Dato' Seri Najib Razak is playing the broken record by blaming 1MDB's failed IPO exercise on its critics

Prime Minister Najib Razak said a failed initial public offering (IPO) exercise, as a result of being "attacked", was the main reason why 1Malaysia Development Bhd (1MDB) encountered problems.

"When the 'attacks' were mounted, the IPO exercise could not be carried out, hence the cash flow problems," Najib said in an exclusive interview telecast live over TV1 last night in conjunction with UMNO's 70th anniversary today.

1MDB must be operating on the worst business model in the world by hedging its success or failure entirely on its ability to IPO its subsidiary. If 1MDB business collapsed just because of a failed IPO, that was probably the reason why the IPO failed in the first place.

Why were they not able to IPO? Laughably, Dato' Seri Najib blamed its failure on the critics on 1MDB. If we critics are so powerful, then we would have stopped so many other IPOs and related transactions such as Felda Global Ventures Holdings or other privatisation and fund-raising projects by the BN administration.

The real reason why the IPO failed in the first place is because 1MDB overpaid for the assets and no investors in their right minds would pay more than the RM12.1 billion 1MDB paid.  

In addition, the Government had gone out of its way to award 1MDB with multiple multi-billion ringgit new power plant contracts to boost its valuation.

However, despite the overwhelming support given by the Government, the PAC Report disclosed that 1MDB's doomed submission to the Securities Commission indicated a valuation of only RM9.86 billion to RM11.3 billion. (Page 74 of the PAC Report on 1MDB)

Hence the IPO failed because 1MDB was unable to justify the ridiculous valuation paid for its energy assets, but Dato Seri Najib chose to conveniently blame the scandal-ridden firm's critics.

The real reason as to why 1MDB has failed however, is because tens of billions of ringgit has gone missing.

For example, 1MDB had borrowed US$3.5 billion and RM6.7 billion (or an approximate total of RM20.7 billion) to acquire its RM12.1 billion worth of power plants. The question is where did the balance of the cash go?

The Auditor-General has specifically confirmed that US$7 billion of 1MDB assets and transactions overseas cannot be verified or traced. The figure includes US$1.03 billion paid to Good Star Limited, which Bank Negara has disclosed is owned by an individual unrelated to 1MDB’s joint venture partner, Petrosaudi International Limited.

Another missing US$3.51 billion has purportedly been paid to “Aabar Investment PJS Limited” incorporated in the British Virgin Islands, which Abu Dhabi’s International Petroleum Investment Corporation (IPIC) has confirmed is completely unrelated to its own subsidiary, Aabar Investment PJS.

1MDB has also failed to show any evidence that it is still in possession of US$940 million worth of unexplained “units” in BSI Bank, Singapore. In addition, US$1.56 billion worth of investments by 1MDB Global Investment Limited remains completely unaccounted for.

The fact that Dato’ Seri Najib Razak, who is also the Finance Minister has refused to address these damning issues raised by the PAC Report, but chose to give laughable excuses for 1MDB’s failure only goes to prove that he is lying to the Malaysian public.

Worse, the Prime Minister has chosen to continue making light of the situation by stubbornly refusing to explain to Malaysians if and how the Ministry of Finance will bail out 1MDB which has already defaulted on US$3.5 billion of bonds as of today.

Any Finance Minister in the world with any sense of accountability and integrity would have long resigned from his position to take responsibility for these monstrous losses.