I responded that perhaps, Mr Arul Kanda has forgotten that he has been forced to admit that the power plant assets which were acquired for RM12.1 billion was sold for a loss at RM9.83 billion. The proceeds was used to pay off RM950 million of the Federal Government’s emergency loan granted last year. However, US$3.5 billion (RM13.6 billion) worth of bonds which were raised to purchase these power plants remains outstanding!
I added that I am flabbergasted by Arul Kanda’s definition of “success, against all odds”.
Mr Arul Kanda is upset at being told the truth. He now says I have “conveniently forget(ten) to mention that whilst 1MDB purchased the power assets at approximately RM12 billion and sold it at RM9.83 billion, the company also received approximately RM2 billion in cash dividends during the period of ownership, which totals RM11.83 billion i.e. a cash-on-cash, near "break-even" position. YB Tony knew this fact, as recorded in the Hansard of my explanation during the PAC proceedings, yet he chose to hide it and mislead the Malaysian public.”
Hence I have attached 2 pages of the relevant proceeding from the Hansard with regards to the above.
As can be read, I had reminded Arul Kanda, and the BN MPs present, that if you chose to take into consideration the purported RM2 billion dividends, then you must similarly take into consideration the cost of the loans taken to acquire these power plants.
In turn, Arul Kanda responded that
“I think apa yang Yang Berhormat Petaling Jaya Utara katakan adalah betul daripada segi accounting disebabkan the rules of accounting, you have to treat certain expenses in a certain way and dividend in certain way.
Akan tetapi kalau kita lihat dari segi cash on cash, maknanya kita masukkan RM12 bilion cash equity. Kita dapat balik RM9.83 bilion cash equity dan juga kami telah terima lebih kurang RM2 bilion cash dividend. Maknanya cash on cash breakeven.
Akan tetapi accounting treatment Yang Berhormat Petaling Jaya Utara betul. The accounting treatment is your dividend goes out because you are paying interest. So, the cost of interest is a loss to the company.”
Any businessman or accountant, upon hearing the above arguments from Arul Kanda will be laughing their pants off. He conceded that I was correct in my “proper accounting”
calculations because interest costs amounting to a whopping RM3.5 billion or more must be taken into account if 1MDB were to take into account the dividends.
However, no one would understand what the heck is Arul Kanda’s “cash on cash breakeven”argument. Did he mean that cash used to service interest cost isn't "cash"?
Worse, I decided to re-check the audited accounts of 1MDB and it’s Edra subsidiaries for 2013 and 2014 - the Edra power plants never paid a single sen of dividend to 1MDB, the parent holding company!
I almost feel really bad heaping so much embarrassment upon the besieged 1MDB President who is spinning out of control.Let me repeat myself, I am truly flabbergasted by Arul Kanda’s definition of “success, against all odds”.