1MDB announced that
The IWH-CREC Consortium has valued 100% of the Bandar Malaysia land at RM 12.35 billion. Accordingly, its 60% share of land will cost RM7.41 billion. 1MDB will receive a 10% deposit of RM741 million upon execution of the Share Sale and Purchase Agreement, with completion of the transaction expected by end June 2016.
On the other hand, China Railway Group announced that
On 31 December 2015, the Joint Venture entered into the Share Sale Agreement with 1MDB Real Estate (1MDBRE), pursuant to which the Joint Venture will purchase 60% of the equity interest in BMSB held by 1MDBRE at a price of MYR5.279 billion…
I had not made any immediate statement yesterday for the simple reason that such a glaring difference in the transaction price would have solicited an immediate clarification or response from 1MDB to allay market confusion.
Instead, unlike 1MDB’s usual speed in retorting its critics, absolutely nothing was issued yesterday. Such a tardy response over such a massive discrepancy only raises the suspicions of Malaysians and the global financial community.
Was it merely an innocent difference in the interpretation of the 'purchase price' for the 60% stake in Bandar Malaysia by the China-led consortium? For example, 1MDB was talking about the value of the land, while China Railway was talking about the actual purchase price. However, even such an explanation does not make sense as 1MDB clearly specified that a 10% deposit of RM741 million will be paid upon the signing of the agreement.
Or was it a schoolboy error in addition/subtraction by 1MDB on the actual transacted price?
Or was 1MDB giving an inflated figure to make the Prime Minister, Dato' Seri Najib Razak, look good? Perhaps 1MDB did not expect China Railway to make an announcement in Hong Kong Exchange, or that there would be parties who would actually read the announcement?
Regardless of which of the above is true, we know that historically, 1MDB statements must always be read with a heavy dose of scepticism as they often do not reflect the complete truth. Their statements are often shaped to tell you what they want you to know or think the situation is, and not to give you a complete understanding of the circumstances.
For example, when International Petroleum Investment Corporation (IPIC) advanced US$1 billion for 1MDB to repay its Deutsche Bank-led consortium loan, 1MDB wilfully failed to inform Malaysians that the Ministry of Finance had indemnified the transaction.
Or when 1MDB announced that it purportedly “redeemed” its investment from Cayman Islands without announcing exactly what was actually “redeemed” or where the funds went.
Therefore, we call upon 1MDB to make public the sales and purchase agreement signed between 1MDBRE and Iskandar Waterfront Holdings – China Railway Engineering Corporation consortium to ensure that there will be no ambiguity to the understanding of the agreement between the relevant parties.
That way, no one can accuse 1MDB of being selective in the information it reveals to the public and Malaysians will not be concerned if there are salient and substantive terms in the agreement which are possibly detrimental to the interest of 1MDB and the Malaysian tax-payers.