Tuesday, February 06, 2018

The Bank Negara Governor fools no one claiming the RM2 billion land acquisition from the Federal Government was an arms length transaction.

Yesterday, Bank Negara (BNM) Governor Tan Sri Muhamad Ibrahim tried to provide a justification for the central bank’s outrageous purchase of 55.79 acres of land for approximately RM2 billion from the Federal Government. On the 4th of January, BNM announced that is had acquired the land for the development of a new financial education hub.

Tan Sri Muhamad Ibrahim said that the Bank wasn’t forced to buy the land by the government and instead it was BNM that requested the government to sell the land to them. Tan Sri Muhamad said that the deal between BNM and government was an “arm’s length agreement”, which is to say that both parties were acting in their own interest without any pressure by the other party.

As reported by the Edge Weekly in January, following Bank Negara’s announcement of the deal, many industry observers had found the purchase puzzling because it was rare for a government agency to buy land from the government more so at a market price. This is especially so when the land is intended to be used for the development of an education hub, rather than a commercial property. Land acquired for public universities are usually transferred at a nominal rate, while the land purchased by BNM works out to approximately RM823 psf.

The question must hence be asked?  Why did the Governor not apply for the land at nominal rate?  This is especially since the education hub is not a commercial venture?  Even 1MDB for example, secured more than 500 acres of land at nominal or heavily discounted value from the Federal Government for commercial purposes.

Hence Malaysians cannot be blamed for suspecting that the entire transaction is a blatant attempt by the Federal Government to raid the Bank Negara coffers.

It also does not escape notice that the timing of the transaction and payment coincided with time 1MDB had to make it US$600 million second instalment payment to IPIC at the end of last year.

Despite questions being asked by the media, analysts, critics and even Members of Parliament, both 1MDB and the Ministry of Finance (MoF) have refused to clarify the source of funds for the above payments by 1MDB.  The question is very important because we all know that 1MDB is effectively insolvent and Malaysians have the right to know if the MoF utilised tax-payers’ funds to further bail out 1MDB.

Hence, the Bank Negara Governor Muhamad Ibrahim “keep an arms length” nonsense is completely not credible and fools no one.  Why should it be arms length in the first place when the land was not intended for Bank Negara to make a profit?  Until these questions are properly answered, Malaysians certainly cannot be blamed for believing that Bank Negara allowed itself to be raided by the MoF in order to bail out 1MDB.
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