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.