Did 1MDB resort to carefully leaked fake news to The Singapore Straits Times to cover up the fact that the Ministry of Finance forked out another RM2.4 billion to foot the bill for 1MDB’s debt to IPIC?

1MDB proudly announced that they had made their final US$602.7 million or RM2.4 billion settlement payment to Abu Dhabi’s International Petroleum Company (IPIC) on 27 December, four days ahead of their deadline.

The problem is, we all know 1MDB is completely insolvent.  So Malaysians are rightly concerned as to how 1MDB paid its latest instalment of their debt.  All that is stated in the official 1MDB statement is that the payment is funded through its “on-going rationalisation programme”.

No one of course, has a clue as to what the “rationalisation programme” entails.

What is more interesting is the carefully planted leaks to The Singapore Straits Times (SST) to reveal that the funds to repay IPIC came from the sale of investments in financial instruments and stakes held in two 1MDB-related entities that own tracts of land in Penang and Pulau Indah, Selangor. The report merely identified the anonymous buyers as “concerns ultimately controlled by Chinese state-owned enterprises”.

This is not the first time SST had carried out a hatchet stories which helped cover up some of the 1MDB’s financial shenanigans.  When the Bandar Malaysia sale to an Iskandar Waterfront-led consortium was terminated out-of-the-blue by the Ministry of Finance, it was SST which created a media maelstorm by reporting on 9 May 2017 that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”

“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project.  According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.

The above proved to be a hoax of course, because when Dato’ Seri Najib Razak met Wanda a week later, he came home empty-handed – without even a face-saving “Memorandum of Understanding (MOU)” signed.

The current SST report is similarly couched in the same language. SST claimed that “Malaysian government officials declined to identify the buyers in the real estate transactions but one financial executive close to the situation said that the equity interests in the 1MDB real estate entities were acquired by "concerns ultimately controlled by Chinese state-owned enterprises". The executive declined to elaborate.”

The SST report was inevitably picked up by nearly all local media outfits.  This clearly served the interest of 1MDB which would want to avoid prickly questions on how they found the funds to  repay IPIC.

The question really is, if 1MDB has really succeeded in disposing of its controversial properties in Pulau Indah and Penang to China-owned state enterprises, why is there absolute silence from official sources?  Dato’ Seri Najib Razak and 1MDB would have been carrying out victory parades for proving their critics wrong, as they did in the past.

Surely if the companies owning these parcels of land were sold for billions of ringgit to foreign investors, from China or otherwise, official transactions would have taken place and the information would be publicly available.

More curiously, these parcels of land in Selangor and Penang were purchased by 1MDB for RM294 million and RM1.1 billion respectively.  Critics were aplenty in citing that both parcels were purchased at inflated prices.  However, even so, the combined purchase amounted to less than RM1.4 billion.

Hence if the SST report were to be true, then it begs the question as to which Chinese state-owned enterprises would pay an outrageous RM2.4 billion for these parcels, which in-turn allowed 1MDB to repay its second loan instalment to IPIC?  Or is it more likely that it is another hoax to evade disclosing the fact that it was really the Ministry of Finance, which directly or indirectly, repaid both instalments amounting to US$1.24 billion to IPIC?

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We either have the stupidest Finance Minister in the world or one who is trying his very best to pretend to be the stupidest

I have asked the Minister of Finance to state the current value of remaining investment ‘units’ owned by 1MDB subsidiary Brazen Sky Limited and to name the bank or financial institution that was the ‘custodian’ of those investment ‘units’.

Tony Pua meminta Menteri Kewangan menyatakan baki nilai terkini pelaburan ‘unit’ yang dimiliki oleh anak syarikat 1MDB, Brazen Sky Limited dan nama institusi bank atau kewangan yang kini menjadi ‘custodian’ kepada pelaburan tersebut.

This question was rejected by the Speaker during the last sitting in July with the utterly ridiculous excuse that it was “buah fikiran” or basically a figment of my imagination.  I’m grateful that the second attempt at posing this question to the Finance Minister has been accepted.

However, my joy was shortlived.  I’ve received the reply dated 30 October 2017 from the Minister of Finance yesterday (attached).  It was the stupidest “pretend to be stupid” reply I have ever received from any Minister in my 9 and the half years in Parliament.

My question asked what is the current value of “units” and who is the custodian bank.  The reply start with “rancangan 1MDB untuk menyelesaikan hutang syarikat adalah seperti berikut…” or “the plan to resolve 1MDB’s debts are as follows”.

And the Minister goes on to tell the story of how selling the Edra Energy, 1MDB’s real estate properties and the investment ‘units’ will pay for the 1MDB debts.  He might as well have added that the sun rises from the east and sets in the west.

The Minister’s answer could have been less than 10 words, and it would have answered my question perfectly. Value of units, and name of bank.

Is the Finance Minister that stupid that he could not understand simple English or Malay?  Or he is trying his best to pretend to be a complete nitwit so that he doesn’t have to answer a very simple question from a Member of Parliament?  Either way, the Finance Minister has show utter contempt for the Parliament.

Malaysians have the right to know the status of USD940 million worth of investment ‘units’ held by Brazen Sky Ltd.  It’s not like the question has never been answered in Parliament before.

Current and former finance ministers, as well as 1MDB, itself had openly stated that the company had investments in the form of ‘units’ held with a ‘custodian bank’ previously valued at US$2.3 billion, of which a substantial portion has apparently been redeemed.

1MDB has in April this year, further emphasized that the investment ‘units’ would be “monetized” to repay Abu Dhabi’s IPIC the sum of US$1.2 billion.  Hence, it is an extremely valid question to ask what is the current value of these units which are previously held in BSI Bank, Singapore.

However, more than a year after BSI lost its license in Singapore, and we are still looking for the same answers regarding Brazen Sky’s accounts. Who is its new ‘custodian’ bank and what is the status of its units?

Or are Malaysians to assume that the refusal of the Finance Minister to answer the above question is evidence that the ‘units’ are indeed a fraud as suspected with little or no value, and it’s current not held in any bank around the world?

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The Speaker has gone bonkers in his over-zealousness to cover up the 1MDB mega-scandal, in this case a US$600 million (RM2.5 billion) emergency bailout of 1MDB by the Ministry of Finance in August 2017

The Parliament question time has become a complete joke.  During the last sitting, I had 5 questions rejected for asking questions with regards to 1MDB.  This round, I have 3, in part because I submitted less questions on 1MDB to avoid too many questions being thrown out.

However, the basis of rejecting the questions I had posed remained completely untenable.  For example, I had asked submitted the following question to be answered today:

Tony Pua meminta Menteri Kewangan menyatakan adakah 1MDB membayar lebih kurang US$600 juta kepada IPIC pada bulan Ogos 2017 melalui pengewangan (“monetisation”) ‘unit’ dana pelaburan 1MDB?  Adakah Kementerian Kewangan telah membantu membiayai bayaran tersebut secara langsung atau tidak langsung?

The question was whether 1MDB’s settlement to Abu Dhabi’s IPIC was funded through the monetisation of 1MDB investment ‘units’ and/or whether the Ministry of Finance (MOF) had helped support these payments either directly or indirectly.

However, I received a rejection letter from the Speaker claiming that the question could not be answered presumably because it would be subjudice as “the matter is in court”.  But the above payment which is part of an agreed settlement with IPIC has nothing to do with any court, whether in Malaysia or any where around the world.

I didn’t even ask about the ‘settlement’ itself.  I merely asked if the MOF helped 1MDB, directly or indirectly, with the US$600 million payment to IPIC which was made in the month of August.  Hence, how is this in any way related to any court case?

The Speaker should be reminded that in April this year, it was 1MDB itself who claimed that its payment obligations would be funded by the monetisation of investment ‘units’.

In August, 1MDB changed their tune and said that the payments were funded through the ‘proceeds of the on-going rationalisation programme’. What exactly is this rationalisation programme?

Is it not ridiculous that 1MDB can make all sorts of conflicting and vague statements to the public but Members of Parliament have no recourse to obtain any clarification or confirmations from the Ministers?

Both 1MDB and the MOF need to come clean about the source of these payments. If the Ministry is helping make these payments, surely the rakyat have a right to know.  In fact, the refusal to respond has only confirmed the suspicions that the MOF has indeed conducted an emergency RM2.5 billion bailout of 1MDB in August this year.

We very much regret that the purportedly independent Speaker’s Office is now helping 1MDB and MOF cover up questions on the scandal.  I will certainly raise this question again in my speech in this sitting and it will make a complete mockery of the Budget debate if the Finance Minister cannot tell us where our money has been used or spent.

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How did 1MDB make the additional US$300 million of debt repayment to the US$350 million paid earlier this month?

We have received the good news that "IPIC has now received the funds required to be paid by Aug 31 to complete the performance by Minister of Finance (Incorporated) Malaysia and 1MDB of the payment obligations that were initially due to be performed by July 31 under the settlement and the consent award and to pay default interest on the delayed payment."

It is good news because the failure of 1MDB to comply with the above scheduled payments would not only have created a diplomatic crisis between Malaysia and Abu Dhabi, it would have had major implications on Malaysia’s credit ratings.

The bad news however, is we have yet to hear any details of how 1MDB has made the combined payment of US$650 million or approximately RM2.8 billion.

While we await for the latest statement from 1MDB, the company’s previous statement only mentioned vaguely that they are the “proceeds of the on-going rationalisation programme”.
There are absolutely no details as to what proceeds from what specific rationalisation programme undertaken by 1MDB.

Initially in April this year, 1MDB said the funds would come from the “monetization of 1MDB-owned investment fund units”.  However, ever since the United States Department of Justice have labelled the “fund units” as fraudulent, 1MDB has since conveniently dropped any mention of these units from its subsequent statements.

Despite repeated questions by many parties, including those in the media and financial community, both 1MDB and the Ministry of Finance (MoF) have remained completely opaque as to the source the funds used to repay IPIC.  Why are they so adamant in not disclosing 1MDB’s source of funds?

Hence, the US$650 million or RM2.8 billion question now is - are 1MDB and MoF refusing to answer the above questions because MoF has extended the funds, directly or indirectly via some convoluted pretend “rationalisation” schemes to 1MDB to help the latter settle its debt obligations?

Until and unless the MoF provides factual clarity on the above, Malaysians cannot be blamed for assuming that 1MDB had to settle the above debt instalment with a tax-payer bailout.

That will cement today as the worst national day in Malaysia’s 60 years of independence.

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Arul Kanda’s disastrous record at 1MDB makes him the least qualified to take over the reigns of Khazanah Nasional

Malaysians were shocked to read the report by The Malaysian Insight on Thursday that Arul Kanda is one of the candidates being considered for the post of Managing Director of Khazanah Nasional.
The online portal reported that “a selection panel has been formed to look through the candidates who can take over from Azman (Mokhtar) whose contract expires in two years” and Arul Kanda is one of two outsiders being considered.

After the disastrous and disgraceful record at the debt-ridden 1MDB since his appointment in January 2015, Arul Kanda should be automatically disqualified from even consideration at the country’s sovereign wealth fund.

The latest catastrophe is the failure of 1MDB to fulfil its settlement obligations with Abu Dhabi’s International Petroleum Investment Corporation (IPIC) in a timely matter.  Despite claiming since April 24 this year that its repayment to IPIC would be fulfilled via the “monetization” of 1MDB’s investment ‘units’ last known to be held in Singapore, IPIC had to twice extend the deadline for the first instalment payment scheduled on 31 July 2017.

1MDB has since managed to pay the “equivalent” of US$350 million on 11 August and would have up to 31 August to settle the balance of US$300 million.  However, even the above partial payment of the first instalment is shrouded in mystery as it is clear that the 1MDB ‘units’ have not been monetized while the source of the 1MDB funds were unclear.

In addition, Arul Kanda has botched the so-called rationalisation with the original attempt to sell 60% of Bandar Malaysia to the Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium.  Despite 1MDB having collected 10% of the sale amounting to RM741 million as “deposit”, the Ministry of Finance (MoF) had to terminate the contract due to IWH’s repeated failure to fulfil its obligations, it was MoF which had to refund the RM741 million “deposit” to the purchaser.

However, the worst deed of Arul Kanda has been to repeatedly lie to the Auditor-General, the Public Accounts Committee and Malaysians in general, to cover up the 1MDB scandal to ensure that those behind the multi-billion dollar misappropriation in the company would be let off scotfree.

For example, Arul Kanda is fully aware that 1MDB’s investment ‘units’ previously held at the now defunct BSI Bank, Singapore are fraudulent and more importantly are worth at best a tiny fraction of their purported US$2.318 billion in valuation.  The fraud has been uncovered by the United States Department of Justice, as reported in the additional civil suit filed in June this year.

However, despite having access to all the material documents and information, Arul Kanda has continued the pretence that 1MDB had already redeemed some US$1.3 billion worth of the ‘units’.  At one point Arul Kanda even told the 1MDB Directors that he has “seen the bank statements” that 1MDB had already received the proceeds in ‘cash’.

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 can only shiver in trepidation at the thought that a RM145 billion-Khazanah Nasional, which is relatively healthy today, would be helmed by the same person who hammered the final nail in 1MDB’s coffin.

The only thing more shocking I heard when I started sniffing around with regards to The Malaysian Insight report is the fact that Arul Kanda is also awaiting possible appointment as a Senator which comes with a Ministerial position.  If that were true, then it would be proof that the Prime Minister, Dato’ Seri Najib Razak would only appoint those without a shred of honesty and integrity to the Cabinet.

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How did 1MDB make its “equivalent” of US$350 million payment to IPIC?

1MDB proudly announced that it has successfully made partial payment for the outstanding sum to Abu Dhabi’s IPIC, after twice having the deadline extended.

The beleagured company said “1MDB is pleased to announce that pursuant to the amendment dated  August 8, 2017, to the settlement deed with Minister of Finance (Incorporated) Malaysia and IPIC, 1MDB has now remitted to date, the equivalent of US$350 million to IPIC.”

When reading any statements from 1MDB, it is always like trying to solve an Agatha Christie murder mystery.  You need to scrutinise the statement for curious or incriminating clues.

For example, in this case, why did 1MDB say “the equivalent of US$350 million” as opposed to just a straightforward “US$350 million”, or whatever the amount is?

Normally, one would perhaps phrase “the equivalent of US$350 million” if the payment was not remitted in US Dollars but perhaps in this case in Ringgit Malaysia?  This clearly lends credence to the allegations that no Bank wants to process payments relating to 1MDB transactions for fear of partaking in a money laundering exercise, especially since US Dollar transactions would require re-routing via US Banks.

The Malaysian Insight had earlier also reported that the remittance was carried out via Maybank Bhd.  Does this mean that 1MDB circumvented its US Dollar remittance “technical problem” with Bank Negara granting approval for the remittance to be issued from Malaysia in Ringgit (or any other non-US Dollar currency)?

This mystery further begs the question – how did 1MDB get its money in Malaysia?  By all public pronouncements from 1MDB and by Ministers in Parliament, 1MDB certainly doesn’t have “the equivalent of US$350 million” or nearly RM1.5 billion in cash sitting around in its local bank accounts.

That’s when you refer back to 1MDB’s 24 April 2017 IPIC settlement announcement for more clues. Then, 1MDB explicitly stated that the company’s “obligations will be met by 1MDB, primarily via monetization of 1MDB-owned investment fund units”.

The last we know, these investment fund ‘units’ were held in the now-defunct BSI Bank, Singapore.  The last known value on the balance of these ‘units’ was US$940 million.

Hence, one would certainly like to ask 1MDB, if the source of the “equivalent of US$350 million” came of the sale of these ‘units’ overseas?  If that were so, wouldn’t the investment disposal proceeds not be in US Dollars?

That’s when you go back to 1MDB’s latest statement, hoping for an easy answer.  However, like any good 1MDB statement, you will never get an honest and straightforward answer.

1MDB disclosed that “all funds paid to IPIC are from proceeds of the on-going rationalisation programme”.  This time, it’s just as important to make inference from what is not stated, beyond what is actually stated.

Notice how in the current statement, 1MDB no longer makes any reference to the “monetization of the 1MDB-owned investment fund units”, which was previously included in all of 1MDB’s past responses on the issue, including two separate Finance Minister’s replies to me in Parliament.

If 1MDB’s “equivalent of US$350 million” payment to IPIC was not the proceeds from the ‘units’ sale, then where did the money come from?  1MDB has after all, sold or transferred all of its assets – both energy and real estate, and have already used such proceeds to pare down their humongous debt and interest payments.

Hence, the US$350 million question now is, did this money come from the Ministry of Finance, directly or indirectly via some convoluted “rationalisation” schemes?  1MDB and Dato’ Seri Najib Razak must come clean on the matter, especially since 1MDB has another US$300 million and US$603 million to pay by 31 August and 31 December respectively.

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No Malaysian or international is willing to help 1MDB launder funds via the sale of fraudulent investment ‘units’ to cover up 1MDB’s debt to IPIC

1MDB has failed to meet its own self-imposed deadline to repay its debts to Abu Dhabi’s International Petroleum Investment Corporation (IPIC). The first instalment of US$602,725,000 was due on 31 July as part of the settlement arrived at the London Arbitration Court between IPIC, 1MDB and the Ministry of Finance in April 2017.

Then, 1MDB had disclosed that “these obligations will be met by 1MDB, primarily via monetization of 1MDB-owned investment fund units”.

Now with the payment in default, 1MDB said that it “is awaiting funds that were due to be received in July. Due to the need for additional regulatory approvals, the receipt of those funds has been delayed to August.”

The Prime Minister, Dato’ Seri Najib Razak repeated the same when questioned in Parliament by the Opposition Leader, Dato’ Seri Wan Azizah Wan Ismail, claiming that the delay in payment is merely a “technical issue” without elaborating any further.

All of the above responses are cryptic and opaque as no one after reading or listening to the above responses have any clue as to why exactly is there apparent difficulty in processing the above transactions, or what regulatory approvals are involved, in making the above payment to IPIC.

The reason for the opacity and secrecy is simple. There is no Bank in the world today who is willing to process the ‘sale’ of the 1MDB-owned investment fund ‘units’. This is because the United States Department of Justice have stated that these ‘units’ were fraudulent. They were created to cover-up the more than US$1 billion which were misappropriated by 1MDB to Good Star Limited when the intent was to have invested with Petrosaudi International Limited.

In fact, the Singapore Courts also confirmed that the financial analyst from NRA Capital in Singapore was bribed to produce the false valuation report on these investment ‘units’.

Any Bank, Malaysian or international which facilitates the transaction involving the sale of these fraudulent investment ‘units’ by 1MDB to whoever or whichever party would hence be guilty of facilitating money laundering.

BSI Bank, the Singapore branch of the 132-year-old Swiss private bank which was the ‘custodian bank’ for the above 1MDB investment had already been punished. It’s merchant banking licence was terminated by Singapore and subsequently, the Switzerland’s financial regulator, FINMA has demanded that the Bank be dissolved.

No bank worth its salt would want to experience and endure the same fate as BSI Bank or many other Banks which have been fined and punished as a result of their entanglement with 1MDB.

The only way for 1MDB to repay IPIC would be a direct payment by the Government of Malaysia to IPIC. However, if that were to happen, it would be a direct admission by the Government that 1MDB is carrying the fraudulent investment and billions of dollars have been lost and stolen from the company, which requires a further mega-bailout from the country’s coffers.

Therefore, the decision by the Speaker to deny the Member of Parliament for Segambut’s motion to debate the default by 1MDB is a clear decision to save Dato’ Seri Najib Razak the embarrassment of having the truth revealed in Parliament or worse, incriminating the Prime Minister in the largest ever financial scandal to be inflicted on Malaysia.

We call upon Dato’ Seri Najib Razak to explain himself and tell the full truth to the millions of Malaysians who are gravely concerned with the RM50 billion 1MDB scandal. If there is ‘nothing to hide’ and what we have stated above is in anyway without basis as the BN leaders often claim, then come to Parliament, answer questions and debate openly.

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The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia

Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.

Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.

Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.

Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.

Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.

In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.

The Malaysian Insight quoted sources that “there are potential conflicts of interest”.  This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia.  What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?

Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards.  He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017.  Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.

Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another.  If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour?  Why didn’t the switch take place in March itself, when the transfer was executed?

Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.

The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?

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Incoming RM42 billion taxpayers' bailout: Bandar Malaysia deal collapse, sale of Edra Energy at a loss and 1MDB-IPIC “settlement” mark total failure of 1MDB “rationalisation exercise”

The entire 1MDB “rationalisation exercise” announced as “completed” by the Prime Minister on 2016 New Year’s Day has been completely unravelled with the latest announcement that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed.

The Government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.

The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets.  Edra Energy had acquired the power plants for a total of RM12.1 billion.  In addition, the Government of Malaysia had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.

However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion.  The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions which amounted to more than RM3 billion over the period.

Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds which were raised for the power plant acquistion in 2012.

As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Ministry of Finance (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.

This had come as a complete shock to Malaysians as 1MDB and the Finance Ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.

Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants.  The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.

Now with the latest collapse of the proposed sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings Bhd (IWH), the entire “rationalisation” exercise architected by Arul Kanda and hailed by the Prime Minister and Cabinet has been completely unravelled.

The devastating implication of the rationalisation failure staring at our faces is staggering.  Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians tax-payer will have to pay for most of 1MDB’s still-outstanding debts including:

(i)             RM5 billion 30-year bond guaranteed by the Federal Government issued in 2009;
(ii)           US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc.;
(iii)          US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by the Minister of Finance, Dato’ Seri Najib Razak;
(iv)          US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc,;
(v)            RM800 million loan from SOCSO in 2010, guaranteed by the Federal Government; and
(vi)          RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF

The above sums up to RM8.2 billion and US$7.73 billion, or a combined total of RM41.7 billion

While I have called for Arul Kanda, the 1MDB President and CEO to resign or be sacked yesterday, it is the Prime Minister, Dato’ Seri Najib Razak who must be ultimately accountable.

He is not only the official with the ultimate decision-making authority in 1MDB as specified in the company’s Memorandum and Articles of Association, his promises of resolution of the above scandal without a bailout by the Malaysian Government have been irredeemably broken.

What’s more, banking documents exposed by the United States Department of Justice (US DOJ) have shown Dato’ Seri Najib Razak to have received in his personal bank account in Malaysia, the sums of US$731 million originating from 1MDB.  He has never denied the US DOJ allegations and steadfastly refused to provide any explanations to the Parliament or the Malaysian public.

With Dato’ Seri Najib Razak’s iron-grip control over UMNO and Barisan Nasional, the country’s legislative, enforcement and prosecution institutions, it is now up to Malaysians to sack the Prime Minister in the coming general elections to ensure that he is made accountable for the single biggest financial scandal in the history of Malaysia.

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Why is the PAC Chairman, Datuk Hasan Arifin as quiet as a mouse over the 1MDB-IPIC “settlement” where the Finance Ministry agreed to assume US$3.5 bil. of 1MDB liabilities from IPIC?

Malaysians are still up in arms over the 1MDB-IPIC “settlement” which was announced less than two weeks ago where the Ministry of Finance has agreed to assume US$3.5 billion of 1MDB bond liabilities which were previously bourne by the International Petroleum Investment Corporation (IPIC) of Abu Dhabi.

The Malaysian Government had agreed to do so despite the fact that both 1MDB and the Cabinet Ministers had in the past insisted that 1MDB had already paid to IPIC’s subsidiary, British Virgin Island-registered Aabar Investment PJS Limited (“Aabar(BVI)”) a total of RM3.51 billion between 2012 and 2014.

The Second Finance Minister, Dato’ Seri Johari Abdul Ghani had previously said he was “very confident” of 1MDB winning the arbitration fight against IPIC.  Despite the bravado displayed, it was 1MDB which capitulated before the arbitration proceedings commenced in full, with the Malaysian parties conceding pretty much to all substantive demands from IPIC.

However, the Second Finance Minister denied any responsibility for the outrageous settlement terms.  Instead, he shifted the blame to Dato’ Seri Najib Razak by pointing out that “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.

Dato’ Seri Johari Abdul Ghani even defended himself by revealing that there was a letter from the BVI Registrar of Companies clearly stating that Aabar(BVI) was indeed a subsidiary of IPIC.

While the existence of such a presumably legitimate letter still does not in itself prove that Aabar(BVI) isn’t a fraudulent set up, it does highlight the fact that the Government’s decision defies all logic.  After all, why would the Government then under all rational circumstances, concede to the demands of IPIC if there was nothing incriminating on the part of 1MDB? As the Malay proverb goes, there must be “udang di sebalik batu”.

This was the reason for my call for the newly-appointed Auditor-General and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

I certainly wasn’t the only one asking for a review.  Even Barisan Nasional Members of Parliament in the PAC, Marcus Mojigoh of Putatan who asked for the above letter to be presented and Aziz Sheikh Fadzir of Kulim Bandar Baru who asked where the payments to Aabar(BVI) went, are keen to obtain answers.

However, instead of responding to requests by multiple parties to re-open the inquiry, the Public Accounts Committee Chairman, Datuk Hasan Arifin has remained as quite as a mouse.  In fact, not only has he not released any statement on an issue of such import, involving more than RM15 billion of tax-payers’ funds, he has been avoiding media enquiries like plague!

I have been informed that he has refused to pick up phone calls, text message or emails from journalists with regards to the above.

Datuk Hasan Arifin’s lack of action is certainly consistent with his track record of covering up for the Najib administration – when he refused to summon the Prime Minister to the PAC as a witness, saying that he has to “cari makan”, and when he secretly and unilaterally amended the finalised PAC Report which was tabled in Parliament.

However, the fact that the loss of US$3.51 billion is staring at Malaysian faces today deserves at the very least, an acknowledgement from the Chairman of the PAC, the very institution conceived to check and scrutinise Government-related expenditures.

If Datuk Hasan Arifin cannot bring himself to, or can’t be bothered to perform his parliamentary and constitutionally entrusted role, he should have the moral decency to resign from his position.  He should give way to someone who is at least somewhat serious about integrity, accountability and being answerable to Malaysians.

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Perfect opportunity for Auditor-General and PAC to re-look into 1MDB scandal: review 1MDB-IPIC settlement which had Malaysians bearing US$7.01 bil. to resolve 1MDB’s US$3.5 bil. bond borrowing

Yesterday, the Second Finance Minister, Dato’ Seri Johari Abdul Ghani desperately tried to backtrack from his original assertion which tried to shift the blame for the 1MDB-IPIC “settlement” to the Prime Minister.

The glorified ‘settlement’ had in effect shifted the burden on repaying 1MDB’s US$3.5 billion bond to the Ministry of Finance, despite repeated assertions by 1MDB and Dato’ Seri Johari himself that 1MDB has already paid IPIC US$3.51 billion in the past.  This meant that Malaysians have to bear a whopping US$7.01 billion to resolve 1MDB’s US$3.5 billion bond borrowing before even taking into consideration the annual interest payments of approximately US$200 million!

“I don't report to him. I never contradicted the Prime Minister. Don't try to split me and the prime minister with this matter," the Second Finance Minister told Malaysiakini.

However, I never accused him of “contradicting” the Prime Minister.  I merely repeated what he had said earlier, which was “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.  His own statement clearly showed that while he had all along said that the dispute between 1MDB and IPIC should go to arbitration and that he was “very confident” of the Malaysian parties winning the case, he had to wash his hands off the matter as the matter has been decided by the Prime Minister.

I had then said that if the US$3.5 billion or RM15 billion matter is “beyond [him]” as a Finance Minister, then he might as well resign from his office.

However, Dato’ Seri Johari shot back, asking "Who is Pua to ask me to resign?”  “I don't report to him. I never contradicted the prime minister. Don't try to split me and the Prime Minister with this matter," he added.

Dato’ Seri Johari appears to have forgotten, while he reports to the Prime Minister in the Cabinet, he is there to serve the interest of Malaysians and not that of the Prime Minister.  If the decision of the Prime Minister is clearly detrimental to the interest of Malaysians, as the settlement showed, then it is certainly the duty of a Finance Minister to make things right.

However, the Second Finance Minister is clearly more interested in blindly supporting Dato’ Seri Najib Razak, by brushing off my allegation that Najib was conflicted in making the decision with regard to the settlement.

I call upon Dato’ Seri Johari to access his conscience and determine facts of the matter, something which is fully within the powers of a Finance Minister. Of the US$3.51 billion which 1MDB had purportedly paid to IPIC, Dato’ Seri Najib Razak has received US$30 million in in personal bank account in while his stepson, Riza Aziz received US$238 million via his company, Red Granite.

The above facts which were outlined in United States Department of Justice (US DOJ) suit to seize US$1 billion of laundered assets by funds originating from 1MDB has never been disputed by Dato’ Seri Najib Razak himself, and if indeed true, the clearly puts the Prime Minister in a position of conflict when deciding on the settlement terms with IPIC.

If the Second Finance Minister is genuine in his desire to “serve the nation” as professed in his March open letter to me, then I ask him to join me in calling for the Auditor-General (AG) and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

It should be noted that the PAC was told by 1MDB and its CEO, Arul Kanda that all payments which have been made to IPIC would be used to offset the US$3.5 billion 1MDB bonds which were guaranteed by IPIC.  The PAC also never made the recommendation for the Ministry of Finance to take over the liability for the bonds from IPIC – that would be just ridiculous.

Hence, it is crucial for both the AG and the PAC to re-visit the 1MDB scandal in the light of new evidence, including but not limited to the “settlement” agreement with IPIC as well as the new information contained in the US DOJ suit to seize the US$1 billion worth of laundered assets with funds originating from 1MDB.

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Did Dato’ Seri Johari Abdul Ghani just blame the Prime Minister for sacrificing US$3.5 billion in 1MDB’s “settlement” with IPIC for “the bigger picture”?

In an exclusive response to Malaysiakini yesterday, Dato’ Seri Johari Abdul Ghani insisted that he has proof that Aabar Investment PJS Limited (“Aabar(BVI)”), an entity incorporated in the British Virgin Islands which 1MDB has already paid US$3.51 billion was a genuine subsidiary of International Petroleum Investment Corporation (IPIC) of Abu Dhabi.

"As far as I am concerned, based on records provided by 1MDB to the Public Accounts Committee (PAC) prior to the settlement agreement, Aabar Investments PJS Ltd (BVI) is a subsidiary of IPIC.  A fact which was confirmed by the Registrar of Corporate Affairs of the British Virgin Islands by its letter dated Aug 11, 2016," he told Malaysiakini.

The question is, if the so-called “proof” is so incontrovertible, then it makes absolutely no sense to concede on a whopping US$3.5 billion or more than RM15 billion based on today’s exchange rates!

Instead of being all gung-ho in being able to win the IPIC-initiated arbitration, the Second Finance Minister said “the matter is beyond [him]” in a subsequent press conference yesterday.  He now made a complete U-turn claiming that the government decided to look after the “bigger picture”.

“At the end of the day, the government felt that they are looking at the bigger picture on this, in terms of the relationship between Malaysian and Abu Dhabi and so on… So I think that’s beyond me. I’m going for the facts, but this is a bigger thing.”

In fact, the Second Finance Minister shifted the blame to the Prime Minister. “The Prime Minister has made the decision for the country. That’s it,” he retorted.

But that’s exactly what Malaysians are worried about – that it’s the tainted Prime Minister who is making the decisions because he is conflicted!

Based on documents revealed by the United States Department of Justice (US DOJ), which were corroborated by the evidence produced by the Singapore prosecution against its rogue bankers, from the funds transferred to Aabar(BVI), Dato’ Seri Najib Razak personally received a sum of US$30 million in his personal bank account in Ambank in 2012.

Worse, his stepson, Riza Aziz received US$238 million via his Red Granite group of companies.  Some US$100 million of the sum was used to produce the Hollywood movie, The Wolf of Wall Street starring Leonardo Dicaprio.

In addition, isn’t Dato’ Seri Johari interested to find out if, despite the incontrovertible “proof” in his possession, that Aabar(BVI) had been fraudulently set up by the officers of IPIC – Khadem Al-Qubaishi and Mohamed Badawy Al-Husseiny, both of whom have been sacked by IPIC – in collusion with 1MDB officers to defraud both the Abu Dhabi and Malaysian governments?

Hence the question must be asked as to whether Dato’ Seri Najib Razak decided to ‘settle’ the IPIC dispute which resulted in US$3.5 billion of additional liability for Malaysians because it is really in the interest of the country or, to prevent IPIC from further exposing and confirming his complicity in the entire 1MDB misappropriation scandal.

Therefore, it is utterly irresponsible of Dato’ Seri Johari to wash his hands off the Ministry of Finance taking on the RM15 billion mega-liability.  Instead of acting ignorant, shouldn’t the Second Finance Minister satisfy himself that the Prime Minister has not made the decision out of self-interest? In reality, was the “bigger picture” a blatant attempt to save Najib and Barisan Nasional from losing in the next General Election?

If the matter is indeed “beyond” him as he pleads, then he might as well resign as the Second Finance Minister.

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Dato’ Seri Johari Abdul Ghani must explain what happened to the US$3.51 billion he had previously insisted had already been paid to IPIC

Last August, Second Finance Minister Dato’ Seri Johari Abdul Ghani said he was very confident that 1Malaysia Development Bhd (1MDB) will win the arbitration in dispute with Abu Dhabi's International Petroleum Investment Company (IPIC), given the documents provided by 1MDB to the minister.

"As far as I'm concerned, I am very confident that we will win (the case), based on the documents that I have, supplied by 1MDB to me," he told reporters after a 2017 Budget focus group meeting.

IPIC had claimed up to US$6.5 billion from 1MDB, including 2 bonds amounting to US$3.5 billion issued by the latter and guaranteed by the former.

Dato’ Seri Johari had insisted that 1MDB has already paid US$3.51 billion to IPIC or its purported subsidiary, Aabar Investment PJS Limited (“Aabar(BVI)”), a company registered in the British Virgin Islands.  IPIC on the other hand, has publicly refuted that Aabar(BVI) is not its subsidiary even though it carries the same name as its own subsidiary, Aabar Investment PJS, a company registered in Abu Dhabi.

1MDB claimed it has already paid Aabar(BVI) the amounts of

(i) US$1.367 billion as a “security deposit” for the US$3.5 billion of bonds in 2012

(ii) US$993 billion for the termination of options granted to IPIC or Aabar in November 2014; and

(iii) Additional sums of US$855 million and US$295 million as “top-up security deposit” in September and December 2014 respectively.

"It's too bad for them not to acknowledge that (Aabar BVI), because as far as the record is concerned, the company belongs to them (IPIC).  Now they suddenly say that the company does not belong to them. So we want to see them in court and let the arbitration look at our document," the Second Finance Minister had insisted then.

Even in his open letter to me as recently as last month, Dato’ Seri Johari declared that “as for the dispute regarding the US$3.5 billion, which was paid to the IPIC group of companies by 1MDB, IPIC cannot continually deny that they have received the monies when 1MDB has already paid the same to them. I don't think Malaysians in their right mind will want to just give up on that issue of the payment.”

So the question is, Dato’ Seri Johari Abdul Ghani must now explain why the Malaysian negotiators have “given up” their case against IPIC in their “settlement” announced 2 days ago.

Under the terms of the settlement, despite 1MDB having purportedly paid the US$3.51 billion above to IPIC or its subsidiary, the Ministry of Finance Incorporated (MoF, Inc) has agreed to assume all liabilities arising from the US$3.5 billion of bonds which were previously guaranteed by IPIC.

Given that 1MDB is clearly in no position to pay the debts, Malaysian taxpayers will now have to fork out another US$3.5 billion to bailout 1MDB as part of the above settlement.  This means that we will ultimately pay a whopping total of US$7.01 billion, or more than double the US$3.5 billion of bond borrowings by 1MDB!

What has happened to Dato’ Seri Johari’s gung-ho statement that “we must fight and win this case”?  Why did we capitulate to IPIC’s demands before the fight even began?  Is it because 1MDB has finally conceded that Aabar(BVI) was clearly a fraudulent company to begin with and the US$3.51 billion originally paid has been clearly misappropriated and lost?

More interestingly, just two days before the settlement was announced, he suddenly washes his hands and said he wasn’t “involved in the negotiations. It (is) being done by (the) management and board of 1MDB with PMO’s (Prime Minister’s Office) officers.”

The Second Finance Minister had heroically claimed in his open letter to me that “it would be wholly irresponsible for [him] to shirk off this responsibility and opportunity to serve the nation.”  So may I ask, is agreeing to pay US$7.01 billion for a US$3.5 billion loan the “responsible” thing to do in “serving the nation”?

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1MDB “Settlement” with IPIC an affirmation by 1MDB that they have lost US$3.51 billion purportedly paid to IPIC and its subsidiary, Aabar Investment PJS

1MDB and IPIC have finally announced the conclusion of the much awaited “settlement” to the London arbitration proceedings filed by IPIC against 1MDB.

What is most interesting, who the winner and loser are, can be clearly deduced by their respective statements.

1MDB’s statement was short and sweet, providing scant details other than the fact that “1MDB will, amongst others, make certain payments to IPIC and will assume responsibility for all future interest and principal payments for two bonds issued by 1MDB Group companies due in 2022”.  No figures are stated.

IPIC on the other hand made a detailed announcement to the London Stock Exchange clearly stating that

(i) IPIC will receive US$1.205 billion in 2 equal tranches on 31 July 2017 and 31 December 2017.

(ii) 1MDB and MoF Inc., will assume all responsibility of future interest and principal payments of US$3.5 billion worth of bonds, previously guaranteed by IPIC.

The implication between the 2 statements is staggering.

1MDB tried to paint a rosy picture of the settlement – that the dispute has been resolved with no hard details.  On the other hand, IPIC’s clearly showed that they got exactly what they wanted, the return of US$1.205 billion worth of cash advances to 1MDB since June 2015 and to discharge itself entirely as a guarantor for 1MDB’s US$3.5 billion worth of bonds.

However, of greater significance is the fact that 1MDB’s concession to the above settlement terms is a direct affirmation and confirmation that 1MDB have lost US$3.51 billion worth of payments which have purportedly been paid to IPIC and its subsidiary, Aabar Investments PJS.

Last year, 1MDB and its CEO, Arul Kanda, have informed the Auditor-General (AG) and the Public Accounts Committee (PAC) that the following payments were made to Aabar Investments PJS Limited, a separate company registered in the British Virgin Islands (“Aabar(BVI)”).  It has already been widely known, and confirmed by the United States Department of Justice (US DOJ) that Aabar (BVI) is a fraudulent impostor company.  However, 1MDB and Arul Kanda continued to insist that it is a wholly-owned subsidiary of the IPIC group.

As outlined on Page 92 of the PAC Report on 1MDB, 1MDB claimed it has paid Aabar (BVI) the amounts of

(i) US$1.367 billion as a “security deposit” for the US$3.5 billion of bonds in 2012 

(ii) US$993 billion for the termination of options granted to IPIC or Aabar in November 2014; and

(iii) Additional sums of US$855 million and US$295 million as “top-up security deposit” in September and December 2014 respectively.

These sums, as emphasized in the PAC Report, could not be verified by the AG as 1MDB has refused to provide the relevant proof and documentation of the transactions, despite repeated requests over months.

The question then is, if we have indeed paid the above sums, totalling US$3.51 billion to IPIC or its subsidiaries, why then are we allowing IPIC to relieve itself an ultimate guarantor for the bonds and why is MOF Inc, assuming the US$3.5 billion of liability?

Is 1MDB and Arul Kanda telling us that despite having paid US$3.51 billion to IPIC, we still owe the US$3.5 billion we borrowed?  Putting it simply, are Malaysians to fork out a whopping US$7.01 billion to settle 1MDB’s US$3.5 billion of bonds?!

The only explanation for the incredulous situation is that the US$3.51 billion was never paid to IPIC as claimed.  Instead, the funds were misappropriated or laundered as documented widely in the US DOJ charges against Jho Low and company, and Singapore prosecution its local banking officers.

Therefore, we call upon the Prime Minister, who is also the Minister of Finance, Dato’ Seri Najib Razak to come clean on the discrepancy resulting from the “settlement” with IPIC, since Malaysians have now to pay more than double what was actually borrowed by 1MDB.

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1MDB new auditor’s biggest challenge now is to audit and verify the purported sale of 1MDB’s Brazen Sky or its assets to a “undisclosed third party”

The Singapore Straits Times reported that 1MDB is expected to ink an agreement with Abu Dhabi's International Petroleum Investment Co (IPIC) to settle a dispute involving billions of dollars very soon.

In its report, the Singapore daily cited sources as saying the agreement would see 1MDB pay IPIC US$1.2 billion by year end, to settle a loan and accumulated interest from a bailout the IPIC gave 1MDB in July 2015.

It said most of the money would come from the sale of "fund units" from 1MDB subsidiary Brazen Sky to an undisclosed buyer.  Brazen Sky is of particular interest to 1MDB watchers because its account in Singapore's BSI Bank was supposed to be the account used to receive funds from 1MDB's Cayman Islands account.

If the Singapore Straits Times report is to be believed, then 1MDB’s newly appointed auditor, Parker Randall will now be faced with their biggest test to date.  Parker Randall, represented locally by the Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) must carry out the necessary due diligence and audit to ensure that the transactions taking place are bona fide and above board.

Of interest is the fact that until today, 1MDB has failed to provide any form of clarity of these “fund units” worth US$940 million purported redeemed from a Cayman Island investment fund.

1MDB has refused, despite repeated demands from the Public Accounts Committee and the Auditor-General to provide financial statements and documents of 1MDB’s overseas bank accounts and assets, including that of Brazen Sky Limited.

Worse, these assets were purportedly parked in BSI Bank, Singapore which have already had its merchant banking license withdrawn by Monetary Authority of Singapore.  When questioned in Parliament, the Minister of Finance responded that these units were not managed by any fund manager or investment bank, while also refusing to where the “units” have been moved to.

Hence it is critical for Parker Randall or aftaas to confirm the existence and authenticity of the US$940 million worth of “units”.  Most interestingly, despite the fluctuating value of investment assets over time, these fund units appeared to have a frozen value of US$940 million since its redemption in January 2015.

In addition, should Brazen Sky or its assets be sold, Parker Randall must verify that the sale and purchase transaction is a genuine transaction and not another case of paper shuffling which have taken place earlier in 1MDB’s US$1.8 billion investment in Petrosaudi.

It is also important for Parker Randall to confirm and satisfy itself on the identity of the mysterious “undisclosed buyer” of these mysterious Brazen Sky assets as part of its audit verification. The auditors must also trace the money trail of the fund transfers from the mysterious undisclosed buyer into 1MDB before being transferred to IPIC.

The audit is all the more important given the spotlight 1MDB has, which has caused some half a dozen of banks around the world to be shutdown or penalised for facilitating money laundering transactions.

Surely, after Deloitte Malaysia disgracefully resigned from 1MDB for failing to detect any of the above illicit and money laundering activities, Parker Randall do not want to follow the same footsteps and sully its international reputation.

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Dato’ Seri Najib Razak undisputed King of Obfuscation, carefully wording parliamentary replies with selected choice facts

Meanwhile, crucial details are deliberately omitted, calculated to present an alternate reality for the media and the rakyat.

At first, I was both amused and bemused by yesterday’s headline on Malaysiakini story, “PM: 1MDB has cleared its bank debts, short-term debts”.  The headline is factually correct, although it needs an alert and informed reader to read between the lines.

Later however, I was stumped and stupefied by the headlines of The Star and The New Straits Times (NST), screaming “Najib: 1MDB is now debt free” and “1MDB now debt free: Finance Ministry”.

I immediately sought out my colleague, Member of Parliament for Bakri, Er Teck Hwa for a copy of Dato’ Seri Najib Razak’s parliamentary reply to his question, which was the basis for the above news stories.

He had asked the Finance Minister to state, among other things, “debts and assets of 1MDB in and out of Malaysia for the years, 2015 and 2016”.

Dato’ Seri Najib Razak responded that 1MDB made full settlement amounting to RM229.5mil for a revolving credit facility to Affin Bank in November, 2015.

Last year, 1MDB has also successfully repaid a RM950mil in a standby credit facility from the Federal Government, a RM2bil term-loan facility from Marstan Investments N.V and a US$150mil term financing facility from Exim Bank.

With the RM3.8 billion worth of debts repaid, the Finance Minister further added that 1MDB no longer have any borrowings with banks, nor any other short-term debts.

As if on cue, knowingly or unknowingly, The Star and The NST fell for it hook, line and sinker by declaring that “1MDB is now debt free”, painting most beautiful alternate reality which the Prime Minister would like you to believe.

Except the reality is so exceedingly different, that you can only conclude that Dato’ Seri Najib Razak’s reply was deliberately designed to obfuscate the truth to achieve the effect convincing Malaysians of the biggest lie of them all, that “1MDB is debt free”.

Dato’ Seri Najib has conveniently and mischievously failed to disclose the multiple elephants squeezed into the room -  that 1MDB still have outstanding

(i)             a 30-year RM5 billion bond which is guaranteed by the Federal Government

(ii)           two 10-year US$1.75 billion bonds which was guaranteed by Abu Dhabi’s International Petroleum Investment Corporation (IPIC) but have since been indemnified by the Ministry of Finance, Incorporated (MoF Inc)

(iii)          a 10-year US$3.0 billion bond, guaranteed with a “Letter of Support” issued by the Minister of Finance

(iv)          a US$1.0 billion advance by IPIC, indemnified by MOF Inc

(v)            at least US$230 million worth of interest payments by IPIC on behalf of 1MDB, indemnified by MOF Inc.

Hence, the total amount of 1MDB debt still outstanding, and directly or indirectly guaranteed by the Federal Government are RM5.0 billion and at least US$7.73 billion, or a total of more than RM39 billion!

This is despite the fact that the Federal Government has already bailed out 1MDB’s real estate division by assuming 1MDB’s RM2.4 billion worth of sukuk and another RM800 million borrowed from SOCSO.

In addition, the RM39 billion is still outstanding despite the fact that 1MDB has already disposed of its power plant assets for a total of RM9.83 billion.

Hence it complete defies belief that Dato’ Seri Najib Razak was less than truthful with the material omission of more than RM39 billion worth debt in his reply to my Bakri colleague.  Instead, the Prime Minister chose to extol 1MDB’s RM3.8 billion repayments, barely a-tenth of the scandal-ridden fund’s total debts.

He even carefully worded his happy conclusion, that 1MDB no longer owes any bank any money or any other short term debts, to skew the impression and perception of those who are not alert or informed.  If this does not crown Dato’ Seri Najib the devious King of Obfuscation in Malaysia, then I certainly don’t know what would.

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The Second Minister of Finance is living in a different planet for claiming 1MDB is not related in anyway to the Federal Government Budget

It is amazing how an UMNO MPs speaks when he is in or out of the Cabinet.

Dato’ Seri Johari Abdul Ghani, before he was appointed to the Cabinet in July last year, was one of the more vocal UMNO members of parliament who asked probing questions with regards to the unravelling RM50 billion 1MDB scandal.

Today, after being promoted to become the Second Finance Minister recently, he would tell Malaysians that 1MDB has nothing to do with the Federal Government budget.

In his explanation to Malaysiakini, he said the government's budget had nothing to do with 1MDB, which was managed by its board.

“A budget is a budget, 1MDB is 1MDB, they are two separate matters.  Budget is something that we present to the public to explain what the government is going to do - how to spend the money with the revenue. The budget has nothing to do with 1MDB. Please tell me which part is related,” he rationalised.

Instead, today we have former Cabinet Ministers, including the former Second Finance Minister, Datuk Ahmad Husni Hanadzlah asking probing questions about 1MDB and its very existence during his budget speech.

1MDB has everything to do with the Federal Government Budget not only because the global scandal has made Malaysia a renown kleptocracy and puts into question on why a tainted Dato’ Seri Najib Razak, who was found to have siphoned US$731 million into his personal bank account, is still the Finance and Prime Minister of Malaysia.

1MDB has everything to do directly with the Budget because Federal Government funds are being utilised to bail out 1MDB.

Most crucially, the Federal Government has given direct and indirect guarantees on RM5 billion and nearly US$8 billion, or an estimated combined RM32 billion worth of 1MDB’s borrowings and liabilities. If 1MDB fails to repay its loans and obligations, then the Finance Ministry will have to foot the bill.  RM32 billion will raise our targeted deficit of 3% of the GDP to 5.4%!

Any responsible Finance Minister will have the obligation to explain to the Malaysian tax-payers as to how the financial scandal will be resolved, especially since the much-hyped rationalisation exercsise which was supposed to by completed by June this year has collapsed.

The collapse was a result of the discovery that 1MDB has made as much as US$3.51 billion payment, according to information submitted by the 1MDB CEO, Arul Kanda to the Auditor-General, to a fraudulent Aabar Investment PJS Limited which was incorporated in the British Virgin Islands.

As a result, the parent of the “real” Aabar Investment PJS of Abu Dhabi, International Petroleum Investment Corporation (IPIC) has brought a suit against 1MDB and the Malaysian Government to the Arbitration Court in London. Of interest is the fact that the Ministry of Finance Incorporated has indemnified IPIC of up to US$4.8 billion of 1MDB’s obligations.

The failure of Dato’ Seri Najib Razak in addressing the 1MDB issue, especially in the Budget, is a clear attempt to hide the scandal and cover up for the guilty parties, including himself, who had misappropriated billions of dollars from the state-owned investment firm.

It might be useful to remind Dato Seri Johari Abdul Ghani that in the Budgets prior to 2013, Dato’ Seri Najib was happily gloating about 1MDB projects and achievements in his Budget speeches and including the proposed 1MDB investments in Bandar Malaysia and Tun Razak Exchange in the data compiled for the Non-Financial Public Corporations (NFPCs).  If it was relevant for the Budget then, why is it suddenly not relevant today?

The Second Finance Minister should be ashamed of himself for failing the people of Malaysia after he has been appointed to the Cabinet to get to the bottom of the single largest scandal ever suffered by Malaysia, and instead turned into a stooge to defend the kleptocrats of this nation.

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Has the PM’s Department decided to award the East Coast Rail Link to China Communications Construction Company (CCCC) for an inflated cost of RM60 billion without any tender?

The Sarawak Report has exposed new documents which alleged that the Malaysian Government is in the midst of finalising a new contract to award China Communications Construction Company (CCCC) for a whopping sum of RM60 billion.  The East Coast Economic Region Development Council had previously expected the cost of the project to be ‘only’ RM30 billion.

Malaysians are taken aback by the speculated cost for the project and cannot be blamed for giving Sarawak Report the benefit of the doubt because the whistle-blower website has been proven right time and again, especially with regards to its reporting of the multi-billion dollar 1MDB scandal.

As a measure of comparison, the 329km Ipoh-Padang Besar double-tracking project was awarded to MMC-Gamuda consortium for RM14.5 billion in 2003.  More recently in December 2015, the 179km Gemas-Johor Bahru link was awarded to China Railway Engineering Corporation for the sum of RM7.1 billion.  On average, the railway projects cost RM44.0 million and RM39.8 million per kilometre respectively.

However, at the cost of RM60 billion, the 620km ECRL will cost a monstrous RM96.8 billion per kilometre to construct.  That would mean that the ECRL will cost 120% and 143% more than northern and southern double-tracking projects respectively!

The massively inflated alleged cost of the ECRL without a tender exercise lends credence to the Sarawak Report documents which detailed how the “excess” was to bailout the debt-stricken 1MDB.

The documents reveal that CCCC, upon the award of the inflated contract, will via a nominated “credit-worthy” company pay 1MDB the sum of US$850 million (RM3.4bn) for the purposes of repayment for International Petroleum Investment Corporation (IPIC) advances, and assume the debt of 1MDB subsidiaries amounting to US$4.78 billion (RM19.4bn) inclusive of interest which had been guaranteed by IPIC.

These payments are clearly meant to go towards the settlement with IPIC which has taken 1MDB to the London arbitration court for the amount of US$6.5 billion.

More interestingly, part of the sum from the inflated cost will go towards acquiring substantial stakes in fugitive Low Taek Jho-linked companies, Putrajaya Perdana Bhd and Loh & Loh Corporation Bhd for US$244 million and US$71 million respectively.

In addition, there is a proposed payment by CCCC to a “consultancy/strategic/comms services” company and another “nominated company” for the amounts of US$65 million and US$200 million respectively.  The payment for the unnamed mysterious “nominated company” was to be made upon the official signing of the ECRL contract expected in December this year.  Hence, it appears that even in the exercise of a desperate bailout, generous commissions will be paid to certain parties, perhaps to continue their lifestyles of luxury and debauchery.

In effect, the Najib administration is merely ECRL as an excuse and an outrageous cover up to mask additional borrowings of RM30 billion in order to repay the billions embezzled from 1MDB.  Most tragically, it means that ordinary Malaysians as the Government will finance the entire ECRL project with more crippling debt.  We are merely covering up a gigantic hole by digging ourselves an even bigger hole.

We call upon Dato’ Seri Najib Razak to confirm or deny that the award of the contract to CCCC is in the works, and provide transparent and accountable justifications for the award in the absence of any competitive tender exercise.

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Are the new 1MDB Board of Directors led by Treasury-General Tan Sri Irwan Serigar going to turn a blind eye after the Sarawak Report exposed an outrageous round-tripping fraud involving US$1.22 billion?

The Sarawak Report first exposed the banking documents on 11 July which showed that 1MDB Global Investment Limited (1MDB GIL) transferred US$1.28 billion between September to November 2014 to the fraudulent Aabar Investment PJS Limited which was incorporated in the British Virgin Islands (“Aabar(BVI)”).

Yesterday, the Sarawak Report leaked more explosive sections from the Auditor-General’s Report relating to transactions between Brazen Sky Limited, another 1MDB subsidiary which held 1MDB’s controversial investments with a little-known Cayman Islands investment fund and 1MDB GIL.

The Sarawak Report concluded based on the additional information from the classified report, 1MDB clearly concocted a round-tripping exercise to give the impression that it has successfully redeemed cash from the Cayman Islands investment.  The fraudulent transactions were apparently so convincing that 1MDB’s auditors, Deloitte Malaysia happily signed off the company’s audited accounts.

Assuming the leaked copy of the AG’s Report is genuine, this is a massive allegation because for the first time hard evidence is shown to incriminate 1MDB officials as parties colluding with the owners of the fake Aabar (BVI) - Mohamed Al Husseiny and Khadem al Qubaisi.

Those incriminated include Datuk Shahrol Halmi, the former 1MDB CEO who was instrumental in 1MDB’s investment in the Cayman Islands fund; Mohd Hazem Abdul Rahman, who was the CEO when the above round-tripping transactions took place and Arul Kanda Kandasamy, the current 1MDB President who is covering up the above shenanigans.

The exposé by Sarawak Report would hugely complicate 1MDB’s case in the arbitration proceedings brought by International Petroleum Investment Corporation (IPIC) against 1MDB involving US$6.5 billion.  IPIC is the parent company of Abu Dhabi’s Aabar Investment PJS, both of whom have officially denied that Aabar (BVI) is ever related to their group.  1MDB’s knowing participation with Aabar (BVI) to defraud both IPIC and the Malaysian government would certainly compromise 1MDB’s claims that it was an innocent victim to IPIC’s then employees Al Husseiny and Al Qubaisi.

What is more immediately important however, is what is the new 1MDB Board of Directors going to do about this new information, now that it has been made public?

The previous Board of Directors led by Chairman Tan Sri Lodin Wok Kamaruddin were forced to resign in shame after the Public Accounts Committee (PAC) condemned them in its report on 1MDB to the Parliament.  These Directors failed miserably to carry out their fiduciary duties and responsibilities with any degree of diligence.

A recent exposé by Sarawak Report also showed that the previous board has blindly signed a retrospective approval of the US$1.2 billion payments by 1MDB GIL to Aabar (BVI) more than a year after these fraudulent transactions took place.  These good-for-nothing “cari makan” directors included Tan Sri Ismee Ismail, Tan Sri Ong Gim Huat, Ashwin Valiram, Datuk Shahrol Halmi and Arul Kanda.

The question now is, will the new Board of Directors appointed on 31 May 2016, led by Treasury-General, Tan Sri Irwan Serigar do a better and proper job?

Together with the other 2 new Board Members, Datuk Kamal Mohd Ali and Dato’ Norazman Ayub, are they going to demand answers to these new explosive allegations and act on them – including but not limited to filing police reports?  It is part of the directors’ roles and responsibilities to investigate cases of fraud and report them accordingly to ensure the interest of the Malaysian tax-payers are fully protected.

Or will they similarly turn a blind eye on indisputably, the single largest case of financial fraud in Malaysia’s history?

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The best Hari Raya present: the Auditor-General's discoveries on 1MDB which the Najib administration tried to hide via the Official Secrets Act (OSA)

It appears that The Sarawak Report has successfully procured the classified Auditor-General’s Report on 1MDB with the relevant accompanying documents.

It is a feat even I could not achieve because the Public Accounts Committee (PAC) Chairman Datuk Hasan Arifin has ruled that even PAC members could not retain a copy of the document.  This is despite the fact that we have been specifically cleared to access the Report.  I could only read the Report during the PAC meetings or upon request at the Parliamentary office.

What is important however, isn’t the feat itself, but the fact that the whole wide world can now confirm what was speculated earlier as the real reason why the AG’s Report has not been declassified and presented to the Parliament.  It is because the Auditor-General’s comments on the fishy tales and documents supplied by 1MDB is even more damning than the already damning PAC Report on the 1MDB investigations.

For example, 1MDB made payments to the British Virgin Islands (BVI) Incorporated Aabar Investment PJS Limited amounting to US$1.15 billion between May to November 2014.  These were originally explained to the Auditor-General as compensation payments for the termination of options granted to Aabar.

However, much later, after it was exposed that they have separately made another payment of US$993 million for the same purpose in November 2014, 1MDB changed their tune and claimed the US$1.15 billion was meant for a separate “top-up security” Deposit to Aabar.

1MDB even got its Board of Directors to retrospectively approve the above US$1.15 billion “top-up security” payment one year later in November 2015.

This was despite the fact that Arul Kanda, as the Chief Executive of 1MDB would have already received notification from International Petroleum Investment Corporation (IPIC) and its subsidiary, Aabar Investment PJS of Abu Dhabi in July 2015 that the BVI-incorporated Aabar is a fictitious entity unrelated to them!

In the spirit of honesty and decency during the month of AidilFitri celebrations, Dato’ Seri Najib Razak must immediately instruct the declassification of the AG’s Report, which was never meant to be permanently classified.  After all, if he has nothing to hide and insists that the Sarawak Report has once again falsified documents and doctored, in this case the AG’s Report, then making public the “real” Report will once and for all destroy Sarawak Report’s credibility.

The failure to declassify the Auditor-General’s Report however, would only prove to Malaysians and the whole wide world that we have a Prime Minister who is guilty of one of the biggest cover up in the history of the world.  It would also ultimately confirm the public perception that we are a country run by kleptocrats.

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