Ministry of Finance Bailout of 1MDB continues unabated with its latest acquisition of 106 Exchange Tower to be built in Tun Razak Exchange

The Edge reported yesterday of the Ministry of Finance’s takeover of the 106-storey 106 Exchange Tower through the company MKD Signature.  The 3.42 acres of land for the project was previously acquired by Indonesian conglomerate, Mulia Group for the sum of RM665 million.

The 106-storey Exchange Tower was initially proof of 1MDB’s success with the TRX project as it was a wholly-owned foreign investment by Indonesia’s Mulia Group. However, news of the transfer of a majority stake ‘back’ to the Malaysian Government goes to prove that there is something extremely fishy going on.

Why is it even necessary for the Government to use tax-payers’ funds to get involved in another mega-property project?  Didn’t the Second Finance Minister, Dato’ Seri Johari Abdul Ghani announced a Cabinet decision to freeze all high-end commercial and residential projects?  Why is the Ministry of Finance participating in the aggravation of the property glut in the country?

More importantly, if Mulia Group had paid RM665 million for the land, the question is how much did the Ministry of Finance pay to acquire the 51% stake in the project?
The complete lack of transparency over the deal which would involve hundreds of millions of ringgit, possibly to the tune of billions, raises suspicions that it is really another one of the series of continued bailout of the debt-stricken 1MDB.

Was there for example, a secret ‘put option’ in the sale and purchase agreement between the Mulia Group and 1MDB, where the latter is obliged to buy back a majority stake from Mulia Group with a higher price at a later date?  And because 1MDB obviously has no money to buy back the stake from Melia Group, was the Ministry of Finance was forced to step in to bailout 1MDB?

It should also be noted that this would be the second tract of 1MDB's TRX land that has been bought by MOF companies. It was previously disclosed in Parliament that MOF-owned company Aroma Teraju had purchased another tract of land at the Tun Razak Exchange (TRX) development in 2015.

Last year, I had asked several times in Parliament for the land area and purchase price of the land by Aroma Teraju.  However my question was repeatly shot down because of the purported confidentiality clause in the purchase agreement was with two companies wholly-owned by MOF.

Why hide behind the veil of secrecy when the parties involved are entirely owned by the Government?  Is it because the Ministry of Finance will look utterly stupid for buying back tiny parcels of land back from 1MDB at sums astronomically higher than the RM230 million paid by 1MDB to acquire the 70 acres from the Government?

We call on MOF and 1MDB to confirm and disclose the details of the purchases of the land in TRX above. As wholly-owned companies under the Government, the public deserves to know what is being done with their own money.

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Why is the Cabinet adamant in ignoring Bank Negara's policy prescriptions on the property market imbalance?

Putrajaya’s constant u-turns over its announced luxury property ban are yet another example of the government’s absurd tendency to ignore expert policy advice in favour of ill thought out knee-jerk reactions.

Bank Negara (BNM) had reported last month on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market priced above RM250,000.

The government then immediately issued a poorly thought out directive halting approvals for all new high-end property developments priced above RM1 million per unit.

When the blanket freeze was first announced on November 17, I had already warned that the ban was not going to resolve any of the issues highlighted by Bank Negara. Sure enough, the government has now made a near-complete U-turn its ban in less than a month.

Based on the latest announcements by the Housing and Local Government Minister, Dato’ Seri Noh Omar and the Second Finance Minister, Dato' Seri Johari Abdul Ghani, earlier this week, property developers can now appeal to Ministers for high-end project approvals on a case-by-case basis.  Basically, the Ministers have now granted themselves full discretionary powers to approve projects for developers who can sweet talk way to win the hearts of the Ministers.

The arbitrary nature of this new policy with have serious consequences to short and longer term investments by both foreign and domestic investors in Malaysia.

The thing is, BNM’s report had outlined six different policy recommendations to dealing with specific issues in the property market.   Hence, why doesn’t the government just adopt the advice already given to them by BNM?

To address the high level of unsold residential properties, the report suggested increasing encouragement for the rental market. On affordable housing, it was recommended that the government increase its efficiency in providing and allocating affordable homes. These policies are targeted and are designed to address the specific issues in the residential market.

The government’s halting of new approvals for high-rise residential developments over RM1 million does nothing to address these issues. According to the Edge Weekly’s in-depth report published last weekend, units at that price point and high-rise residences only make up 12.06% and 11.48% of unsold properties respectively.

BNM also suggested better management to address the large incoming supply of commercial properties. This includes ensuring the commercial viability of the project is thoroughly assessed and for developers to be cognisant of demand conditions. However, the government’s blanket ban lacked any mechanism that would allow an objective assessment of each development.

In addition, to alleviate the problem of high office vacancy rates and low rental rates in existing buildings, the report recommended the repurposing of vacant commercial buildings as well as increasing demand for existing space through either rental rebates or greater efforts to attract foreign business.

Unlike these policies, the government’s knee-jerk ban would only halt the approvals for future high-end developments without managing the already severe level of oversupply. It is difficult to understand why the government has chosen to ignore Bank Negara’s relatively sound advice to address these problems.

We call upon the government to take heed of Bank Negara’s recommendations immediately.  It should also conduct a thorough study with all stakeholders and think-tanks to design and implement consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and correspondingly, our economy.

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Our Cabinet has some of the best back-flip acrobats in the world with the unbelievable twists and turns over high-end property development freeze

Second Finance Minister Datuk Seri Johari Abdul Ghani announced on November 17 that the government had sent a directive to halt all approvals for high-end residences, shopping complexes and office buildings priced over RM1 million.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.

The Second Finance Minister subsequently reaffirmed the blanket ban after his fellow Cabinet colleague, Works Minister Datuk Fadillah Yusof said that developments would be reviewed on a case by case basis.

The ‘blanket ban’ had smacked of being a ‘hare-brained’ policy prescription as the Government started granting exemptions to projects which the Government had a vested interested.  In particular, the Minister of Federal Territories, Dato’ Seri Tengku Adnan Tengku Mansor said the 1MDB-linked projects – Tun Razak Exchange and Bandar Malaysia were “pre-approved”, and are hence exempted.

The fact that Bandar Malaysia has not even found a developer with a plan appears immaterial to the ban exemption.

The biased exemption of such projects by Government-linked companies (GLCs) created an uproar among the private sector, who then lobbied hard to ease the ban.

Yesterday, the Government did another double-twist somersault on its ‘blanket ban’. Two statements by Urban Wellbeing and Local Government Minister Tan Sri Noh Omar and Datuk Seri Johari, suggested that the Government will now allow developers to appeal the ban on a case by case basis.

For luxury residential properties, Tan Sri Noh Omar announced that a four-minister committee to review the project applications comprising of Datuk Seri Johari, Datuk Fadillah, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan and himself. The committee would apparently subject its approvals to criteria including the existing housing condition, the number of houses in that location and those priced above RM1 million, as well as the number of unsold houses.

Separately, Datuk Johari said that developers of office spaces and shopping malls could appeal to the relevant ministers if they find locations that lack those properties and can justify their developments. He even went on to say that “anyone can build an office provided you know how to market it”.

Does the Minister actually think that developers are going to build an office block or a mall that they are not confident in selling?

I was among the first who had criticised that the blanket ban would not do much to remedy the property market imbalance.  However, now the Ministers have granted themselves full discretionary powers to grant approval to any developers who can sweet talk way to win the hearts of the Ministers.

Have we now become a communist regime where the Government dictates how many left shoes to manufacture?  Two big mistakes here certainly don’t make a right.

The multiple twists and turns worthy of a world-class acrobatic act only goes to prove that the Najib administration is completely clueless in policy-making.  How does the above, for example, even address the main issue of the lack of affordable housing in the country and the largest oversupply of residential properties were reported at the RM500 000 to RM1 million segment?

The worst type of Government for any investor, foreign or domestic, is the absolutely lack of predictability and consistency in its policies.  The current fiasco will certainly have major short to long term negative implications for Malaysia’s economy.  The Cabinet must remedy its knee-jerk policy-making mechanism and instead, conduct a thorough study with all stakeholders, Bank Negara and think-tanks to design a consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and our economy.

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Why are 1MDB-related projects given special exemptions despite Cabinet blanket ban on luxury property projects above RM1 million in unit values?

Last week, Dato’ Seri Johari Abdul Ghani announced the Cabinet decision on a “temporary ban” approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced over RM1 million effective November 1.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.

Particularly in the Klang Valley, the report found that office vacancy rates had increased from 20.9% in Q1 2015 to 23.6% in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.

It has also been confirmed in various news reports that the Kuala Lumpur City Hall (DBKL) has received the above directive.

However, we are not sure if we should be shocked that the Mayor, Tan Sri Mohd Amin Nordin Abd Aziz announced yesterday that the prospective single largest high-end property development project ever in Malaysia – Bandar Malaysia is exempted from the ban.

Malaysiakini reported that although the Kuala Lumpur City Hall (DBKL) had yet to receive any application regarding the project, Mohd Amin said the freeze on approvals for condominiums, serviced apartments, offices and shopping complexes priced at RM1 million and above is not a blanket ban.

“We haven’t received any application from Bandar Malaysia. No, because it is not a blanket (ban). On certain developments, it can be approved,” he told Malaysiakini.

At the same time, it was announced yesterday that IJM would be building a new RM500 million office tower at Tun Razak Exchange after acquiring TRX City subsidiary Fairview Valley Sdn Bhd. Will this new tower, which will have a gross floor area of 560,000 square feet also be exempted from the ban?

Due to the size of these 1MDB-related projects, they will certainly exacerbate the property over-supply situation in the Klang Valley and effectively blunt the effectiveness of the Cabinet decision to ban high-end development projects.

More critically, if the 486 acres Bandar Malaysia and the 70 acres Tun Razak Exchange projects receive automatic exemptions from the ban – how is that fair to the rest of the property development industry in the country?

Clearly the “temporary ban” is a hare-brained which will fail to actually solve the “supply-demand imbalances” in our property sector. Worse, the investment and business community will only see the inconsistency and unfair policies imposed by the Government.  Can they be blamed if both the domestic and foreign investors take their money and invest in other countries?

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Is the high-end property ‘freeze’ a case of a hare-brained attempt to hose down a fire which has already burnt to ashes, or worse, cause a flood and further add to the woes?

On 17 November, Bank Negara Malaysia (BNM) produced a report highlighting the mismatch in supply and demand of property developments in Malaysia.

The BNM Governor, Tan Sri Muhammad Ibrahim pointed out that the supply-demand imbalances in the property market has increased since 2015, pointing to the decade-high of unsold residential properties. There were 130,690 unsold units at the end of March this year, with 83% priced at above RM250,000.

The knee-jerk reaction to the alarming report was the announcement two days later by Second Finance Minister, Datuk Johari Abdul Ghani that the government had issued a directive temporarily stopping developments of shopping malls, commercial complexes and condominiums valued about RM1 million from November 1.

One can tell that it was a hare-brained policy attempt because the day after, the Works Minister, Datuk Fadillah Yusof said that the directive was not a blanket freeze and that approvals would be evaluated on a case by case basis.

Datuk Johari then added, on November 21, that the freeze would only affect projects that had not been approved and the length of the freeze would depend on a continued assessment of the situation.

The question is, how did the Government allow the situation to develop to such a state of gross mismatch in the first place?

Actually, the issue of imbalances in the property market was already highlighted by BNM in its 2015 annual report. And the oversupply in the housing market has since then almost doubled between 2015 and 2017.  In fact, Bank Negara’s figures for the property supply and demand come from the National Property Information Centre (NAPIC) located under the Ministry of Finance (MoF).

As the BNM Governor opined, “we have raised these issues for more than a year. Exposure of financial sector within this area is within a comfortable level. But if we're not careful, the oversupply could have a negative impact on the economy.”

Hence the question now is, given the fact that the milk is already spilled, will the seemingly drastic knee-jerk ban on luxury condominiums, shopping malls and commercial complexes solve the problem or trigger even more problems?

Investors, both domestic and foreign, will tell you that what they fear and hate more than bad policies are inconsistent, uncertain and ad-hoc policy-making.  The latter results in constant unanticipated changes and frequent policy U-turns which makes it impossible for business to plan their investments and measure their expected returns.

In this case, there are so many unanswered questions based on the Cabinet's hasty policy decision.

Has MoF asked the real estate sector – why is it that despite the excess supply of “luxury condominium”, developers continue to build them at that price?  Are Malaysian developers really that stupid to invest in projects which cannot sell?

Has MoF conducted a study to determine if a ban on the “luxury” sector will reallocate investments into the “affordable” property sector?  If it doesn’t, will the ban merely stop property and construction activities and consequently trigger an economic slowdown and lower employment opportunities?

One of the biggest questions that needs to be asked is, what is considered a “luxury” project?  The Bank Negara report used RM250,000 as the benchmark.  However, the Government’s own affordable housing agency PR1MA have properties priced between RM100,000 and RM400,000, although prices tend to be skewed more to the higher-end.  On the other hand, the latest MoF ban appears to apply to only properties priced above RM1 million.  Hence, are we prescribing medication to the wrong patient?

Worst, the blanket ban does not take into account of regional factors and imbalances.  The BNM Governor clearly stated that Johor is poised to have the highest number of unsold residential properties and potentially the largest excess supply of retail space. Hence is a nationwide ban of any kind the right prescription or will it instead cause economic distortions in other states and regions?

We call upon the Minister of Finance to provide not only clarity to the hare-brained “temporary ban” decision but also to justify how such a ban will actually solve the “supply-demand imbalances” in our property sector.  He should also take in cognizance of the fact that BNM’s 6-policy prescription to resolving the problem did not involve an outright ban on types of development.  Otherwise, the unintended consequences of such a crude policy prescription would worsen the effects on our already fragile economy.

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Najib’s toll freebie meant to entice Harapan supporters will only going to cost BN voters more

In Friday’s 2018 Budget speech, one of the big “goodies” that the Prime Minister announced was the abolishment of 4 tolls at Sg Rasau, Batu Tiga, Bukit Kayu Hitam and on the Eastern Dispersal Link (EDL).

On the surface, it looks like the Najib administration is hard pressed to replicate the Pakatan Harapan Alternative Budget which promised abolishing all highway tolls over time.

However, before Malaysians decides to rejoice, the first question that arises is how the government intends to compensate the existing toll concessionaires for their loss of revenue.

The Second Finance Minister, Datuk Johari Abdul Ghani very quickly burst the balloons by admitting that the government is looking at increasing the concession period for other tolls belonging to concessionaires as compensation.

This simply means that Malaysians will end paying toll fares for longer periods.

More specifically however, the tolls abolished were located in Selangor, a state which Dato’ Seri Najib Razak is only too eager to regain; and in Kedah as well as Johor, where BN is at the risk of losing with the twin threats of Tun Dr Mahathir Mohamad and Tan Sri Muhyiddin Yassin.

The 3 tolls at Sg Rasau, Batu Tiga and Bukit Kayu Hitam are owned by PLUS Malaysia Bhd. As a result, compensation for abolishing just three tolls will see the extension of its concession on any other highway under its management including the North-South Expressway, Seremban-Port Dickson Highway, Butterworth-Kulim Expressway, Malaysia-Singapore Second Link.

Very simply, the burden of the political move by Dato’ Seri Najib Razak to “free” the tolls in Selangor, Kedah and Johor will be “shared” by BN supporters in other parts of the country.  It appears to make a lot more sense to demonstrate support Pakatan Harapan because then, the BN government will actually show more love for you.

That however, isn’t the whole story.

The EDL is currently owned by MRCB, who just so happens is desperately looking to sell the loss-making highway.  MRCB also doesn’t own any other highway assets.

Hence the only way for the EDL toll to be abolished is for the Federal Government to fork out multi-billion ringgit compensation for MRCB.  Therefore, Dato’ Seri Najib Razak must come clean as to how much tax-payers must fork out to pay for the EDL and how the compensation is calculated.

The rakyat’s biggest fear is the Najib administration bailing out highway concessionaires, further proving that BN’s intrinsic economic policy is to “privatise profits and socialize losses”.

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Finance Minister II Dato’ Seri Johari Abdul Ghani should not bluff Malaysians by stating that the Government “has never given public funds to 1MDB to settle its debts”

According to Bernama yesterday, Second Finance Minister, Dato’ Seri Johari Abdul Ghani said that “the Finance Ministry (MoF) has never given any public funds to 1Malaysia Development Bhd (1MDB) to help settle its debt”.

The Minister must think that Malaysians are complete and utter idiots to be served what is one of biggest piece of cow dung amongst all the attempts to cover up the 1MDB scandal.

The Ministry of Finance has on so many occasions come to the rescue of 1MDB over the past 2 years involving billions of ringgit of tax-payers’ monies, and yet Dato’ Seri Johari has the cheek to tell us that the MoF “has never given any public funds to 1MDB”.

Among the most clear-cut examples are the RM800 million loan from SOCSO and another RM2.4 billion Bandar Malaysia sukuk bond which the MoF have assumed as a result of taking over TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.

The Auditor-General has reported that nearly all of the above proceeds of the 1MDB borrowings were never used for the development of the 2 property projects above.  Hence when MoF agreed to take over the property projects and assumed the liabilities, MoF has effectively “settled” 1MDB’s RM3.2 billion debt problem.

What’s more, when 1MDB had originally sold a 60% stake in Bandar Malaysia to an Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium, they had collected, and presumably spent the RM741 million deposit which has been paid upon the signing of the sale and purchase agreement in December 2015.

However, when MoF terminated the sale due to IWH payment defaults, it was MoF who coughed up the RM741 million to refund the deposit paid by the consortium.   If the deposit, should have been refunded at all, it should have been by 1MDB, and not by the Malaysian tax-payers.

The above doesn’t yet include MoF subsidiary or subsidiaries which actually acquired properties from 1MDB in TRX at inflated prices.  The irony is, it was MoF who sold the land to 1MDB in the first place at dirt cheap prices.

We understand the conundrum Dato’ Seri Johari Abdul Ghani is facing as the 2nd Finance Minister who has fallen out of favour and having to defend the indefensible regain the Prime Minister’s favour.  It is now clear that he has been dropped by Dato’ Seri Najib Razak from handling the 1MDB imbroglio, particularly in the company’s multi-billion dollar dispute with Abu Dhabi’s IPIC.

However, the Second Finance Minister should not go to the extent to telling outright lies to pull the wool over the people’s eyes.  Dato’ Seri Johari should not forget his role and responsibility to the people of Malaysia by sacrificing his own integrity and honour.

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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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Did the Second Finance Minister even bother asking the Finance Minister if the latter took money, directly or indirectly from 1MDB and SRC International?

I am disappointed, although not surprised by Dato’ Seri Johari Abdul Ghani’s immediate decline of my invite to speak at my fund-raising dinner.  It would have been perfect opportunity for the Second Finance Minister to convince and implore the voters of Petaling Jaya Utara to not only give 1MDB “a rest”, but even give me “a rest”.

After all, he could have demonstrated his conviction that “the folks of Petaling Jaya Utara elected you as their MP to do better things than just being obsessed with 1MDB”.

He justified his decision to turn down the invite by claiming that "I have to do my job as a minister and I would do the best for the country".

"Even if I had lunch or dinner (with Pua), it would not solve the problem the way he wants, because I am not the Malaysian Anti-Corruption Commission (MACC), Bank Negara Malaysia (BNM), police and investigation agencies. So, let these agencies do their work.  Nowhere in my letter did I mention I want these agencies to stop their investigation," he told Malaysiakini.

Dato’ Seri Johari Abdul Ghani cannot have his cake and eat it too.

He wants to escape the challenge by taking the moral high ground.  He says he wants “to do his job as a minister” and he “would do the best for the country”.

If that is so, now that he is the Second Finance Minister, with all the necessary access to all the documents and transactions within the Finance Ministry subsidiaries – has he figured out why and how 1MDB and its sister company, SRC International lost tens of billions of ringgit?

Has Dato’ Seri Johari even bothered asking the Finance Minister, who also happens to be the Prime Minister, Dato’ Seri Najib Razak, whether he did indeed receive US$731 million in his personal bank account which originated from 1MDB?

Or did Dato’ Seri Johari question Dato’ Seri Najib if he received the RM69 million in his personal bank account which originated from SRC Interntional, as inadvertently exposed by none other than the Attorney-General, Tan Sri Apandi Ali himself?  At the very least, did the Second Finance Minister, in dutifully carrying out his responsibility ask if Dato’ Seri Najib intends to return the RM69 million back to SRC International?

Why should a Second Finance Minister trying to shift his responsibility to “Malaysian Anti-Corruption Commission (MACC), Bank Negara Malaysia (BNM), police and investigation agencies”, when it is also his sworn duty to administer his own Ministry’s subsidiaries?

Isn’t uncovering multi-billion ringgit hanky-panky within his Ministry part of his Minister’s scope of work? Is it because Dato’ Seri Johari not dare to ask because he already knows the answer, but don’t want to rock the boat?

Or is Dato’ Seri Johari taking the position that what has happened in the past, even if it involved billions of ringgit of stolen funds, should be left alone, and his blinkered role is just focus on how to cover up the massive hole which has been created?

Whether the Minister attends my dinner to espouse his position is immaterial.  However, Dato’ Seri Johari’s deeds and actions only goes to show the hypocrisy of his moral high ground and his claims of “doing the best for this country”.  In fact, in his attempt to cover up the stolen funds and keeping the kleptocrats in power without answering for their crimes, he is betraying the country and sacrificing the interest of our future generations.

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Open Invitation to Second Finance Minister, Dato’ Seri Johari Abdul Ghani on Monday, 27 March 2017

A week ago, Second Finance Minister, Dato’ Seri Johari Abdul Ghani wrote an open letter to me asking me to give the 1MDB issue “a rest”.  I had responded the next day with an open letter outlining some of the many reasons why I won’t “give it a rest”.  This includes the fact that the Minister has not only failed to answer the questions which have been posed, and the multiple attempts to obfuscate the truth for the Malaysian public.

However, a week later, the Minister has unfortunately chosen to maintain an elegant silence.  Perhaps Dato’ Seri Johari is just hoping that I would have no choice but to then “give it a rest”.

If so, the Minister must be daydreaming.  Instead, I would like to offer Dato’ Seri Johari Abdul Ghani the perfect opportunity to not only give the 1MDB issue a rest, but to give me “a rest”.

I would like to extend an open invitation to the Second Finance Minister to come to my fund-raising dinner on Saturday, 6 May 2017 to be held in the heart of the Petaling Jaya Utara (PJU) constitueny, at the SS2 open air carpark.

Dato’ Seri Johari Abdul Ghani will be given a full hour to speak uninterrupted to my voters to tell them about why they should not only give the 1MDB issue arest, but why they give me a rest by voting me out of office.  There would be no better opportunity for the Minister to do so than in front of an expected sell-out crowd of 300 tables.

Dato’ Seri Johari can explain to the 3,000 best-behaved audience why my “behaviour in respect of the entire affair does not fit that of a lawmaker”.

The Minister is free to put forth his argument, per his open letter, that “the spectacle of name-calling, not only towards me but towards other members of the administration as well, is nothing less than embarrassing and demeaning to your standing as a Member of Parliament.”

Then the Minister can ask the voters of PJU directly, whether “the folks of Petaling Jaya Utara elected you as their MP to do better things than just being obsessed with 1MDB”.

In fact, the other speakers who are attending the dinner are DAP Parliamentary Leader, Lim Kit Siang; former Prime Minister, Tun Dr Mahathir Mohamad; Amanah President Mat Sabu and PKR Vice-President, Rafizi Ramli.  The Minister has a chance to put all of us ‘out of business’.

No BN Ministers would offer me such an opportunity to attend their official events and get even 15 minutes to explain how the Najib administration has stolen and misappropriated some RM25 billion of funds raised by 1MDB.

However, perhaps in my foolishness, I am giving UMNO-BN an excellent chance to sign my political death warrant.  The question is, will Dato’ Seri Johari have the courage and conviction in his defense of 1MDB to pick up the gauntlet?

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Open Letter by Tony Pua, DAP National Publicity Secretary and Member of Parliament for Petaling Jaya Utara to Second Finance Minister, Dato’ Seri Johari Abdul Ghani on Tuesday, 20 March 2017

Dear Minister,

Thank you so much for your Open Letter addressed to me which was issued yesterday.  I am not sure whether I should be honoured to have received such a letter from a Minister for the very first time in my 9 years as a Member of Parliament.

Dato’,

You are extremely unhappy apparently because I called you a “liar” and accused you of “covering up for the Prime Minister”.  I checked my facts again and I’m more than happy to stand by my accusations.

Earlier this year, you told the media repeatedly that the Finance Ministry (MOF) would not take over any of the 1MDB’s debts.  This was a specific response to my question raised in mid-January as to whether the MOF took over 1MDB’s RM800 million loan from SOCSO and RM2.4 billion sukuk.

It was only when I received the convoluted parliamentary reply in the current sitting, I could conclude that MOF did indeed take over these debts.  The sad thing about the reply from the Minister of Finance was that it was clearly written in a way to obfuscate the truth.

You then dug a deeper hole for yourself by arguing that the RM3.2 billion of debt was an “operating debt” belonging to 1MDB’s wholly-owned subsidiary, 1MDB Real Estate (1MDB RE) and hence was not considered as 1MDB’s debt.  I then said that “no Finance Minister worth his salt would argue that the ‘operating debts’ of a wholly-owned subsidiary does not belong to the parent company’s accounting books”.

I also proved with facts published in the Public Accounts Committee (PAC) Report, extracted from the Auditor-General’s (AG) report that more than 87% or RM2.8 billion of the RM3.2 billion of 1MDB RE borrowings never went towards the development of 1MDB’s real estate properties.  Hence I asked why did the MOF not insist that these advances to 1MDB be repaid?

Dato’,

You then went on to tell an audience at a MIDF lunch talk that the Malaysian government couldn’t press charges against 1MDB personalities “without complete information”.  You supported your claim by saying the the Auditor-General and the PAC could not point to anything specifically wrong with 1MDB.

Again, I pointed to specific sections of the PAC Report which clearly concluded that the 1MDB top management has on dozens of occasions – lied and misled the Board of Directors, defied the decisions of the Board or worse, acted without the Board’s authority, all of which are legal offences.  The PAC even asked the authorities to investigate the CEO, Datuk Shahrol Halmi and other officers involved for the above wrongdoings.  However, a year later, Datuk Shahrol Halmi remains comfortably as of today, a Director of PEMANDU agency in the Prime Minister’s Department.

You added in your letter that, “as far as the government is concerned, there is nothing to hide and nothing to cover up.” Then, I ask you, if so, why do you not propose for the Cabinet refusing to declassify the ‘harmless’ Auditor-General’s Report?

However, instead of answering all of the above questions, you ask me to “give it a rest”.

You opined that 1MDB is the most scrutinised entity by all enforcement agencies in Malaysia. However, you fail to also disclose that every single investigating agency was hampered and disrupted.

When the PAC announced that we were summoning Jho Low for questioning, the PAC Chairman was soon replaced by Datuk Hasan Arifin who promptly reversed the decision.  Datuk Hasan, even responded that he has to “cari makan” when asked by the media if the Prime Minister would be summoned.

Despite the diligence of the Auditor-General’s Office, key documents such as 1MDB’s bank statements for its overseas subsidiaries were not handed over to the AG.  Neither did Arul Kanda or Datuk Shahrol hand over many other documents they promised when requested by the PAC.

The biggest farce must be the “Super-Taskforce” investigating 1MDB comprising of the Attorney-General, the Inspector-General of Police, the MACC Chief Commissioner and the Bank Negara Governor  set up by the Prime Minister himself.  Did you forget that just as the then Attorney-General discovered shenanigans relating to the Prime Minister, he was promptly “retired” on spurious ‘health’ reasons?  As if on queue, the new Attorney-General effectively dissolved the “Super-Taskforce” and even went to the extent of instructing the MACC to stop any further investigations on the matter.

Dato’,

You started your letter whining that you are merely working “serve the nation” by taking “positive and proactive” steps.

Perhaps let me gently remind you that there is a difference between ‘serving the nation’ and ‘serving the Prime Minister’, by covering up the scandal so that the truth gets swept under the carpet and the crooks get away scot-free.

Do you not realise that we are now a renown kleptocracy and how damaging that is for our country?  Everyone who has taken an interest in the affairs of Malaysia knows from the documents presented by the United States Department of Justice and the Singapore Courts that US$731 million from 1MDB, found its way through dodgy investment funds and deceptive offshore companies into the personal bank account of Dato’ Seri Najib Razak.

Do you not think that to “serve the nation”, we must work to revive our heavily-tarnished global reputation?  And do you not think that the only way we can remove the kleptocracy label from Malaysia is not by sweeping the truth under the carpet but instead ensure that the kleptocrats are charged and appropriately punished?

In fact, if you really want to take “positive and proactive steps” to help the nation, why haven’t you made a claim for the US$1 billion worth of assets being seized by the United States which were acquired with funds laundered and stolen from 1MDB?  Why is the Government still keeping up the pretences that 1MDB did not lose these billions of dollars?

Dear Minister,

The above are just some of the many reasons why I won’t give the 1MDB issue a rest.  The issue doesn’t deserve to be rested because you and your fellow Ministers have refused to answer simple questions and more importantly, the crooks who audaciously misappropriated more than US$5 billion are still at large.

Any elected representative with any sense of morality and integrity, who believes in protecting the interest of the man-on-the-street and who wants justice meted out to criminals who rob the country will never let the matter rest until the truth is found.

I am sure that my voters in Petaling Jaya Utara and all right-thinking Malaysians would overwhelmingly back my dogged persistence and relentless pursuit to ensure that Malaysia’s corrupt leaders and its kleptocratic government are made accountable for their crimes.

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Dato’ Seri Johari Abdul Ghani must prove that the Auditor-General (AG) couldn’t find specifically what went wrong with 1MDB by seeking declassification of the AG’s Report on 1MDB

Last week, the Second Finance Minister Dato’ Seri Johari Abdul Ghani told an audience of the investment community at a luncheon organised by the Malaysian Industrial Development Finance Bhd (MIDF) that the Government “can’t press charges on 1MDB without a full picture”.

He argued that "even the PAC (Public Accounts Committee) and AG (Auditor-General) were unable to specifically tell what went wrong”.

Dato’ Seri Johari must prove to Malaysians that he has not become a big liar defending a kleptocratic administration by demanding that the Cabinet declassify the Auditor-General’s Report immediately.

How can the Second Finance Minister expect Malaysians to believe him that the AG could not anything specifically wrong with 1MDB when the Najib administration has classified the AG’s Report under the Official Secrets Act (OSA) since its publication in February 2016?

Even the then Auditor-General, Tan Sri Ambrin Buang has emphasised that the intent of the OSA classification was only for the purpose of the PAC to complete its own report without unnecessary leaks.  He has stated clearly that there was no need for the AG’s Report to be classified after the PAC Report has been completed and left it to the discretion of the Government to declassify the document.

Can Dato’ Seri Johari tell us why the the AG’s Report remains classified?

Is it because even the ‘sanitised’ PAC Report itself has hinted at a whole lot of shenanigans discovered by the AG, if further exposed, would make life difficult for the Barisan Nasional Government?

For example, the PAC found that the 1MDB’s multi-billion dollar investments in Petrosaudi and other funds were carried out without any proper study or due diligence.  For that matter, the PAC and the AG found that 1MDB decided to invest a total of US$1 billion in a joint venture with Petrosaudi International Limited within just 8 days.

We have also since discovered with corroborating evidence from Bank Negara as well as court cases in the United States and Singapore, that US$700 million of that sum was siphoned to Good Star Limited, a company owned by the flamboyant Jho Low.

The PAC and the AG also found that 1MDB’s management executed multiple multi-billion dollar transactions without the approval of the 1MDB Board of Directors.  The PAC and AG also concluded that the top management had provided false information to the Board of Directors on multiple occassions.  Worse, the top management was found to have acted in defiance of decisions made by the Board of Directors.

The PAC and AG’s Reports were very specific in these allegations.

It true that the PAC and AG’s report were not sufficiently comprehensive. The PAC and AG could not investigate the US$731 million of funds originating from 1MDB which were deposited into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account because 1MDB refused to supply its overseas banking documents.

However, there are already sufficient instances of criminal wrong-doings and negligence by the top management highlighted by both the AG and the PAC in their reports.  This was also the reason why the PAC had recommended that the authorities carry out investigations against Datuk Shahrol Halmi and other management officers who were involved.

Hence the question that the Second Finance Minister must answer is – why haven’t investigations into the shenanigans in 1MDB, especially by Datuk Shahrol Halmi been completed after more than a year?  Why is Datuk Shahrol still a Director at the PEMANDU agency in the Prime Minister’s Department?

Is it because he is ‘untouchable’ and protected by the Prime Minister himself, so as to avoid even more damning truths surfacing on how tens of billions of ringgit were misappropriated by 1MDB, of which a substantial portion of it was channelled to Dato’ Seri Najib Razak?

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Dato’ Seri Johari Abdul Ghani must think that Malaysians are born yesterday to buy his excuse that the Government “can't press charges on 1MDB without a full picture”.

I was stunned by the Second Finance Minister, Dato’ Seri Johari Abdul Ghani’s remarks to the media that the Government “can’t press charges on 1MDB without a full picture”.  I had certainly expected better of him, as he was a known critic of 1MDB before his appointment as a Minister.

"The transfer of the money to the accounts and so on, it’s not that. That’s only half the story. If you want to charge people, you need the complete story," Johari said at a luncheon talk organised by Malaysian Industrial Development Finance Bhd which was reported by the Edge Financial Daily yesterday.

Of course, we need the complete story in order to charge any person for a crime.  However, the question is there must be a concerted effort to investigate the crime. 

From what we can see happening in Malaysia at this point of time, there is no attempt at all to investigate the crimes everyone can see which have taken place in Malaysia.

The United States Department of Justice (US DOJ) has clearly presented all documentary evidence of how funds amounting to more than US$5.6 billion have been siphoned from 1MDB and laundered overseas.  This included more than US$1 billion which have been siphoned to Good Star Limited which was owned by Jho Low, whose whereabouts are a mystery today.  The 1MDB management had persistently tried to hide this fact by lying that Good Star Limited was owned by 1MDB’s joint venture partner, Petrosaudi International Limited.

In Singapore, bankers have been sent to jail and bank licences have been withdrawn for facilitating the above same transactions.  This has included funds which has passed through to and from a Tanore Finance Corporation via its bank account with Falcon Private Bank to the personal bank account of Dato’ Seri Najib Razak.

And yet, despite the obvious and ease of accessing all the relevant evidence of grand corruption, the Second Finance Minister has the cheek to tell Malaysians that the Government “can’t press charges without the full picture”.

Dato’ Seri Johari even had the gall to dismiss the case in Singapore as not having involved Malaysians. "The governance issue happened in Singapore, not in Malaysia. And those characters are actually Singaporeans,” he said.

The Minister is obviously pretending very hard to be ignorant and stupid because the Singapore cases clearly named the parties who laundered the funds included Jho Low, his father Tan Sri Larry Low and other associates who were Malaysians.  Evidence including banking transactions were presented to the Court demonstrating how these funds stolen from 1MDB were misappropriated, including the amounts ending up in the Prime Minister’s bank account.

If the Minister is really clueless about the evidence and what took place in the US DOJ and Singapore Courts, I will be most happy to share the information and documents with the Minister.

However, please don’t tell half-truths to the Malaysian public that "even the PAC (Public Accounts Committee) and AG (auditor-general) were unable to specifically tell what went wrong.

The AG has discovered many wrongs which were cited in the AG’s Report on 1MDB which the Cabinet has decided to classify under the Official Secrets Act (OSA).  This was despite the fact that 1MDB had refused full cooperation with the AG by denying the AG access to crucial banking documents of its overseas subsidiaries.

But even what little revealed in the PAC Report was sufficient for the PAC to conclude massive wrong-doing on the part of the management.  The PAC has specifically demanded that Datuk Shahrol Halmi be investigated for his role in causing the billions of ringgit of losses to 1MDB and the Malaysian Government. 

It has been nearly a year since the report has been tabled in Parliament. Why hasn’t any action at all be taken against Datuk Shahrol Halmi?  In fact, why is Datuk Shahrol Halmi still a Director at the PEMANDU agency in the Prime Minister’s Department?

The reality is, not only has the Government made no effort into investigating the scandal, it is blocking all attempts to investigate the crime. For example, the Attorney-General abused his power by instructing the Malaysian Anti-Corruption Commission (MACC) from further investigating the US$681 million or more which were discovered in the Prime Minister’s bank account. Subsequently, he rejected a request for cooperation by the Swiss Attorney-General to investigate the case.

Dato’ Seri Johari Abdul Ghani may not have been involved in the attempts to stall or stop the investigations, as he was only appointed a Minister in July last year.  However, he should not try to belittle the intelligence of ordinary Malaysians or take us for fools by claiming that the Government can’t press charges because it doesn’t have a “full picture”.

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Which Finance Minister in the world worth his salt would tell you that the debts of its wholly-owned subsidiaries are not the debt of the parent company?

First of all, I would like to thank the Second Finance Minister, Dato’ Seri Johari Abdul Ghani for issuing the official statement “Some Facts for Tony Pua”, in response to my earlier press statement on this issue.

This is because the Minister confirmed the very facts which I had stated.

1.     The Minister confirmed that real estate owned by the Government was sold to 1MDB at “nominal” prices.  A check on 1MDB financial statements would show that the 70-acre Tun Razak Exchange (TRX) land was priced at RM64 per square feet (psf) for a total of RM194 million, while the 486-acre Bandar Malaysia was at RM72psf for a total of RM1.67 billion.

2.     The Minister concurred that the 1MDB real estate companies took loans amounting to RM800 million from SOCSO and another RM2.4 billion worth of sukuk for Bandar Malaysia.

3.     The Minster also confirmed that the above debts amounting to RM3.2 billion are no longer under the books of 1MDB as they have been assumed by the Ministry of Finance.

The question is, how else to describe the above transactions other than a bailout?  The Government granted these parcels of land at “nominal prices” to 1MDB, but when effectively less than 50% of these parcels of land were ‘returned’ to the Government, they came with an attached liability of RM3.2 billion?

The Minister failed to mention the fact that 1MDB has sold 30.5 acres of TRX and 40% of Bandar Malaysia for RM3.5 billion and RM7.8 billion respectively where the proceeds are due entirely to 1MDB.  None of it went towards the settlement of these debts.  So why is it that 1MDB gets to keep all the astronomical profits, while the Ministry of Finance is left to carry all the liabilities in their entirety?

Dato’ Seri Johari tried to wriggle his way out of it by claiming that the above were merely the “operating debts” of the real estate subsidiaries.  Malaysians fail to understand his convoluted argument that “there is therefore a clear distinction between 1MDB debts, which will not be taken over by MOF Inc, and the BMSB/TRXC project company operating debt, which are part of the assets and liabilities of the company…”

I hope that Dato’ Seri Johari, who was formerly a corporate man himself, did not actually draft the statement because it makes no financial sense.  No Finance Minister worth his salt would argue that the “operating debts” of a wholly-owned subsidiary does not belong to the parent company’s accounting books.

The Second Finance Minister might do well to consult 1MDB’s newly appointed auditors, Parker Randall for an accounting opinion before issuing such embarrassing statements.

What is worse is that, even if Dato’ Seri Johari’s illogical statement holds, he has failed to acknowledge that both the Auditor-General and the Public Accounts Committee (PAC) have discovered that the bulk of the money raised from the borrowings did not go towards the real estate projects!

Page 43 of the PAC Report would tell you that out of RM800 million borrowed from SOCSO, only RM338 million went towards 1MDB Real Estate and its projects.  The balance was “advanced” to the 1MDB parent company for other purposes.

Even more shocking, Page 45 of the same report would tell you that not a single sen of the RM2.4 billion sukuk raised went towards the development of Bandar Malaysia or TRX, or any other 1MDB real estate projects!  The net proceeds from the sukuk were “advanced” to the 1MDB parent company for other purposes as well as to refinance previous borrowings, which were also utilised for non-real estate purposes.

The 1MDB CEO, Arul Kanda himself, confessed to the Public Accounts Committee that due to cashflow difficulties within the 1MDB group, these funds were “diverted” from their intended purposes.

Hence while the intent of the RM3.2 billion of borrowings was perhaps “operational” as emphasized by the Second Finance Minister, in reality, the overwhelming bulk of the borrowings was brazenly utilised for “non-operational” purposes.

Therefore, using Dato’ Seri Johari’s own argument, since more than RM2.8 billion of the borrowings were “non-operational” in nature, 1MDB must pay back these “advances” to MOF.

Otherwise, it’s a triple-whammy for the Malaysian tax-payers – where (1) 1MDB made multi-billion ringgit profits from nominally priced land from the Government to partially cover up tens-of-billions of ringgit of losses from other 1MDB transactions; (2) the Government takes back less than 50% of the land attached to a RM3.2 billion liability and (3) the RM3.2 billion borrowed was never invested in the land in the first place, which means that MOF itself has to further invest in the projects to realise their value.

The Malaysian tax-payers cannot be more screwed and victimised than the extra-ordinary bailout that is taking place right before our very eyes.

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1MDB Chairman, Tan Sri Irwan Serigar must answer as to why his fellow Directors are so tardy in making urgent and critical decisions on the financial audit of scandal-ridden 1MDB

The last audited financial statements filed by 1MDB was for the accounts for the year-ending March 2014.  1MDB has failed to file their financial statements for 2 consecutive years, March 2015 and March 2016 which were due to by October 2015 and 2016 respectively.

Even so, Deloitte Malaysia has since July last year, withdrawn its endorsements for the financial statements of March 2013 and 2014.  At the same time, the disgraced audit firm announced that it had resigned as the auditors of 1MDB as at February 2016.

The new auditors, Parker Randall, which is operated locally by a four-partner Afrizan Tarmili Khairul Azhar (aftaas) was appointed in January this year.

I had asked in my parliamentary question to the Finance Minister last week as to whether Parker Randall will re-audit the 1MDB financial statements for March 2013 and 2014.

The Minister of Finance responded that the Board of Directors will make a decision on the above on “after further discussions with the new auditor”.

The reply also stated that the last time the Board of Directors met to discuss the implications of the US Department of Justice asset-seizure kleptocracy suit was prior to 26 July 2016 when 1MDB had issued a press statement.

Malaysians are shocked that for exactly 1 year after Treasurer-General, Tan Sri Irwan Serigar took over the 1MDB Chairmanship from the disgraced Tan Sri Lodin Wok Kamaruddin, the Board of Directors had basically sat on their backsides and demonstrated little or no urgency over the 1MDB fiasco.

Allegations and evidence have been produced and made available globally by the US Department of Justice which showed that more than US$5 billion have been misappropriation from 1MDB and laundered around the world and yet our Treasurer-General acts as if it is no big deal.  These allegations and evidence have been supported since by court prosecutions which took place in Singapore and Switzerland against banks which had facilitated the money-laundering transactions.

Worse, it has also been discovered that at least US$731 million from the above misappropriated sum had found its way into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.  Despite the gravity of the crime, our Treasurer-General, the most senior civil servant responsible for managing our hundreds of billions of ringgit of annual tax revenue has shown only nonchalance in the scandal.

Any auditor worth their salt would immediately tell you that they will not be able to complete a financial audit for the year without the “opening balance” or prior year accounts.  In this case, it is clear that there have been no audited and certified accounts for March 2013 and 2014 given that Deloitte has withdrawn its endorsement.

What’s more, the Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies.  It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.

The only resolution for the above matter is for the accounts for March 2013 and 2014 to be re-audited and re-stated.

Hence, what is the point of appointing Parker Randall as the new auditors if they cannot properly perform their duties? Why is the 1MDB Board of Directors dragging its feet under the chairmanship of the Treasurer-General?

We call upon Tan Sri Irwan Serigar to do what he is being paid to do by the Malaysian tax-payers properly.  He must remember that his job is to protect the integrity of his office and not to protect those who have misappropriated and stolen billions of ringgit from the Government and the people.

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There’s nothing personal about a Tun Dr Mahathir – Dato’ Seri Nazri Aziz 1MDB Debate

A public spat between former Prime Minister, Tun Dr Mahathir Mohamad and the Minister of Tourism, Dato’ Seri Nazri Aziz has led to a 1MDB debate challenge which has been duly accepted by the latter.

The Tourism Minister even took a dig at his colleague, EPU Minister, Dato’ Seri Abdul Rahman Dahlan, who withdrew at the last minute after agreeing to a highly anticipated debate with the Penang Chief Minister, Lim Guan Eng.

Dato’ Seri Nazri said he would not budge. "Why should I? I am Nazri Aziz, you should know me better, I am not Rahman Dahlan," he told Malaysiakini when contacted.

The Minister’s bravado has apparently put the Najib Cabinet in a panic mode as the debate on 1MDB has been a subject matter which they have taken great pains to hide and cover up.

Even 1MDB CEO, Arul Kanda withdrew from a debate with me last year, after accepting a similar challenge with much bravado – holding a press conference in a hotel to say “Bring it on!”

They are so worried about the negative fallout for the Najib administration that Finance Minister II, Dato’ Seri Johari Abdul Ghani had to declare that the proposed debate between Tun Dr Mahathir and Dato’ Seri Nazri had “nothing to do” with the Government.

How ridiculous is it for the Finance Minister II to claim that the RM50 billion corruption scandal has “nothing to do” with the Government?

The 1MDB debate has everything to do with the Government, and in particular the Prime Minister, Dato’ Seri Najib Razak.  The latter, who is also Finance Minister I, has been found to have received US$731 million which had originated from 1MDB based on the documents and evidence produced by the United States Department of Justice (US DOJ).  The 1MDB scandal has made Malaysia the kleptocratic capital of the world and put Malaysians to shame.

In fact, it is shocking that to date, since the US DOJ filed the suit to seize assets acquired with money laundered from 1MDB in July 2016, Dato’ Seri Najib Razak has not once denied the allegations that he has received the US$731 million misappropriated from 1MDB.

Dato’ Seri Johari Abdul Ghani tried to argue that the matter had purportedly already been “debated extensively in Parliament”.

He told the reporters that “the report that (was) prepared by the auditor general, (the) public accounts committee (PAC), have been deliberated extensively in Parliament, all questions have been answered in Parliament.”

However, the Finance Minister II failed to also clarify that the Parliament Speaker has forbidden any answers on questions relating to the 1MDB US DOJ suit, preposterously claiming “subjudice”.  At the same time, the then newly appointed PAC Chairman, Dato’ Hasan Arifin took pains to unilaterally make amendments to the PAC Report and refused any attempts during the meetings to investigate links between the scandal and the Prime Minister.  Worse, if all questions on 1MDB has allegedly been answered, then why is the Cabinet hiding the Auditor-General’s Report under the Official Secrets Act (OSA)?

Even the Finance Minister II himself failed to answer questions raised in Parliament on the scandal during the last sitting.

Hence with the utter failure of the Parliament, the next best thing Malaysians can hope for to gain the truth is via a debate. And one between the former premier and one of the harshest critic of the Najib administration, versus one of the most senior Minister’s in Najib’s cabinet could not have come at a better time.

In fact, if the Government has nothing to hide, we call upon the Cabinet to insist that the debate be broadcast live on RTM or TV3, for there could not be a better opportunity for the Najib administration to destroy the opposition’s allegations on 1MDB and clear its tainted reputation.

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