1MDB is now on the verge on defaulting on the interest payments for its second US$1.75 billion bond, after defaulting on the first US$1.75 billion bond last month.
1MDB has been forced to “engage”their bondholders to negotiate the defaults in order to limit the financial damage to both the company and its shareholder, the Ministry of Finance (MoF).
And yet, under such dire circumstances, Deputy Finance Minister Johari Abdul Ghani can everything is hunky-dory, call “1MDB's engagement with its US dollar-denominated bondholders is a good move”.
Worse, the MoF is clearly taking a cavalier attitude to the entire financial fiasco by claiming that MoF does “not want to interfere with this because it is between two corporate entities to go and sort out their problems”.
This must be one of the most irresponsible statement by the newly appointed Deputy Finance Minister who replaced the previous bumbling Datuk Ahmad Maslan.
The above bonds were guaranteed by International Petroleum Investment Corporation (IPIC). However, did he overlook the fact that the MoF has provided an indemnity to IPIC for losses and damages suffered by the latter?
If it was merely a “dispute” between “two corporate entities”, then why did MoF agree to provide the indemnity to IPIC in the binding term sheet signed between IPIC and 1MDB in May last year?
Worse, while 1MDB is forced to “engage” with bondholders to “restore market confidence”and “prevent panic”, what about ordinary Malaysian tax-payers who are now liable for a multi-billion dollar bailout of the debt-ridden 1MDB?
Doesn’t Datuk Johari see it necessary to “restore the confidence of” and “prevent panic” by Malaysians?
1MDB has already defaulted on the first US$1.75 billion bond. It will soon default on the second US$1.75 billion bond. 1MDB has at the same time cross-defaulted on another RM7.4 billion of Islamic bonds and possibly a further RM800 million loan from SOCSO. That means that Malaysians are liable to for US$3.5 billion and RM8.2 billion, or a whopping total of approximately RM22.2 billion of 1MDB’s mess.
The above has yet to take into consideration another US$3 billion bond which may be affected at some time in the near future.
Instead of pretending that everything is A-OK, Datuk Johari must explain to Malaysians if we have to foot the bill.
He has earlier promised the Parliament in December last year that the 1Malaysia Development Berhad (1MDB) will resolve “its debt and cash flow issue more quickly without help from the Government.”Is this assurance still valid?
Both the Prime Minister, Datuk Seri Najib Razak and 1MDB’s President Arul Kanda have boasted that the rationalisation exercise has been a success and has been completed. Did they both lie to Malaysians to provide a false front for 1MDB?
If the answers to the above questions are above Datuk Johari’s pay-grade, then he must persuade his boss, Datuk Seri Najib Razak, who is also the Finance Minister to explain the imploding 1MDB disaster to Malaysians.