Tuesday, November 07, 2017

Malaysians are stunned that failed 1MDB CEO, Arul Kanda is even better placed today to take over Khazanah’s Managing Director role in the near future.

According to the recent Singapore Straits Times’ report on 2 November 2017, the prospects of a Khazanah outsider such as Arul Kanda to come into the position is more likely following the resignation of Tan Sri Nor Mohamed Yakcop from Khazanah's board.

The Khazanah panel overseeing the leadership succession was until recently headed by its former deputy chairman, Tan Sri Nor Mohamed Yackop, who recently resigned from the fund following the completion of a Royal Commission of Inquiry into multi-billion dollar losses at Malaysia's central bank stemming from foreign exchange trading in the 1990s.

The Straits Times reported that senior Khazanah sources said that Mr Nor Mohamed was a strong advocate for Mr Azman's replacement to come from within Khazanah, and his departure could strengthen the push by vested interest groups to get an outside candidate.

Apparently senior politicians and well-connected business people close to Arul are lobbying Prime Minister Dato’ Seri Najib Razak who, as Khazanah's chairman, would have the final say on who replaces Mr Azman.  It is not hard to imagine Najib giving the job to the man who has willfully bent over backwards to defend his image and paint 1MDB as a success.

However, appointing Arul Kanda to lead Khazanah would only be an absolute disaster for the sovereign wealth fund.

Arul Kanda has had an utterly shameful record helming 1MDB. The debt stricken fund is supposed to be saved with the “rationalisation plan” he masterminded. However, to date, 1MDB has only found itself in a deeper hole with no sight of the end of the tunnel.

1MDB’s attempt to sell 60% of Bandar Malaysia was an abject failure. The Ministry of Finance had to terminate the contract because of the failure of the purchaser to make payments according to schedule despite repeated extensions.  To rub salt onto would, it was the Minsitry of Finance which refunded the RM741 million ‘deposit’ despite it being 1MDB which received the monies.  The fact that Arul Kanda was sacked by the Ministry of Finance from Bandar Malaysia Sdn Bhd practically says it all.

Just two weeks ago, I had reminded the Prime Minister that 1MDB’s sale of power assets to China General Nuclear Corporation incurred RM2.3 billion in losses. 1MDB’s reply, drafted by Arul Kanda himself, had tried to ‘erase’ the losses with an alleged RM2.13 billion in dividends received by the company.

However, the 1MDB President and CEO conveniently forgot to also include the interest cost which 1MDB had incurred to finance the acquisition of the power assets.  As I said before, only a half-baked CEO would say that it’s made money off dividends without accounting for the interest bill.

While being exceedingly creative with the accounts on its own should have disqualified Arul Kanda from even being considered, what is worse is his brazen lies told to the Public Accounts Committee (PAC) with regards to mysterious assets owned purportedly owned by 1MDB in its overseas subsidiaries.

For example, he has continued to insist on the monetisation of US$1.3 billion worth of investment ‘units’ in Singapore even though its subsidiary that holds the units has already been uncovered as a complete scam.

Today we know that the entire redemption exercise was a Ponzi-like round-tripping exercise using part of the proceeds from a Deutsche Bank loan to pretend that it’s the receipt from the ‘units’ redemption exercise.

Malaysians must protest the fact that a man who has proven incompetent and devoid of integrity is even considered for the post of Managing Director at Khazanah.  If 1MDB, with debts up to RM50 billion at its peak could be brought to ruins, what more could happen at the RM145 billion Khazanah Nasional.
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