Thursday, April 07, 2016

All critics of debt-stricken 1MDB have been finally vindicated with tabling of the PAC Report

For  more  than  a  year,  the  critics  of  1Malaysia  Development  Bhd  (1MDB) –  the  Sarawak Report,  which  has  been  banned  by  the  Malaysian  government,  the  Wall  Street  Journal, which has been accused of orchestrating a conspiracy against the country and myself, who is being investigated for “activities detrimental to parliamentary democracy” over the same matter were accused of doctoring documents and publishing lies.

The  tabling  of  the  Public Accounts Committee  (PAC) Report  today,  with  the  accompanying transcripts of all its proceedings since 19th May 2015 in Parliament has now fully vindicated us. The findings  of  the Auditor-General, summarised in  the  106-page  PAC Report  and  the relatively brief conclusion by the PAC confirms gross mismanagement and wanton neglect of all principles of good governance and accountability.

Most  importantly,  1MDB  deliberately  hampered  the  investigations  by  the  Auditor-General and the  PAC  by  giving  half-truths,  withholding  of  crucial  information  as  well  as defiantly refusing to  supply  simple  bank  statements  of  its  overseas  accounts  to  allow  the  audit  of multi-billion ringgit money trails.

Despite certain shortcomings of the report – the failure to obtain the crucial information of 1MDB’s foreign banking transactions, and the failure to secure additional key witnesses like former CEO, Mohd Hazem Abd Rahman, Bank Negara officials, auditors Ernst & Young and even controversial figures like Low Taek Jho – the evidence put forward based on available documents were overwhelmingly damning for 1MDB.

This crucially include the first joint venture agreement with Petrosaudi International Limited where 1MDB  was  meant  to  invest  US$1  billion  for  a  40%  stake  but  US$700  million  was misappropriated  to  Good  Star  Limited. The  Auditor-General  has  found  evidence  that  the transaction  took  place without  the  knowledge  and  approval  of  the  Board  (7.3.4, 7.3.5). Interviews  with  the  then 1MDB  Chairman,  Tan  Sri  Mohd  Bakke Salleh showed that he quit the Board in disgust a few weeks after discovering the dodgy, in his refusal to condone the actions of the insubordinate action of the Management.

While  the  Management  insisted  that  Good  Star  Limited  was  a  subsidiary of  Petrosaudi International, no evidence  was presented by 1MDB from the relevant authorities to the AG or the PAC to prove such claims. The AG’s Report also confirmed that besides the original US$700 million  transferred in 2009, 1MDB  further  transferred  an  additional  US$330 million to Good Star in 2011.

The  AG  and  PAC  have  also  been  able  to  establish  multiple  questionable  transactions between 1MDB and Aabar Investment PJS Limited, which is established in the British Virgin Islands “Aabar (BVI)”. It has been previously reported that Aabar (BVI) was granted 49% options to acquire 2 power companies, Tanjong Power and Genting Sanyen, in exchange for International Petroleum Investment Corporation (IPIC) providing a US$3.5 billion guarantee for 1MDB bonds issued in 2012. These options were terminated in 2014.

Based on the Option Termination agreement sighted by  the AG, 1MDB was to compensate Aabar with a “refundable deposit” of US$300 million.  However, 1MDB reported that it has paid US$993 million to Aabar (BVI). (7.3.10)

Worse,  the  AG  and  the  PAC  has  also  been  informed  that besides  the  above,  1MDB  paid Aabar  (BVI)  further  sums of  US$855  million  and  US$295  million  as  unexplained “top-up security deposits”. (7.3.13)

Under the original “Credit Enhancement Agreement” signed in 2012, 1MDB has already paid Aabar (BVI) US$1.367 billion. (7.3.9)

Hence, in total, 1MDB has paid US$3.51 billion to Aabar (BVI) for “security deposits” and “option termination” apparently for the US$3.5 billion bond guarantee provided by IPIC!

What  is  damning  is  the  fact  that  1MDB  could  not  provide  any  concrete  documentary evidence that Aabar (BVI) is in anyway related to Aabar Investment PJS of Abu Dhabi, which is the susbsidiary of IPIC.  The Auditor-General noted that Aabar (BVI) is not listed as IPIC’s subsidiary based on the audited accounts of IPIC. (7.3.11, 7.3.12).

In  addition,  the  AG  Office  clearly  stated  that  they  could  not  verify  that  the  above transactions disclosed  by  1MDB  actually  took  place because 1MDB  failed to submit  its overseas bank statements  and  other  relevant  documents  for  verification, despite repeated requests and reminders. (7.3.13)

There are many other shocking misdeeds and transgressions which have been disclosed in the PAC report, which won’t be listed here in my statement. However, what is clear is that there  is  more than sufficient  damning  evidence  to  indict  not  only  the  entire  top management, but also the entire Board of Directors.

The  PAC  Report  has  requested  that  former  CEO,  Datuk  Shahrol  Halmi  Azral  and  other related parties be investigated for all of the shenanigans cited, and reprimanded the Board of Directors for their failure. The  Inspector-General  of  Police  must  take  immediate  action  to investigate  Datuk  Shahrol and his associates. I will go further to call not only for Datuk Shahrol Halmi be sacked with immediate effect, but the entire Board of Directors who have failed to protect the interest of the Government and the tax-payers to be removed as well.
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