargantuan fiasco which has become an international case study for financial mismanagement?
Why did the Ministry of Finance appoint a representative in 1MDB’s board of directors to ensure that all decisions by the “strategic development fund” are made with the necessary transparency and due diligence?
As the top civil servant looking after the interest of the tax-payers’ monies, Tan Sri Irwan has failed in fulfilling his responsibilities with regards to the tens of billions of ringgit possibly lost in the 1MDB scandal, and he now has the cheek to tell Malaysians that it is “a small issue involving just one company”?
Such nonchalant attitude from the powerful Treasury-General certainly does not breed any confidence that the 1MDB scandal can be resolved in the interest of Malaysians as it appears that it is more important to cover up the scandal so that it doesn’t further affect the plunging image of his political masters.