Is Treasurer-General and 1MDB Chairman, Tan Sri Irwan Serigar aware of a third ‘secret’ Letter of Support for 1MDB’s US$975 million borrowing from a Deutsche Bank-led consortium in September 2014?

The latest suit filed by the United States Department of Justice (US DOJ) last month exposed a new allegation Dato’ Seri Najib Razak signed a ‘secret’ Letter of Support for 1MDB to secure a US$975 million loan from a Deutsche Bank-led consortium in September 2014.

The US DOJ suit stated that Dato’ Seri Najib Razak, referred to as “Malaysian Official 1 (MO1)”, “on behalf of the Government of Malaysia, provided a Letter of Support to Deutsche Bank in connection with the $975 million loan.”

This would have been a third Letter of Support issued by Dato’ Seri Najib Razak as the Finance Minister to effectively guarantee borrowings by 1MDB.  The letters had stated that “in the event 1MDB… fails to provide the required funds, Malaysia shall then step in to inject the necessary capital into the Issuer or make payments to ensure the Issuer’s obligations are fully met”.

The DOJ suit further noted that “internal Deutsche Bank records reflect that 1MDB officials opted to provide a Letter of Support signed by MALAYSIAN OFFICIAL 1, rather than some form of guarantee by 1MDB… at least in part because a letter of support did not require Bank Negara or Cabinet approval. At the request of 1MDB, all references to the Letter of Support were removed from the Facility Agreement.” 

I had submitted a question to the Finance Minister to confirm the existence of the letter in the current parliamentary sitting.  However, the question has been inexplicably rejected by the Speaker on the ultra-flimsy grounds of presumably questionable assumptions (“sangkaan”).

I had last week issued a statement via a press conference seeking answers from Dato’ Seri Najib Razak himself as to whether he had indeed issued this “secret” Letter of Support and whether he had the authorisation from the Cabinet and Ministry of Finance to do so.

However, the questions posed have been met with utter silence, whether from the Prime Minister himself or from his Cabinet cheerleaders.

I can fully understand why the Prime Minister might want to remain absolutely silent so as not to incriminate himself with any answers he may provide.

Hence, I now pose the same questions to the Treasurer-General of the Ministry of Finance, Tan Sri Irwan Serigar who has also been appointed as the Chairman of 1MDB just a year ago.

As the Treasurer-General of Finance Ministry, is Tan Sri Irwan Serigar aware that the Minister of Finance had signed a third Letter of Support for 1MDB in September 2014?  The official reply provided by the Minister of Finance in March 2016 stated that there were only 2 such Letters of Support issued in March 2013 for US$3 billion and another in March 2015 for US$150 million.

Was the reply which would have been prepared and approved by the Treasurer-General mistaken? Or was he, horrors of horrors, completely unaware that a third ‘secret’ Letter of Support had actually been issued by the Finance Minister, Dato’ Seri Najib Razak.

Secondly, even if he was not previously aware of the ‘secret’ letter, Tan Sri Irwan Serigar, as the Treasurer-General and 1MDB Chairman, must surely investigate.  Has he called Duetsche Bank to verify the existence of the Letter of Support as alleged by the US DOJ?

If Tan Sri Irwan fails to do the simple task of calling up the Bank to confirm this information, then he has betrayed the trust of Malaysian tax-payers as the most senior financial civil servant in the country today.

If he is unable to protect the financial interest of the 30 million Malaysians in the country, then he is completely unfit to continue in his position, both as the Treasurer-General and the 1MDB Chairman.

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Dato’ Seri Najib Razak must come clean as to whether there was another undocumented “letter of support” for 1MDB in 2014 to borrow US$975 million from a Deutsche Bank-led consortium

In November 2014, when it was first discovered that Dato’ Seri Najib Razak had signed a “letter of support” to enable 1MDB to secure a US$3 billion bond in March 2013, it was immediately met with denial in Parliament.

On 6 November 2014, Datuk Ahmad Maslan, the then Deputy Minister of Finance had insisted in Parliament that the Government did not issue any such “letter of support”.  However, a few days later, he conceded to the media that such a “letter of support” existed and he was ultimately forced to apologise to the House for his “error” on 18 November 2014.

The existence of this “letter of support” had major financial implications for the Government because it stated that “In the event, 1MDB has shareholder of the issuer fails to provide the required funds… Malaysia shall then step in to inject the necessary capital into the issuer or make payment to ensure the issuers obligations are fully met.”  This meant that the Malaysian Government had effectively guaranteed, one way or another, the US$3 billion 1MDB borrowing above.

As reported by The Edge Financial Daily on 12 November 2014, Datuk Ahmad Maslan had said that there was “no other letter of support for 1MDB apart from the US$3 billion” during a media conference at the Parliament.

Further on 16 March 2016, when questioned by the Member of Parliament for Indera Mahkota, Dato’ Fauzi Abdul Rahman, the Finance Minister had confirmed that there were only TWO “letters of support” which was issued by the Government, including another for 1MDB’s US$150 million borrowing from Bank Exim in March 2015.

However, we have since discovered, via information provided by the latest United States Department of Justice filing to seize assets acquired with funds laundered from 1MDB that there exist another secret “letter of support” to borrow US$975 million from a Deutsche Bank-led consortium in September 2014.

The US DOJ suit stated that Dato’ Seri Najib Razak, referred to as “Malaysian Official 1 (MO1)”,

“on behalf of the Government of Malaysia, provided a Letter of Support to Deutsche Bank in connection with the $975 million loan.”

The suit further noted that “internal Deutsche Bank records reflect that 1MDB officials opted to provide a Letter of Support signed by MALAYSIAN OFFICIAL 1, rather than some form of guarantee by 1MDB… at least in part because a letter of support did not require Bank Negara or Cabinet approval. At the request of 1MDB, all references to the Letter of Support were removed from the Facility Agreement.”

Like the earlier “letters of support”, the Government agrees to financial support to 1MDB to ensure the company’s ability to repay. Dato’ Seri Najib Razak even “waived its sovereign immunity in connection with disputes arising out of the Letter of Support”.

I have submitted a simple question in the current sitting asking the Prime Minister to confirm if he had indeed issued a “Letter of Support” in connection to the US$975 million loan from Deutsche Bank.  The question has been rejected on the basis that it was “sangkaan”, or “presumably questionable assumptions”.

There was no assumptions in my question.  I had asked a simple matter as to whether there was indeed a “letter of support” issued in September 2014.  If there isn’t, just say “no”.  What’s so difficult?

Both Dato’ Seri Najib Razak and the Parliament’s refusal to entertain the simple factual question only serves to confirm the suspicions in everyone’s minds that such a secret guarantee was indeed issued.  Dato’ Seri Najib Razak cannot come to the Parliament to say “yes” to the question simply because it would mean that he had previously lied to the Parliament when he said there were only 2 such letters for the sums of US$3 billion and US$150 million.

This further raises the question as to whether Dato’ Seri Najib Razak had issued the letter without the Cabinet’s approval or for that matter, without the knowledge of the Finance Ministry – which will be a clear cut abuse of power by the Prime Minister.  I will confer with Tan Sri Muhyiddin Yassin, the former Deputy Prime Minister to confirm if such a “letter of support” which binds the Malaysian Government was ever discussed in the Cabinet.

If not, then the Attorney-General must commence immediate investigations over the possible criminal breach of trust, abuse of power and even fraud against Dato’ Seri Najib Razak.

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Was 1MDB's failure to disclose Deutsche Bank's US$975 million loan in March 2014 to cover up payment of nearly US$1 billion to terminate options granted to IPIC?

Last week, the Wall Street Journal (WSJ) shed light on US$993 million which was allegedly paid to International Petroleum Investment Corporation (IPIC) by 1MDB to buy back the latter’s options have not been properly accounted for.  The above payment was not reflected in the audited accounts of IPIC.  Instead, IPIC’s books showed that 1MDB still owes an additional US$481 million to the former for the termination of the options as at December 2014.

These options were granted to IPIC’s subsidiary, Aabar Investment PJS in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.

Now, even as 1MDB is failing to explain where the “missing” US$993 million dollars went to if not to IPIC, the question also needs to be asked where the US$993 million dollars came from.

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