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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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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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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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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Finance Minister’s convoluted answer on MoF takeover of 1MDB’s real estate assets was a blatant attempt to mask at least a RM3.2 billion bailout

I had submitted a question last week to the Finance Minister, Dato’ Seri Najib Razak which only required a simple straightforward, possibly 2-sentence answer.  I have asked the Finance Minister to “list the 1MDB real estate assets taken over by the Ministry of Finance (MoF) and the consideration paid for them”.

More importantly, I asked “did MoF take over the borrowings associated with these assets including, the RM800 million from SOCSO and RM2.4 billion in sukuk bonds”.  This question only required a simple “yes or no” reply, with the total borrowings assumed by the MoF, if any.

What I received was a long grandmother story which tried to obviously obfuscate the answer.

The Finance Minister tried to pin the blame or responsibility for the take over of assets on the Public Accounts Committee (PAC).  The PAC had indeed recommended that the MoF takeover these assets and I have no problems with that.

Anak-anak syarikat dan aset milik kumpulan 1MDB (TRX, Bandar Malaysia, tanah Air Itam, tanah Pulau Indah) seharusnya diserahkan kepada MKD, supaya dapat dikawal selia dan diuruskan dengan lebih rapi dan teliti. (pg 106)

To the second part of my question, again he shifted to responsibility to the PAC by quoting page 81 of the PAC report which stated that

…pinjaman SOCSO sebanyak RM800 juta oleh TRX City Sdn Bhd dan sukuk sebanyak RM2.4 bilion oleh Bandar Malaysia Sdn Bhd akan diuruskan, di mana ia akan kekal ditanggung oleh aliran tunai projek TRX dan projek Bandar Malaysia.

That was a most blatant slight of hand, and I actually had to double-check my own copy of the PAC Report because I didn’t recall any such recommendations. My memory certainly did not fail me because the statement on pg 81 was actually the proposal submitted by 1MDB to the PAC and not, a recommendation by the PAC!

However, while Dato’ Seri Najib Razak did not explicitly say “yes” or “no” to the above question, it is now clear as day that the MoF has effectively bailed out 1MDB to the tune of RM3.2 billion by taking over these debts!

It also meant that the Second Finance Minister, Dato’ Seri Abdul Johari Ghani’s prior insistence to the media that there was no taking over of 1MDB debts planned over the assets takeover was a blatant lie.

Malaysians are being raped two-times over the above transaction because these pieces of land were “sold” to 1MDB by the MoF at bargain basement prices.  The land for the 70-acre TRX 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.

However, 1MDB has already sold parts of TRX to Tabung Haji and Armed Forces Pension Fund-owned Affin Bank for more than RM2,700 and RM4,500psf.  In total, 30.5 acre of TRX was sold for approximately RM3.5 billion.  At the same time 40% of Bandar Malaysia has been sold for more than RM1,000psf.  The proceeds of these sale has already gone into the pockets of 1MDB to service its mountain of debt unrelated to its property division.

Hence we were screwed first time when we practically gave the super-prime land to 1MDB for free, allowing 1MDB to blindly profit for billions of ringgit.  We are now screwed the second time, when MoF takes back the balance of the assets from 1MDB, now attached with a mega RM3.2 billion debt.

Malaysians can now understand why former Second Finance Minister, Dato’ Seri Husni Hanadzlah decided to quit the Cabinet.  The brazen bailout horrors which are taking place today are just mind-blowing – and the above refers only to the real estate transactions.

No Minister with an iota of integrity or credibility would want to remain in this Cabinet, bent on using billions of ringgit of tax-payers’ money to cover up the single largest kleptocratic crime by the Najib administration.

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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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Be it “Parker Randall” or “Afrizan Tarmili Khairul Azhar”, will new 1MDB auditors act as “independent auditors” in an objective, professional and timely manner?

Scandal-ridden 1MDB has finally appointed new auditors to replace Deloitte Malaysia who resigned since the middle of last year.  Deloitte is the 3rd audit firm which have resigned in 6 years, following Ernst & Young and KPMG.  The new 1MDB chairman, who is also the Treasurer-General, announced that “Parker Randall” appointed to the task two days ago.

A little storm was created as “Parker Randall” in Malaysia is essentially Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) with 4 partners, based in Sri Rampai, Kuala Lumpur.

As the corporate profile downloaded from the firm’s website stated, aftaas is “a member of Parker Randall International” which is an “international association of independent audit and accounting firms”.

As highlighted by Malaysiakini, each member firm of Parker Randall in each country is a separate and independent legal entity. Malaysiakini also pointed out that the 2011 ranking on the largest law and accounting firm networks ranked Parker Randall at 56 among 60.  Parker Randall also did not make the list for accountancy publication Accountancy Age's 'Top 100' survey for 2016.

However, what is ultimately most important for Malaysians isn’t the question of whether it is Parker Randall or Afrizan Tarmili Khairul Azhar carrying out the 1MDB audit.  What is of utmost importance is whether the newly appointed firm will carry out their responsibilities as “independent auditors”, and I emphasize “independent”, in an objective, professional and timely manner.

For a start, this is the perfect opportunity for aftaas to prove that they can do a better job than global giants, KPMG and Deloitte who have failed miserably in their audit of 1MDB by signing off financial statements which were at best misleading, at worst completely fraudulent.

Both KPMG and Deloitte failed to detect even a single dollar of misappropriation from 1MDB in the five financial years ending March 2010 to 2014.  We have since discovered, with confirmation from both Bank Negara Malaysia, the Switzerland Attorney-General as well as the Department of Justice of the United States that at least US$5 billion has been siphoned from 1MDB into private off-shore firms owned by Low Taek Jho, fraudulent entities masquerading as legitimate Abu Dhabi companies as well as dodgy investment funds which acted as money laundering conduits.

The Parliamentary Public Accounts Committee has also similarly provided evidence of the complicity of the 1MDB top management who signed dubious agreements and provided false information to the Board of Directors as well as the regulating agencies.

The previous auditors were so badly and disgracefully duped that Deloitte found it necessary to announce the withdrawal of their recognition of 1MDB’s March 2013 and 2014 audited accounts which they had previously signed off without any qualification.  Deloitte said that the above accounts “should no longer be relied upon”.

Hence, regardless of what the 1MDB directors and management might think, it is important for Parker Randall and/or aftaas to carry out a thorough audit of all the questionable transactions of the past where billions of dollars have been misappropriated.

Therefore, the first task by aftaas is simply to review and restate 1MDB’s 2013 and 2014 financial statements which have been withdrawn by Deloitte.  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.

Following that, with the “right” opening balance determined, then aftaas can proceed to conduct the audit for March 2015 and 2016 which are both already overdue.

If aftaas fails to perform the above review and audit, they can be assured that not only their market reputation will be left in tatters in Malaysia, their international affiliation, Parker Randall – whose credibility 1MDB is banking on – will be similarly disgraced internationally and dragged through the mud.

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Apa sebabnya Menteri Kewangan merahsiakan pengurus dana dan bank kustodian bagi pelaburan “unit” yang dikatakan bernilai US$940 juta?

Laporan Ketua Audit Negara dan Laporan Jawatankuasa Kira-kira Wang Negara yang dibentangkan di Dewan Rakyat pada bulan April yang lalu telah menyatakan bahawa nilai dan aset sejumlah US$7 bilion (RM28 bilion) tidak dapat dikesan atau disahkan.

Antaranya ialah pelaburan “unit” bernilai US$940 juta yang pada masa itu disimpan dalam bank kustodian, BSI Bank di Singapura.  Ketua Audit Negara tidak dapat mengesahkan kewujudan dan nilai semasa pelaburan tersebut sebab 1MDB telah gagal menyerahkan sebarang dokumen daripada BSI Bank kepadanya walaupun dokumen telah diminta selama setahun.

Aset “unit” yang dikatakan bernilai US$940 juta ini merupakan baki aset yang ditebus daripada pengurus dana di Cayman Islands pada bulan January 2015.

Sehingga hari ini, “unit” yang disimpan di BSI Bank ini merupakan misteri sebab kalau 1MDB begitu terdesak kekurangan aliran tunai, sehingga terpaksa menjual aset-aset penting negara seperti penjanakuasa bebas dan hartanah emas seperti Bandar Malaysia kepada pelabur asing, kenapa pelaburan “unit” ini tidak dijualkan dahulu untuk membiayai hutang gergasi 1MDB?

Keengganan 1MDB untuk menyampaikan sebarang matlumat dan dokumen kepada Ketua Audit Negara, dan keputusan Deloitte Malaysia untuk menarik balik pengakuan kepada audit 1MDB bagi tahun 2013 dan 2014 mengemukakan keraguan besar terhadap kewujudan “unit” yang dipegang dalam BSI Bank tersebut.

Kini, lesen perbankan BSI Bank telah dibatalkan oleh kerajaan Singapura kerana didapati bersalah dari segi pengubahan wang haram yang berkaitan dengan skandal 1MDB.  Saya telah bertanya kepada Menteri Kewangan, apa telah terjadi kepada “unit” tersebut.

Inilah jawapan yang saya telah terima daripada YB Menteri Kewangan pada Hari Khamis yang lalu.  Beliau menyebut bahawa “Ahli Lembaga Pengarah Brazen Sky Limited mengesahkan bahawa sebuah bank berlesen antarabangsa telah diberi mandate sebagai custodian bank untuk mengambilalih peranan BSI Bank, Singapura.  Ahli Lembaga Pengarah Brazen Sky Limited juga telah melaporkan bahawa tiada perubahan status di dalam nilai pelaburan tersebut.”

Ini merupakan jawapan yang cukup tidak bertanggungjawab daripada Menteri Kewangan.

Pertama sekali, kenapa Menteri tak sebut, siapakah pengurus dana dan custodian bank yang baru?  Apakah kerahsiaan yang diperlukan sehingga nama tidak boleh dimaklumkan kepada Dewan Rakyat?

Dulu bila Menteri Kewangan ditanya siapa pengurus dana pelaburan 1MDB di Cayman Islands, Menteri Kewangan sama-sama enggan menamakan nama pengurus dana walaupun beliau menegaskan bahawa ia dilaburkan dalam sebuah syarikat kewangan yang berlesen.

Kini, kita faham kenapa Menteri enggan menamakan syarikat. Ini adalah kerana syarikat pengurus dana pada masa 1MDB membuat pelaburan telah didapati oleh Ketua Audit Negara bahawa syarikat itu tanpa lesen.

Adakah keengganan Menteri Kewangan untuk menamakan pengurusan dana “unit” ini adalah kerana ia juga tidak berlesen seperti syarikat di Cayman Islands yang dulu?

Adakah Menteri Kewangan takut bahawa kalau dinamakan, bank kustodian yang baru ini juga akan dibatalkan lesen perbankan seperti apa yang terjadi kepada BSI Bank Singapura?

Kedua, jawapan Menteri Kewangan tidak boleh diterima kerana beliau bertanggungjawab untuk memastikan kesahihan segala jawapan yang diberikan oleh syarikat yang dikawalnya.  Menteri Kewangan tak boleh jawab bahawa Ahli Lembaga Pengarah berkata bahawa apa-apa.  Menteri Kewangan kena pasti bahawa nilai “unit” itu benar-benar bernilai US$940 juta!

It is not right for the Finance Minister to try to protect himself with deniability.

Adalah jelas bahawa kesemua kekurangan keterbukaan dalam jawapan Menteri Kewangan ini menunjukkan bahawa adanya udang disebalik batu yang disembunyikan daripada rakyat Malaysia.

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Is Dato’ Seri Najib Razak’s strategy to deal with Malaysia’s entrenching reputation as a global kleptocracy to remain silent like a mouse?

Malaysians have been demanding answers from Dato' Seri Najib Razak on the 1MDB-related scandal, that is the RM4 billion SRC International, which is the former subsidiary of 1MDB.  Similar to 1MDB, the money which was borrowed from KWAP has been invested in mysterious and unknown funds overseas.  No one, including anyone from the Ministry of Finance (MOF) knows where the money has disappeared to.

The Prime Minister and the Attorney-General have also stubbornly refused to respond to the clear-cut evidence which have shown that SRC International has transferred, via intermediaries, at least RM67 million into the personal bank account of Dato' Seri Najib Razak.

However, it appears that Dato' Seri Najib cannot remain silent forever as, like 1MDB, the international authorities are catching up to the SRC International laundering scams.

The Swiss Attorney-General Office (OAG) has publicly stated that investigations revealed that substantial amounts of money were allegedly misappropriated from former 1MDB subsidiary SRC International and that fraud was committed based on a form of “Ponzi” scheme to cover it up.

Dato' Seri Najib Razak can no longer choose to remain silent in the face of another international investigation over funds which he controls.  He must come forward and disclose if the allegations made by the Swiss authorities are frivolous or are they substantive, which will require an open and thorough investigation in Malaysia.

In addition, Dato' Seri Najib Razak must state if he will provide full cooperation with the Swiss authorities who are demanding and requiring information from their counterparts in Malaysia.  Or is he going to merely pay lip service and ignore the requests?

At least in 1MDB, for the longest time, there were "faces" who responded to questions and queries, like Datuk Shahrol Halmi and Arul Kanda.

The question Malaysians have is, who is or are running the show in SRC International?  As far as we are aware, the Managing Director of SRC International, Nik Faisal Ariff Kamil has disappeared off the face of Malaysia together with another fellow Director, Datuk Suboh Yassin.  And yet despite their disappearance, they have remained Directors in SRC International over the past year or more.  In fact, when asked, the Prime Minister had responded in Parliament that there is no need at all to appoint new Directors or a new management team.

It is a testament to the failure of Malaysian institutions, entrusted to safeguard the people's money as well as law and order, that nothing concrete has been done to uncover another massive embezzlement of RM4 billion of funds from a state-owned subsidiary.  What have the police, Bank Negara Malaysia, MACC or the Attorney-General's office been doing?  Have they been closing both eyes because the scandal involved the Prime Minister himself?

If Dato' Seri Najib Razak believes that the Swiss allegations are frivolous and untrue, then he should immediately demand the Auditor-General commence a new report specifically on SRC International and table the report to Parliament.  If not, there is no longer any credibility to his administration which will be etched in history as the single biggest den of thieves.

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The Royal Malaysian Police and Bank Negara must investigate latest allegations that Ambank officials actively conspired with Jho Low to launder funds into Dato’ Seri Najib Razak's personal bank accounts

The Wall Street Journal (WSJ) had on 6 September 2016 made very specific allegations against Ambank Malaysia and its officials of facilitating and abetting money-laundering when billions of ringgit was transferred into the bank accounts of Dato’ Seri Najib Razak.

In making the allegations, the prestigious financial paper substantiated the claims with private conversations between senior Ambank officials with Low Taek Jho, who was carrying out the transactions on behalf of the Prime Minister.

The Prime Minister gave Low access to his accounts, according to investigative documents sighted by WSJ. His primary contact at AmBank was Joanna Yu, the banker he had warned via BlackBerry to communicate discreetly. Cheah Tek Kuang, a senior AmBank executive and adviser to the bank’s chairman, handled the account personally, the BlackBerry messages indicate.

On the assumption that the messages were genuine, they clearly indicated a conspiracy by the above parties to at best hide the transactions from scrutiny, and at worst, blatant masking of the illicit transactions as legitimate ones.

According to WSJ, Low sent hampers of food to Yu and lunched with her at noodle shops, according to the phone messages. He kept reinforcing the need for secrecy: “v v important no one should know in ambank besides u or cheah or get hold of statement,” one message said. “Cause if it gets on internet where funds were from then headache.”

Yu even made recommendations on which US correspondent bank will raise less questions involving the transfers.  They discussed whether to use Wells Fargo & Co. or J.P. Morgan Chase & Co.

“Can do JP, but may raise ques too…suspect better keep to wachovia,” Ms. Yu wrote, referring to a unit of Wells Fargo.

“Okay, wachovia then,” he replied. The transfer went through the Wells Fargo unit.

The above conversations raises major concerns of a high-level conspiracy to enable the money-laundering transactions to take place without being questioned or detected.

As the parties responsible for Anti-Money Laundering and Counter Financing of Terrorism Act (AMLA), the Royal Malaysian Police and particularly, Bank Negara must take immediate actions to investigate the above very serious allegations.

They must be investigated, and if found true, concrete actions must be taken to protect the integrity of our banking institutions and financial system.  Otherwise, the hard-earned reputation of Bank Negara and Malaysia will take a severe beating.

Instead, Malaysia may become an infamous haven for the rich and powerful criminals to abuse our banking institutions to hide and launder their ill-gotten wealth.

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Did Datuk Mohammad Ibrahim cut a deal not to investigate Dato’ Seri Najib Razak for money-laundering offences to secure his appointment as the new Bank Negara Governor?

New Bank Negara Malaysia (BNM) Governor, Datuk Muhammad Ibrahim announced yesterday that there would be no reopening of investigations on 1MDB despite the spate of new evidence disclosed by United States Department of Justice (DOJ). He said that the central bank has already taken all necessary action against 1MDB.

"We have completed our investigations into 1MDB based on the information and investigation papers. We have imposed a penalty on the company. We have taken all necessary action entrusted on us by the law and we have closed the investigation," Muhammad said at a press conference in Kuala Lumpur.

This single announcement has in one swift blow, destroyed all the credibility BNM has painstakingly accumulated over the past 2 decades.  The international financial community and government authorities will only laugh with incredulity how 1MDB was slapped on the wrist with an undisclosed administrative penalty when the DOJ charges that 1MDB and Malaysian officials have colluded to scam and launder more than USD3.5 billion from the company.

The Anti-Money Laundering and Anti-Terrorism Financing (Amendment) Act 2013 (“AMLA”) states that any person is deemed to have committed an offence if he or she “acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity” or “removes from or brings into Malaysia, proceeds of an unlawful activity”.

Bank Negara Malaysia, as the competent authority under the AMLA, must hence not abdicate from its responsibility to commence investigations into the above highly suspicious transactions for all relevant offences under the Act.

Worst, the DOJ specified that a significant part of the laundered funds found its way into the Malaysian banking system.  In particular, the charges established that USD731 million was deposited into the personal bank account of a “Malaysian Official One” (MO1) between 2011 and 2013. And the Minister in the Prime Minister’s Department, Dato’ Seri Rahman Dahlan acknowledged that only an idiot would not know that MO1 refers to Dato’ Seri Najib Razak.

In addition, it is also an offence when one “conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity”.

Dato’ Seri Najib Razak has not only received the illicit funds, he had tried to conceal the transfers by pretending that it is a “donation” from some mysterious unnamed Arab donor, which has now proven to be a complete lie.

The question for the Bank Negara Governor is very simple - has Dato’ Seri Najib Razak been investigated for multi-billion ringgit money laundering scam which has been highlighted by the US DOJ?

As far as we are aware, based on public announcements by BNM, 1MDB has only been investigated for improper disclosure to the central bank for its fund transfers overseas.  The elements of a money laundering conspiracy involving top 1MDB officials and the Prime Minister has never been carried out.

Why is Dato’ Seri Najib Razak immune to money laundering investigations by BNM?  Why is Datuk Mohammad Ibrahim failing to restore the integrity and protect the sanctity of our financial system from money laundering activities aggressively like other jurisdictions?

The Rakyat are now asking if this is because the newly appointed Governor has struck a secret deal with the Prime Minister to secure his appointment?

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A second international money laundering scam designed to cover up the first will cement Malaysia’s notoriety as the kleptocratic capital of the world

The Sarawak Report has exposed an alleged plan to double the price tag of the East Coast Rail Link (ECRL) to RM60 billion.  The “extra” RM30 billion is meant to be channelled to a nominated Chinese company to pay off 1MDB’s bad debts channelled via behind the scenes company.

The massively inflated alleged cost of the ECRL to be awarded to China Communications Construction Company (CCCC) lends credence to the Sarawak Report documents which detailed how the “excess” was to bailout the debt-stricken 1MDB.

The nominated company by CCCC will then 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.

I have since demanded that Dato’ Seri Najib Razak confirm or deny the alleged plan.  However, the Prime Minister has remained conspicuously silent on the exposé.  His silence on the matter will no doubt leave Malaysians believing another bailout is underway.  However, this is no ordinary bailout.

When the Parliament approved a special bill to allocate RM6 billion for Khazanah Nasional to rescue Malaysian Airlines System, that was a bailout. When the Ministry of Finance approved a RM4.5 billion soft loan for the Port Klang Free Zone, that was a bailout.

However, in this case, the Najib administration will be attempting a secret bailout of 1MDB via fraud and deceit.  If true, the Prime Minister will be engineering another multi-billion-dollar international money laundering exercise to cover up the first one by 1MDB.

Has Najib not learnt his lesson with the first 1MDB money-laundering scam?  The purportedly “legal” transactions such as “investment” in an ostensibly legal joint venture like “1MDB-Petrosaudi International Limited” did not in any way legitimise the attempts to siphon money for unrelated purposes.

Hence similarly, a purportedly “legal” ECRL contract does not in any way legitimise the attempt to siphon money out for the purposes of covering up another crime.

Furthermore, as the second “cover up” bailout will once again involve international cross-border transactions, any bank carrying out the multi-billion-dollar money-laundering exercise for them will be risking their reputation and survival.

After all, the previous banks who have facilitated the 1MDB money-laundering scam are now all in hot soup – including UBS Bank, DBS Bank and Standard Chartered Bank.  143-year-old Swiss bank, BSI not only found itself investigated by the Switzerland authorities but had its operating license terminated by the Monetary Authority of Singapore.  Even Goldman Sachs who assisted 1MDB in raising US$6.5 billion of bonds is being probed.

Finally, if CCCC were to accept the fraudulently inflated contract to carry out the money laundering on behalf of the Najib administration, then the US$24 billion company listed on the Hong Kong Stock Exchange will itself be party to the money-laundering scam and subjecting itself to prosecution in jurisdictions around the world.

Malaysia does not need another money-laundering scandal investigated by authorities all around the world to further sully our rapidly diminishing reputation while making Malaysia the kleptocratic capital of the world.  The Cabinet must put a stop to this RM60 billion ECRL contract immediately so that the long-suffering Malaysian people will not be scammed again for multi-billion dollars to cover up another scam.

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Deloitte Malaysia has disowned 1MDB audited accounts for March 2013 and 2014 – will KPMG do the same for the audited accounts it signed off for 2010, 2011 and 2012?

The United States Department of Justice’s (DOJ) explosive exposé has finally resulted of Deloitte Malaysia finally telling 1MDB that they no longer stand by the March 2013 and 2014 financial statements which they signed off on 28 March 2014 and 5 November 2014 respectively.

The DOJ’s account showed that Deloitte has failed to discover in its audit that 1MDB had made more than US$3.5 billion of payments over the course of 2012 t0 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI).

Deloitte also did not discover anything suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds.  The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.

Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited.  This was revealed separately by documents exposed by the Sarawak Report.

Deloitte’s gullibility had allowed 1MDB executives and the Najib administration to cite and abuse the international audit firm’s international “reputation” to lend credibility to 1MDB.  They helped mask the multi-billion dollar shenanigans which were taking place in the state-owned enterprise for the past few years.

However, Deloittle was not the only auditor guilty of such negligence.  Equally gullible to 1MDB executives lies and deceit was KPMG who signed off the 1MDB accounts for the years ending March 2010, 2011 and 2012 before they were sacked in December 2013.

In fact, it was KPMG who signed of the March 2010 accounts on 4 October 2010 in less than 3 weeks after they replaced the previous auditors, Ernst & Young, who were sacked for refusing to sign off the accounts.

The March 2010 accounts was crucial because it had involved 1MDB’s first investment of US$1 billion to form the short-lived joint venture with Petrosaudi International Limited.  As we now know for a fact, US$700 million of that investment was embezzled by Jho Low, with complicity by 1MDB top executives.

KPMG had then intentionally and/or negligently failed to report the fact that 1MDB’s sale and conversion of their stake in the Petrosaudi joint venture into a loan took place only after the March 2010 financial year.  As a result, 1MDB was able to report artificially inflated profits and failed to disclose the key transactions which were highly dubious within 1MDB-Petrosaudi Limited.

The nullification of the 1MDB’s 2010 audit would also mean that the 2011 and 2012 audits would automatically cease to be valid as well.

The question is, now that the US DOJ has surfaced evidence that the entire Petrosaudi transaction was a fraud for the purposes of money-laundering, will KPMG in form 1MDB and the public that they will no longer stand by the audited accounts like what Deloitte has done?

Or will KPMG decide to grit its teeth and stubbornly stand by the audited accounts which have now proven at best doubtful in the light of the recent developments?

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Deloitte Malaysia washes hands off 1MDB; new 1MDB Board of Directors fails its first test of integrity and accountability

Yesterday, the new Board of Directors of scandal-ridden 1MDB had peculiarly announced that “its 2013 and 2014 audited financial statements should no longer be relied on until allegations made by the United States (US) Department of Justice (DOJ) are determined in court”.

The announcement further added that 1MDB is in the midst of seeking a new auditor after Deloitte notified of its intention to resign on Feb 26.

It is clear from this peculiar announcement coming hot on the trails of the DOJ exposé was a result of Deloitte finally telling 1MDB that they no longer stand by the March 2013 and 2014 financial statements which they signed off on 28 March 2014 and 5 November 2014 respectively.

The evidence presented by the DOJ clearly showed that Deloitte has made a complete mess of 1MDB’s audit for the two financial years.  The auditors were made complete fools by 1MDB’s executives who repeatedly embezzled billions of dollars from the company.  They were hoodwinked, perhaps too readily, by fictitious documents and outrageous lies presented by the company’s management.

Deloitte has failed to discover in its audit that 1MDB had made more than US$3.5 billion of payments over the course of 2012 to 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI). 

Deloitte found nothing suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds.  The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.

Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited.  This was revealed separately by documents exposed by the Sarawak Report.

Deloitte’s gullibility had allowed 1MDB executives and the Najib administration to cite and abuse the international audit firm’s international “reputation” to lend credibility to 1MDB.  They helped mask the multi-billion dollar shenanigans which were taking place in the state-owned enterprise for the past few years.

With the DOJ’s exposé, it has finally come to a stage where it is no longer tenable for Deloitte to standby the financial statements it audited for 2013 and 2014. Hence 1MDB was forced into making this queer announcement to deny the veracity of its own financial report.

While Deloitte’s belated withdrawal of its endorsement for 1MDB’s financial statements were understandable, the 1MDB Board’s continued insistence that “no wrongdoing has been committed by 1MDB and that the past audited financial statements continue to show a true and fair view of the company’s affairs” is shocking and utterly irresponsible.

Despite the overwhelming evidence which has publicly surfaced, the newly appointed Directors led by Treasury-General Tan Sri Irwan Serigar is persisting with a massive cover up of the crimes which have taken place within 1MDB.

It is now obviously that Tan Sri Irwan Serigar is only interested in carrying on the “stellar” work of the previous Board of Directors who had resigned en masse in absolute disgrace in April. 

When the Treasury-General had testified before the Parliamentary Public Accounts Committee in June 2014, he had absolved himself from all blame by claiming that he had no control or supervisory powers over 1MDB.  In fact, he blamed Clause 117 of 1MDB’s Memorandum and Articles of Association which grated all such powers directly to the Prime Minister.

However, despite the abolition of the above Clause and his appointment as the new Chairman, Tan Sri Irwan Serigar has shown that he is cut from the same cloth.  His loyalty is to Dato' Seri Najib Razak and he has little care for integrity and accountability.

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Dato’ Seri Najib Razak should stop pulling the wool over the rakyat’s eyes with purported social welfare programmes by 1MDB which are in actual reality, funded by Malaysian taxpayers

It beggars belief that the Prime Minister, Dato’ Seri Najib Razak could still heap praise on 1MDB for “making immense contribution to social welfare programmes”.

He announced that 1MDB Foundation sponsored RM10.4 million for 1,100 pilgrims to go to for pilgrimage this year; recipients of which were present with Najib in a Putrajaya mosque today to receive their offer letters yesterday

The 1MDB Foundation contribution to social welfare is a farce designed with the specific intent to mask the fact that 1MDB has made billions of ringgit of losses, as a result of an international money laundering exercise involving the Prime Minister himself.

If 1MDB had made real profits and subsequently allocated part of these profits to charitable causes, then the efforts by the state-owned company should certainly be applauded.

However, 1MDB which had funded itself entirely by debt by borrowing at its peak, RM55 billion ringgit, never made a sen of cash profits in its entire 6 years of existence. 

This means that 1MDB had effectively paid for its “immense contribution to social welfare programmes” with borrowings as a public relations exercise to repair the damage to its reputation caused by its massive losses and scandalous misappropriations.

Worse, because 1MDB was cash-strapped and unable to fulfil its debt obligations on a timely basis, government agencies were forced to step into bail out 1MDB.

For example, Tabung Haji – the pilgrimage fund, was called upon to acquire a piece of 0.64 acres of land from 1MDB in Tun Razak Exchange for the exorbitant price of RM188.5 million or approximately RM2,774 per square feet in 2015.  1MDB had earlier acquired the land from the Government at the bargain basement price of only RM64 per square feet.

It is of the greatest irony the Dato’ Seri Najib Razak boasted of 1MDB’s RM10.4 million contribution to the 1,100 pilgrims – who were supposed to be funded by Tabung Haji, when Tabung Haji has been ripped off of more than RM184 million from the above transaction alone.

What’s more, now that 1MDB is unable to service its debts and is faced with a US$6.5 billion suit from Abu Dhabi’s International Petroleum Investment Corporation (IPIC) in London, the tax-payers is now faced with another round of a multi-billion dollar bailout exercise by the Ministry of Finance which had explicitly or implicitly guaranteed the above debts.

Worse, the United States Department of Justice has now provided clear evidence of how US$731 million belonging to 1MDB was deposited in the Prime Minister’s personal bank account between 2011 and 2013.  Hence it is clear that what has been distributed to the poor in Malaysia is dwarfed by what Dato’ Seri Najib Razak received.

Therefore we call upon the Prime Minister to stop putting on a false front on 1MDB.  The public relations exercise is doomed to fail because the facts and evidence of the multi-billion dollar embezzlement from 1MDB is clear for all to see.

Dato’ Seri Najib Razak will serve the Rakyat better by explaining why he took US$731 million from 1MDB and why did he allow his son-in-law, Riza Aziz and the latter’s best friend, Low Taek Jho to pillage 1MDB to buy luxury properties, pay for gambling debts, acquire an aircraft, collect art masterpieces and finance their decadent lifestyles.

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