Last week, the Wall Street Journal (WSJ) shed light on US$993 million which was allegedly paid to International Petroleum Investment Corporation (IPIC) by 1MDB to buy back the latter’s options have not been properly accounted for. The above payment was not reflected in the audited accounts of IPIC. Instead, IPIC’s books showed that 1MDB still owes an additional US$481 million to the former for the termination of the options as at December 2014.
These options were granted to IPIC’s subsidiary, Aabar Investment PJS in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
Now, even as 1MDB is failing to explain where the “missing” US$993 million dollars went to if not to IPIC, the question also needs to be asked where the US$993 million dollars came from.
Wednesday, September 23, 2015
Tuesday, September 22, 2015
Deloitte Malaysia failed to properly account for 1MDB's cost of options, understates losses by at least RM3.24 billion
The Wall Street Journal (WSJ) reported on Thursday that US$993 million, which was allegedly paid to International Petroleum Investment Corporation (IPIC) by 1MDB to buy back the latter’s options, has not been properly accounted for. The options were granted to IPIC in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings, and 1MDB Energy (Langat) Sdn Bhd, as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
The above exposé raises another question of Deloitte Malaysia’s professionalism when auditing the accounts of 1MDB in 2013 and 2014.
The above exposé raises another question of Deloitte Malaysia’s professionalism when auditing the accounts of 1MDB in 2013 and 2014.
Monday, September 21, 2015
Was Deloitte Malaysia wilfully misled or negligent over the options granted by 1MDB to IPIC?
The Wall Street Journal (WSJ) reported on Thursday that US$993 million which was allegedly paid to IPIC by 1MDB to buy back the latter’s options have not been properly unaccounted for. The options were granted to IPIC in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
According to the March 2014 Financial Statement audited by Deloitte Malaysia, 1MDB claimed the proceeds of US$1.22 billion derived from the redemption of its investment in Cayman Islands was instantly and “substantially utilised to pay debt interest, Aabar options, working capital”. The sum used to redeem the options granted to Aabar Investment PJS, a subsidiary of IPIC, according to both The Edge and WSJ amounted to US$993 million.
However, this payment of nearly US$1 billion was not reflected anywhere in the IPIC financial statements for the year ending December 2014, which was audited by Ernst & Young. Instead, the statements disclosed that 1MDB still owes an additional US$481 million to IPIC for the termination of the said options.
In 1MDB’s responses since the above expose, the company failed to explain the “missing” billion dollars. Instead the company executives tried to obfuscate the matter by claiming that “despite the malicious and wrong second Wall Street Journal article on September 18, 2015, upon payment of the “nearly US$1 billion” deposit by 1MDB, the options over the energy assets have indeed been terminated”.
However, the WSJ never queried the termination of “the options over the energy assets”. WSJ asked if 1MDB had indeed paid “nearly US$1 billion” to terminate the options and IPIC’s accounts did not reflect any such payments received, where did the “nearly US$1 billion” go?
According to the March 2014 Financial Statement audited by Deloitte Malaysia, 1MDB claimed the proceeds of US$1.22 billion derived from the redemption of its investment in Cayman Islands was instantly and “substantially utilised to pay debt interest, Aabar options, working capital”. The sum used to redeem the options granted to Aabar Investment PJS, a subsidiary of IPIC, according to both The Edge and WSJ amounted to US$993 million.
However, this payment of nearly US$1 billion was not reflected anywhere in the IPIC financial statements for the year ending December 2014, which was audited by Ernst & Young. Instead, the statements disclosed that 1MDB still owes an additional US$481 million to IPIC for the termination of the said options.
In 1MDB’s responses since the above expose, the company failed to explain the “missing” billion dollars. Instead the company executives tried to obfuscate the matter by claiming that “despite the malicious and wrong second Wall Street Journal article on September 18, 2015, upon payment of the “nearly US$1 billion” deposit by 1MDB, the options over the energy assets have indeed been terminated”.
However, the WSJ never queried the termination of “the options over the energy assets”. WSJ asked if 1MDB had indeed paid “nearly US$1 billion” to terminate the options and IPIC’s accounts did not reflect any such payments received, where did the “nearly US$1 billion” go?
Sunday, September 20, 2015
1MDB Board of Directors must convene an emergency meeting to appoint an independent auditor to review 1MDB's Financial Statements for March 2013 and 2014
1Malaysia Development Bhd (1MDB) provided a quick and smug reply to my statement issued yesterday.
I had challenged 1MDB to deny the allegations carried in the Wall Street Journal (WSJ) reports that 1MDB’s US$1.4 billion “refundable deposit” and US$993 million payment to buy back its options from International Petroleum Investment Corporation (IPIC) was missing and unaccounted for in the latter’s financial statements.
1MDB claimed that
Unfortunately, the above “denials” were only attempts to obfuscate the issue but did not address the allegations made by WSJ.
I had challenged 1MDB to deny the allegations carried in the Wall Street Journal (WSJ) reports that 1MDB’s US$1.4 billion “refundable deposit” and US$993 million payment to buy back its options from International Petroleum Investment Corporation (IPIC) was missing and unaccounted for in the latter’s financial statements.
1MDB claimed that
"(a) despite the spurious and unproven allegations raised by the Wall Street Journal in its first article dated 9 September 2015, further to the US$1.4 billion (RM5.9 billion) deposit from 1MDB in 2012, IPIC was and remains, the guarantor of two 1MDB bonds totalling US$3.5 billion; and
(b) despite the malicious and wrong second Wall Street Journal article on September 18, 2015, upon payment of the “nearly US$1 billion” deposit by 1MDB, the options over the energy assets have indeed been terminated.
YB Tony Pua, the facts above speak for themselves."
Unfortunately, the above “denials” were only attempts to obfuscate the issue but did not address the allegations made by WSJ.
Saturday, September 19, 2015
1MDB must issue a joint statement with IPIC in the face of more allegations of missing funds
Ten days after allegations surfaced of a US$1.4 billion payment in 2012 from 1Malaysia Development Berhad (1MDB) to Abu Dhabi’s International Petroleum Investment Corporation (IPIC), The Wall Street Journal (WSJ) reported yesterday that another US$993 million remains unaccounted for.
Apparently officials in the Emirate were trying to trace the sum that 1MDB reportedly paid to the IPIC and this sum is not reflected in the latest IPIC financial statements for the year ending December 2014.
1MDB claimed in its March 2014 Financial Statements that in November 2014, it redeemed US$1.22 billion from its US$2.318 billion of funds mysteriously “invested” in the Cayman Islands. However, the proceeds were instantly and “substantially utilised to pay debt interest, Aabar options, working capital”.
As reported by The Edge Weekly previously, the sum of US$993 million from this redemption was used to buy back the options granted to IPIC to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd.
Now, the fear is that the amount of US$993 million is “missing”, in addition to the US$1.4 billion exposed earlier. Additionally, the IPIC financial statement disclosed that 1MDB still owes IPIC the amount of US$481 million in relation to the termination of the options.
Apparently officials in the Emirate were trying to trace the sum that 1MDB reportedly paid to the IPIC and this sum is not reflected in the latest IPIC financial statements for the year ending December 2014.
1MDB claimed in its March 2014 Financial Statements that in November 2014, it redeemed US$1.22 billion from its US$2.318 billion of funds mysteriously “invested” in the Cayman Islands. However, the proceeds were instantly and “substantially utilised to pay debt interest, Aabar options, working capital”.
As reported by The Edge Weekly previously, the sum of US$993 million from this redemption was used to buy back the options granted to IPIC to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd.
Now, the fear is that the amount of US$993 million is “missing”, in addition to the US$1.4 billion exposed earlier. Additionally, the IPIC financial statement disclosed that 1MDB still owes IPIC the amount of US$481 million in relation to the termination of the options.
Wednesday, September 16, 2015
Letter to the United Kingdom Listing Authority to seek clarification on "missing" US$1.4billion from IPIC accounts
Yesterday, I sent a letter to the United Kingdom Listing Authority (UKLA) requesting for UKLA to seek clarification from International Petroleum Investment Corporation (IPIC) on US$1.4 billion which is missing from its financial statements.
I have decided to write the letter because it appears that the financially distressed 1Malaysia Development Bhd (1MDB) is not at all concerned that its US$1.4 billion pledged as collateral with IPIC in exchange for a US$3.5 billion guarantee is reportedly "missing".
This matter was exposed by the Wall Street Journal last week but was met with disdain from 1MDB. The company was more interested in victimising the mystery whistleblowers than discovering the truth behind its funds.
I explained to the UKLA that the financial statements of 1MDB audited by Deloitte Malaysia stated clearly that the Company placed US$1.4 billion of funds with IPIC as a "refundable deposit". It is classified as a non-current asset under "other receivables, deposits and prepayments".
However, when scrutinising the listing prospectus of IPIC bonds which was listed in the London Stock Exchange in December 2014, the US$1.4 billion did not appear anywhere in the published accounts of the company. Neither was the sum disclosed in the December 2014 audited accounts of IPIC published on 30 June 2014.
I have decided to write the letter because it appears that the financially distressed 1Malaysia Development Bhd (1MDB) is not at all concerned that its US$1.4 billion pledged as collateral with IPIC in exchange for a US$3.5 billion guarantee is reportedly "missing".
This matter was exposed by the Wall Street Journal last week but was met with disdain from 1MDB. The company was more interested in victimising the mystery whistleblowers than discovering the truth behind its funds.
I explained to the UKLA that the financial statements of 1MDB audited by Deloitte Malaysia stated clearly that the Company placed US$1.4 billion of funds with IPIC as a "refundable deposit". It is classified as a non-current asset under "other receivables, deposits and prepayments".
However, when scrutinising the listing prospectus of IPIC bonds which was listed in the London Stock Exchange in December 2014, the US$1.4 billion did not appear anywhere in the published accounts of the company. Neither was the sum disclosed in the December 2014 audited accounts of IPIC published on 30 June 2014.
Monday, September 14, 2015
Najib should show sincerity in asking GLCs to re-invest overseas assets domestically by ensuring 1MDB does the same
Prime Minister Datuk Seri Najib Razak yesterday urged government-linked companies (GLCs) to cash in on their foreign investments and re-invest domestically to spur the local economy as one of the immediate measures by the special economic committee he had set up to look into the current economic situation.
"Most of these companies have made profit in their investments and now is the time to bring the investments back home," he said.
We agree in principle that Malaysian companies with excess funds overseas should take this opportunity of the weak ringgit to repartriate their foreign cash holdings and assets and seek new business opportunities in the country.
However, for the Prime Minister’s call to be sincere, he must first direct 1Malaysia Development Bhd (1MDB) to bring back its billions of ringgit of funds and assets still parked unproductively overseas, to be reinvested in Malaysia.
"Most of these companies have made profit in their investments and now is the time to bring the investments back home," he said.
We agree in principle that Malaysian companies with excess funds overseas should take this opportunity of the weak ringgit to repartriate their foreign cash holdings and assets and seek new business opportunities in the country.
However, for the Prime Minister’s call to be sincere, he must first direct 1Malaysia Development Bhd (1MDB) to bring back its billions of ringgit of funds and assets still parked unproductively overseas, to be reinvested in Malaysia.
Friday, September 11, 2015
1MDB more interested in removing me as a PAC member than the missing US$1.4 billion as exposed by WSJ
I'm bemused by the eagerness of 1Malaysia Development Bhd to remove me as a member of the Parliamentary Public Accounts Committee (PAC).
1MDB urged yesterday, "now that YB Tony Pua is under investigation by the police, we urge YB Tony Pua to practise what he preaches to others and step down from the PAC, while he proves his innocence on the various allegations made against him".
1MDB should first get their facts right. I've been specifically informed by the Police that I am being questioned only as a witness to their investigations. Is 1MDB saying that I should quit my place in the PAC just because I'm assisting investigations as a witness?
However, even if I were being investigated for alleged crimes under the penal code section 124B for "activities detrimental to parliamentary democracy", regardless of how ridiculous the allegations are, how is that in conflict with the investigations into the RM42 billion 1MDB scandal?
If 1MDB is trying to tenuously highlight similarities between the case of the Prime Minister, Dato' Seri Najib Razak with my case, then they have failed miserably. The Prime Minister is being investigated for receiving an incredible RM2.6 billion from a foreign party as well as millions in transfers from a Ministry of Finance subsidiary, SRC International Sdn Bhd.
Hence in this case, Dato' Seri Najib Razak must go on leave to allow for independent investigations into the scandal where he himself is the suspect. Similarly, Dato' Seri Najib Razak signed all approvals for the questionable multi-billion transactions in 1MDB. Surely you cannot have a criminal suspect remaining in a position of power where he continues to direct or have influence over the investigations?
In my case however, I'm not a suspect in the case of billions of ringgit embezzled from 1MDB, nor have I received any donation from 1MDB. So why on earth should I step down from the PAC investigating the financially distressed company as I pose no conflict of interest?
1MDB urged yesterday, "now that YB Tony Pua is under investigation by the police, we urge YB Tony Pua to practise what he preaches to others and step down from the PAC, while he proves his innocence on the various allegations made against him".
1MDB should first get their facts right. I've been specifically informed by the Police that I am being questioned only as a witness to their investigations. Is 1MDB saying that I should quit my place in the PAC just because I'm assisting investigations as a witness?
However, even if I were being investigated for alleged crimes under the penal code section 124B for "activities detrimental to parliamentary democracy", regardless of how ridiculous the allegations are, how is that in conflict with the investigations into the RM42 billion 1MDB scandal?
If 1MDB is trying to tenuously highlight similarities between the case of the Prime Minister, Dato' Seri Najib Razak with my case, then they have failed miserably. The Prime Minister is being investigated for receiving an incredible RM2.6 billion from a foreign party as well as millions in transfers from a Ministry of Finance subsidiary, SRC International Sdn Bhd.
Hence in this case, Dato' Seri Najib Razak must go on leave to allow for independent investigations into the scandal where he himself is the suspect. Similarly, Dato' Seri Najib Razak signed all approvals for the questionable multi-billion transactions in 1MDB. Surely you cannot have a criminal suspect remaining in a position of power where he continues to direct or have influence over the investigations?
In my case however, I'm not a suspect in the case of billions of ringgit embezzled from 1MDB, nor have I received any donation from 1MDB. So why on earth should I step down from the PAC investigating the financially distressed company as I pose no conflict of interest?
Tuesday, September 08, 2015
NST and Berita Harian spinning 'conspiracy theories' to distract from billions of ringgit embezzled and lost from 1MDB
Various news reports over the past 2 days in The New Straits Times and Berita Harian has alleged or insinuated that I have been part of a conspiracy “to topple” the Prime Minister, Dato’ Seri Najib Abdul Razak.
As I have stated many times previously, I am involved in no such “conspiracy” with any party. I was however very eager to discover the truth behind the RM42 billion 1MDB scandal which has rocked the nation, where the documents proving the embezzlement of billions of ringgit has not been specifically disputed by both 1MDB or the Prime Minister.
As I have stated many times previously, I am involved in no such “conspiracy” with any party. I was however very eager to discover the truth behind the RM42 billion 1MDB scandal which has rocked the nation, where the documents proving the embezzlement of billions of ringgit has not been specifically disputed by both 1MDB or the Prime Minister.
After latest WSJ exposé, 1MDB must come clean over the US$3.5 billion bond arrangements and guarantee by IPIC
The Wall Street Journal (WSJ) once again raised another multi-billion ringgit question mark on where the money from 1Malaysia Development Bhd (1MDB) went.
When 1MDB issued 2 bonds worth US$1.75 billion each in May and October 2012 respectively, the loans were strangely guaranteed by International Petroleum Investment Corporation (IPIC), the sovereign wealth fund of Abu Dhabi.
As a condition, it was stated in the 1MDB 2013 and 2014 Financial Statements that 40% of the proceeds of the borrowings, or US$1.4 billion was to be kept as a “refundable deposit” as a collateral to the above guarantees. This is on top of 1MDB granting up to “49% equity interest in Powertek Investment Holdings and 1MDB Energy (Langat) which held 1MDB’s power plant acquisitions from Tanjong Energy and Genting Sanyen.
However, as rightly pointed out by the Wall Street Journal, the US$1.4 billion does not appear anywhere in the financial statements of IPIC for the year ending 31 December 2013 and 2014, which was audited by Ernst & Young.
When 1MDB issued 2 bonds worth US$1.75 billion each in May and October 2012 respectively, the loans were strangely guaranteed by International Petroleum Investment Corporation (IPIC), the sovereign wealth fund of Abu Dhabi.
As a condition, it was stated in the 1MDB 2013 and 2014 Financial Statements that 40% of the proceeds of the borrowings, or US$1.4 billion was to be kept as a “refundable deposit” as a collateral to the above guarantees. This is on top of 1MDB granting up to “49% equity interest in Powertek Investment Holdings and 1MDB Energy (Langat) which held 1MDB’s power plant acquisitions from Tanjong Energy and Genting Sanyen.
However, as rightly pointed out by the Wall Street Journal, the US$1.4 billion does not appear anywhere in the financial statements of IPIC for the year ending 31 December 2013 and 2014, which was audited by Ernst & Young.
Tuesday, September 01, 2015
If BN wants to win back Malaysian votes, they should look at their own policies and statements, instead of blaming journalists
The Malay Mail Online reported yesterday that Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi urged journalists from non-mainstream media to help paint Barisan Nasional (BN) in a good light, in the ruling coalition’s bid to reclaim the support of Chinese and Indian voters.
The Deputy Prime Minister got his priority completely wrong. It is not the role of journalists to “help paint” BN in a good light. It is the role of the journalists to report the facts and the truths of events and activities. If the truth paints anyone in the bad light, regardless of whether it is the ruling party or the opposition, the fault lays with the relevant parties themselves, and not the journalists.
If the Deputy Prime Minister is really sincere about winning back the votes from the rakyat, particularly from the non-Malay community, then the first step must start from himself and UMNO.
The Deputy Prime Minister got his priority completely wrong. It is not the role of journalists to “help paint” BN in a good light. It is the role of the journalists to report the facts and the truths of events and activities. If the truth paints anyone in the bad light, regardless of whether it is the ruling party or the opposition, the fault lays with the relevant parties themselves, and not the journalists.
If the Deputy Prime Minister is really sincere about winning back the votes from the rakyat, particularly from the non-Malay community, then the first step must start from himself and UMNO.
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