Malaysian Aviation Commission (MAVCOM) claim that it is ‘unsustainable’ for the Passenger Service Charge (PSC) to be kept at LCCT levels confirms that the fees are hiked to rescue Malaysia Airports Holdings Bhd (MAHB)

MAVCOM told The Malaysian Insight[1] two days ago that

…when klia2 began operations, it had the same PSC rates as the LCCT, despite having far superior services and facilities.  This environment is non-sustainable, given that the costs of operating and maintaining a larger and more advanced airport are higher.

Indeed, we have long criticised and warned the Government on the inflated costs and questionable decisions made by MAHB in the construction of KLIA2 which will inevitably result in subtantially higher operating costs.  The higher cost however, isn’t quite due to MAVCOM’s description of a “more advanced airport”.

Firstly, it is due to more than RM5 billion worth of borrowings MAHB took to finance the airport which today incurs more than RM250 million in interest per annum.

Secondly, it is due to MAHB incompetence and questionable decisions which have resulted in substantially higher than expected maintenance cost.  Despite KLIA2 commencing operations since 2013, the airport is still plagued with soil settlement or sinking problems causing constant operational inconvenience and a state of perpetual repair.

For example, in August this year, urgent repairs had to be carried out at the KLIA2 runway due to soil settlement problems, forcing dozens of outbound and inbound flight delays.  In October last year, a ruptured fuel pipeline – not the first time – was estimated to have taken one and a half months to rectify.

Most obviously, and the biggest complaint by both Air Asia as well as passengers is the unnecessary grandeur in the sheer size and scale of the airport.  This has resulted in extra-long walking distances for airline workers and passengers.  As a result, MAHB was forced to retrofit poorly designed walkalators all around the terminal to ease the inconvenience.  Hence perhaps in this particular instance, MAVCOM is indeed correct to point out that the larger airport is indeed more costly to maintain.

Regardless, the admission by MAVCOM confirms that a key reason for the hike in PSC, also known as the airport tax, is to bailout MAHB which is suffering from losses in its KLIA2 operations.  It should be remembered that the Chief Financial Officer of MAHB, has assured the Public Accounts Committee that MAHB does not need to raise the PSC above and beyond the prescribed inflation rates to ensure operational profitability.  That has clearly turned out to be a lie.

We will not object to a hike in PSC if it is pegged to the annual inflation rates.  However, a hike amounting to 46% to RM73 per international passenger is unacceptable, especially since it is to make the rakyat pay for the follies of MAHB.

It is worse when Malaysians see how biased MAVCOM is, when the latter is prepared to even revise history to justify the above hike.

MAVCOM reiterated to The Malaysian Insight that “KLIA2 was never designed as a low-cost carrier terminal and was not a “hybrid airport” as some claimed”.  There cannot be a greater lie coming from the airline industry regulator which was born only a few years after KLIA2 commenced operations.

KLIA2 was conceived and intended to service the low-cost carrier airlines.  Even the official brochure on KLIA2[2] on the MAHB website site still clearly states so.  And when the cost of the airport ballooned to RM4 billion from the original budget of RM1.7 billion, it was the Deputy Transport Minister, Datuk Aziz Kaprawi who told both the media and the Parliament in 2013 that KLIA2 was not merely a ‘low-cost carrier terminal’ but a ‘hybrid airport’.

Is MAVCOM telling us that both MAHB and the Transport Minister had lied about the nature of KLIA2?

Let me advise the MAVCOM to download a copy of the Public Accounts Committee Report on KLIA2[3] for its commissioners to read and better understand the shenanigans which have taken place during the design, award and construction of KLIA2.  Only then perhaps, Malaysians can hope that MAVCOM will stop punishing tax-payers to save MAHB’s skin.

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International Civil Aviation Organisation (ICAO) policy clearly states that “in general, aircraft operators and other airport users, including end-users, should not be charged for facilities and services they do not use”

Malaysia Airports Holdings Bhd (MAHB) has been quick to often cite the International Civil Aviation Organisation’s (ICAO) ‘principle of non-discriminatory pricing of passenger service charges’ when responding to criticisms against the equalisation of the fees between KLIA and KLIA2.

Earlier this month, it was announced that the Passenger Service Charge (PSC) for international flights, excluding ASEAN, operating at KLIA2 would be increased from RM50 to RM73 per passenger. The move by the Malaysian Aviation Commission (Mavcom) has drawn the ire of users of KLIA2, including the airport’s main airline AirAsia.  The PSC increase which comes into effect on January 1 2018, will likely lead to an increase in airfares for flights using the supposedly low-cost terminal.

However, MAHB is only being selective in using the above non-discriminatory principle as an excuse to raise the PSC for KLIA2.

If one were to refer to the ICAO’s Policies on Charges for Airports and Air Navigation Service (attached), MAHB conveniently forgets to mention that the same policy still allows for differential pricing systems.

ICAO specifically says that “in general, aircraft operators and other airport users, including end-users, should not be charged for facilities and services they do not use”.

Hence MAHB is clearly violating this guideline when it increases the PSC at KLIA2.

This is very simply because the facilities and services provided at KLIA2 are vastly inferior to KLIA.  And that in turn is because KLIA2 was never intended, designed or built as an extended “second permanent terminal for KLIA”.  KLIA2 was conceived and always intended as an international hub for low-cost carriers, and was built to cope with the growth of AirAsia as the region’s fastest growing low-cost airline.

Because of the massive cost overruns as a result from MAHB incompetence, as concluded by the Parliamentary Public Accounts Committee (PAC), KLIA2 was relabelled as a ‘hybrid terminal’ in 2013.  Even so, that relabelling still confirmed that after its opening in 2013, KLIA2 was unique and distinct from KLIA.

Therefore the latest claim by MAHB that KLIA2 is merely a “second permanent terminal for KLIA” to justify the hike in PSC is wholly untenable.

Hence, we call upon both MAHB and the Malaysian Aviation Commission (MAVCOM) to retract the decision to 46% hike the PSC charges at KLIA2 to equal that charged in KLIA.  ICAO clearly allows for fee differentiation between airports and terminals based on the availability and quality of services offered.

If MAHB and MAVCOM insist on hiking the fees at KLIA2, then they must prove how KLIA2 is an equal to KLIA to the angry Malaysians out there.  If they fail to do so, then it cannot be clearer that the entir fee hike exercise is to make more profits for MAHB, particularly since MAHB has taken billions of ringgit of debt to fund its RM4 billion KLIA2 misadventure.

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Is KLIA2 a “low-cost terminal”, a “hybrid airport” or a mere “extension” of the main KLIA terminal?

Yesterday, Malaysia Airports Holdings Bhd (MAHB) issued a statement in response to my criticisms against the impending Passenger Services Charge (PSC) increase in 2018.

MAHB insisted that “KLIA2 is not a low-cost airport terminal”. It said “together with the government, we had made the strategic decision to build a second permanent terminal for KLIA that will accommodate increased capacity requirements, or in other words, future growth”.

So not only is KLIA2 not a “low-cost terminal”, it also appears that MAHB is now ditching its own much-ridiculed “hybrid airport” moniker.  Deputy Minister of Transport Datuk Abdul Aziz Kaprawi had announced in July 2013 that “KLIA2 will no longer be a low-cost terminal, but Malaysia’s first hybrid airport with upgraded business-class services alongside total international passenger segregation”.  The announcement was made partly to justify the astronomical increase in the cost of the terminal from RM1.7 billion to more than RM4 billion.

Malaysians are rightly confused with the shifting terminologies and inconsistent definitions of what exactly is the purpose and intent of KLIA2.

If you were to download the brochure from MAHB’s own website, “KLIA2 – The Rise of the New Titan”[1], it clearly states

…KLIA2 is positioned to be the biggest terminal for Low Cost Carriers (LCC) in the world, serving as a global benchmark for future terminals of its kind…

With these world-class features, KLIA2 will be the largest purpose built terminal for low-cost travel in the world with a capacity of up to 45 million passengers per annum…

So which is right?  The marketing brochure on MAHB’s website or the latest statement to deflect blame from the massive hike for Passenger Service Charge (PSC) at KLIA2?

However, regardless of whether MAHB wants to call KLIA2 a “hybrid airport” as it did earlier in 2013, or a “second permanent terminal for KLIA” as it did yesterday, the fact remains that KLIA2 has at all times since its approval by the Cabinet, been intended specifically to serve as a new “low cost carrier terminal” to replace the old makeshift LCCT.

The fact of the matter is, MAHB had only decided in 2013 to re-label KLIA2 as a “hybrid airport” in order to justify the massive unbudgeted cost overruns and delays.  Now, MAHB is redefining KLIA2 as merely a “second permanent terminal of KLIA”, implying no differentiated service quality between KLIA and KLIA2, purely to justify the equal PSC to be imposed both terminals.

It is ironical that MAHB claimed that it has already explained the above to the Public Accounts Committee (PAC), of which I am a member.  MAHB said in its statement yesterday

We have also explained numerous times to YB Tony Pua along with the other members during the PAC sessions that after numerous engagement sessions with key stakeholders, klia2 development had undergone significant scope increase due to changing requirements by the key stakeholders, including the government agencies and AirAsia.

MAHB seems to have forgotten that the damning PAC Report on MAHB concluded that the excuses given by the top management of MAHB were misleading, untenable and unjustifiable.

The then PAC chairman, Datuk Nur Jazlan Mohamed said MAHB was “not being customer-centric” when “MAHB should be building airports for people to use and not determine what people should use”.  The PAC had strongly criticised MAHB’s arrogance for intentionally abstaining from engagement with its key customers like Air Asia when designing and constructing the airport.

The PAC Report had concluded that “Malaysia has lost a golden opportunity to develop the most competitive low-cost carrier hub in the Asia Pacific region.”  Today, Malaysians have to pay for the follies of MAHB with a massive 46% hike in Passenger Service Charges.

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Malaysians are now paying the cost of an incompetent Malaysia Airports Holdings Bhd (MAHB) who built a defective ‘low-cost’ KLIA2 at more than RM4 billion

Earlier this month, it was announced that the Passenger Service Charge (PSC) for international flights, excluding ASEAN, operating at KLIA2 would be increased from RM50 to RM73 per passenger. The move by the Malaysian Aviation Commission (Mavcom) has drawn the ire of users of KLIA2, including the airport’s main airline AirAsia.

The PSC increase which comes into effect on January 1 2018, will likely lead to an increase in airfares for flights using the supposedly low-cost terminal. Mavcom’s rationale for the increase is to equalise the PSC between KLIA and KLIA2 because they view the two airports as providing a similar quality of service.

However, anyone who’s used the two airports would know that the level of service provided at the two airports is far from the same. For passengers, this includes the long distances that need to be covered by foot when using KLIA2. The check-in area at KLIA also has more space and counters compared to the newer KLIA2, even though the latter was designed for a higher passenger capacity of 45 million people per year compared to KLIA’s 30 million people per year.

Airline operators also face similar inconveniences including a greater distance to the KLAS Cargo and catering building, which are now 10km away in KLIA. The construction of KLIA2 was already controversial with problems such as sinking soil which has caused alarming depressions on the aprons and runway, while damaging fuel supplies at the airport.

With all these problems plaguing KLIA2, it is boggles the mind how Mavcom has decided to treat the airport as an equal to KLIA, and in doing so make passengers at the lesser airport bear a greater cost.

The real reason for the increase in PSC lie in the astronomical cost over-runs that came with KLIA2. The airport which was built and is operated by Malaysia Airports Berhad (MAHB) started off with a budget of RM1.7 billion in 2007 and wound up costing well-above RM4 billion.  Worse, the ‘low-cost’ terminal was completed more than 2 years later than scheduled.

Back in 2012, when I raised this issue in Parliament, the then Deputy Transport Minister said that the increased costs would not be borne by the Government but would instead be fully borne by MAHB through their issuance of sukuk bonds.  MAHB had borrowed RM5.6 billion through various bond issuances to fund the airport.

In 2014, I protested that MAHB’s borrowing spree to fund these increased costs had lead to the company facing increased financing costs. An analyst report on MAHB at the time had suggested that without a price hike to the PSC at KLIA2, MAHB would not be able to meet its debt obligations which kick in in 2023.

The Chief Financial Officer of MAHB then had assured the Public Accounts Committee (PAC) who was investigating the KLIA2 project then that MAHB does not deed to raise the PSC to meet its debt obligations.  However, it is clear today that the senior management of MAHB had lied to the PAC to absolve themselves of responsibilities towards to drastic increase in the cost of construction of the new terminal.

The government may not have lied when it said that government funds would not be used to bear the extra costs of KLIA2, but it did conveniently hide the fact that passengers would be picking up the tab through its increased PSC.

It is clear now that the PSC hike announced by Mavcom could be coming in to ensure that the Government does not have to bailout MAHB if it fails to meet its debt obligation. Worse, the massive hike of the PSC at KLIA2 will significantly jeopardise Malaysia’s strategic competitiveness as the hub for the growing low cost airlines.  This will in turn hurt our tourist arrivals and economy.

Therefore, we call upon the Government to review the decision to penalise KLIA2 passengers with higher fees without any corresponding increase in the quality of facilities and service.

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The Malaysian Anti-Corruption Commission needs to grow a spine and really stand up to corruption.

I had asked in Parliament why the MACC had announced in June that it would not be carrying out investigations regarding the misappropriation of funds and abuse of power in the 1MDB scandal.

Tony Pua meminta Perdana Menteri menyatakan apakah sebabnya Ketua Pesuruhjaya Suruhanjaya Pencegah Rasuah Malaysia (SPRM) mengumumkan pada bulan Jun 2017 bahawa pihak SPRM tidak akan menjalankan siasatan ke atas ke penyelewengan dan penyalahgunaan kuasa dalam skandal 1MDB?

The Minister in the Prime Minister’s Department in-charge of Integrity, Datuk Paul Low replied on 1 November that “investigations weren’t carried out because of existing investigations being done by the Public Accounts Committee (PAC), Bank Negara and the Police.”

There could not be a more shameless and irresponsible reply from the Minister and the Government.

The PAC – which barely scratched the surface of the 1MDB scandal, has no prosecutorial powers.  Bank Negara Malaysia, on the other hand, was investigating 1MDB purely from the Financial Services Act and certainly did not deal with the parties who had profited from the scandal. 

At the same time, while the Police may have been investigating the criminal elements in 1MDB, the MACC has powers, laws and jurisdictions which are completely different from the Police to tackle corruption cases.

That was the whole point of the Parliament passing the MACC Act in the first place, so that there is a dedicated and independent commission to tackle the scourge of corruption and not let the burden be shouldered by the Royal Malaysian Police. What type “independent commission” worth its salt is MACC, if it leaves investigations, especially a scandal of such scale to other agencies?

In January this year, MACC commissioner Datuk Dzulkifly Ahmad warned corrupt politicians to “be careful”. He said he wasn’t afraid of protected individuals and would launch investigations without fear or favour. “Just you wait,” he had warned politicians.

Why is the MACC and Datuk Dzulkifly Ahmad, after all its showboating, so afraid of investigating the country’s biggest and most blatant corruption scandal?

Malaysians have been waiting long for MACC to launch its investigations into 1MDB especially after similar investigations have already begun in the US, Switzerland and Singapore. Just this weekend, even 1MDB-linked Prince Turki of Saudi Arabia was hauled up as part of an anti-corruption sweep in his own Kingdom.

In Malaysia, multiple reports have been lodged with the MACC regarding the 1MDB scandal. These included reports filed in December 2014 by then UMNO Batu Kawan Division Deputy Chief Datuk Khairuddin Abu Hassan and more recently, a Pakatan Harapan Youth-linked NGO in July this year.   Hence it is a serious breach of MACC’s duty for failing to look into complaints of corruption.

These submitted reports were to be evaluated before the Commission’s Information Evaluation Committee to determine whether there were elements of corruption or not. If elements of corruption are found, it is imperative that an MACC investigation is opened before being referred to the AG for legal prosecution.

Was the above process conveniently ignored in MACC’s special treatment for 1MDB?  Was this a condition for Datuk Dzulkifly Ahmad to be rapidly promoted to be appointed, less than 2 years ago, to be the Chief Commissioner in the first place?

It is preposterous for an independent commission like MACC to pass on its investigation to other agencies. Each authority has a different mandate to investigate, so it is entirely cowardly for MACC to turn a blind eye and let other agencies look into it.

Until the MACC finally grows a spine and properly considers reports against 1MDB, the commissioner's boastful warnings will remain in Malaysians’ eyes as baseless rhetoric.

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With outrageously creative accounting and a preposterous tax-payers’ bailout admitted by 1MDB itself, perhaps 1MDB will indeed be “on track to realise a profit”.

On Wednesday, I had accused the Prime Minister of peddling lies with the outrageous claim that 1MDB “is on track to realise a profit”, when 1MDB is nothing but a shell today laden with some RM40 billion of outstanding debt (including debts that have been assumed by the Ministry of Finance (MoF) over the past year).

1MDB tried vainly to defend the Prime Minister yesterday by spewing another set of half-truths and establish new standards of creative accounting.

I had, not for the first time, argued that 1MDB made some RM2.3 billion of losses from the sale of its acquired power plants to China General Nuclear Corporation.  And not for the first time, 1MDB tried to argue that 1MDB didn’t lose money because of dividends purportedly received from the energy subsidiaries.

Let me remind the CEO of 1MDB, Arul Kanda again - he had conceded to the Public Accounts Committee (PAC) that were the purported RM2.18b in dividends to be counted, he also needs to account for the huge RM3.5 billion in interest costs on the loan is taken to purchase those assets in the first place.

Only a half-baked CEO would tell his shareholders that he made money from the dividends, without taking into account the massive interest bill which was substantially higher than the purported dividends!

Worse, when I checked the financial statements of 1MDB’s energy subsidiaries, there was not a single year where they declared dividends to their 1MDB parent.  This meant that Arul Kanda cooked up the entire ‘dividend’ bullshit.

The Prime Minister himself declared that the proposed 1MDB rationalisation exercise practically ‘complete’ way back on 31 December 2015.  He said then, “it is therefore clear that 1MDB’s major challenges are now behind it as I promised they would be last summer.”

Except two years later, the plans are not only far from complete, they have completely unravelled.

As I’ve already highlighted previously, the RM7.41 billion deal to sell 60% of Bandar Malaysia which was the pillar of the 1MDB rationalisation exercise, has collapse spectacularly with no end in sight.

1MDB which had no ability to develop the massive property project had surrendered Bandar Malaysia back to the MoF, as proposed by the Public Accounts Committee (PAC).  And as 1MDB rightly pointed out, I was part of the committee which made the particular recommendation.

However, what PAC did not at any point in time recommend for the RM2.4 billion sukuk bond 1MDB borrowed for Bandar Malaysia to be also handed to MoF.  This is because the Auditor-General has confirmed that hardly a single sen from the above bond was actually spent for the purposes of the Bandar Malaysia project – a fact which was also conceded by Arul Kanda to the PAC.

Most shockingly however, as admitted explicitly for the first time by 1MDB in its statement to condemn me, was that 1MDB is expecting to “receive payments, over time” from MoF for the above debt-laden asset transfers.

In layman terms, it means that not only the tax-payers were forced to assume 1MDB’s debt, we bloody fools have to even pay 1MDB to assume these debts!

The above doesn’t yet include the fact that MoF has only recently in August, directly or indirectly bailed out 1MDB by making some US$600 million (RM2.5 billion) in settlement payments to Abu Dhabi’s IPIC.

Perhaps, I was wrong after all.  Despite being a shell laden with some RM40 billion of debts, Dato’ Seri Najib Razak was right to say that 1MDB “is on track to realise a profit” – with outrageously creative accounting and a preposterous tax-payers’ bailout.

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Auditor-General and PAC Chairman's decision not to pursue 1MDB scandal proves that they are compromised and unfit to protect the interest of Malaysians

Malaysians are aghast, but perhaps not surprised, that both the new Auditor-General, Tan Sri Madinah Mohamad and the Public Accounts Committee Chairman, Datuk Seri Hasan Arifin have decided against pursuing the 1MDB investigations and audit further.

This is despite the fact that the United States Department of Justice (US DOJ) had over the past one year, revealed new explosive evidence and details of how the billions of dollars of 1MDB funds have been misappropriated, stolen and laundered all around the world.

Most incriminatingly, the US DOJ suits detailed how more than US$732 million (RM3.1 billion) flowed in and out of the Prime Minister’s personal bank account between 2011 and 2014.  The specific dates and amounts of funds transferred, as well as the respective banks involved are listed in Table A on below.

Even the most partial observers would have to concede that there is a prima facie case to investigate the flow of funds, to determine the veracity of the allegations contained in the US DOJ report.  The investigators in the United States did not pluck these transactions out of the sky, but have meticulously corroborated all evidence with all the international banks across the world from global banks like Standard Chartered Bank to private banks like Falcon Bank of Switzerland.

None of the above transactions were investigated or were made available to the previous Auditor-General Report by the then Auditor-General, Tan Sri Ambrin Buang as well as the Public Accounts Committee Report tabled in Parliament in April 2016.

The Auditor-General then had reprimanded 1MDB for refusing to hand over its foreign bank account statements and transaction verifications despite multiple requests.  However, even without the above, there was sufficient damning evidence of abuse and mismanagement within 1MDB for the PAC to table its critical report last year. 

Now, with the scale of new explosive details of the scandal surfacing since the April 2016 Report, any God-fearing and responsible Auditor-General or PAC Chairman would have demanded a re-opening of their investigations.

While the PAC had a meeting yesterday to receive the latest Auditor-General’s Report, there was no discussion of pursuing the 1MDB investigations.  Instead Dato’ Seri Hasan Arifin unilaterally told the media that the Committee will not re-open the case.

On the other hand, Tan Sri Madinah Mohamad merely added her department would do so only if it receives instructions from the Cabinet.  Such instruction would never come of course, given the blatant conflict of interests involved with the Finance and Prime Minister, Dato’ Seri Najib Razak directly implicated in the massive scandal.

Their refusal to pursue the investigations only serves to entrench the rakyat’s perception that they are stooges installed by Dato’ Seri Najib Razak to protect the latter from the outrageous scandal.  After all, it has been exposed previously that Tan Sri Madinah is or was an UMNO Kepong Division member where her husband is the Division Chairman, Datuk Rizuan Abdul Hamid had openly expressed his willingness to “die for Najib”.  On the other hand, Dato’ Seri Hasan Arifin was installed as the PAC Chairman after the previous Chairman, Datuk Nur Jazlan was “promoted” to become a Deputy Minister.  Dato’ Seri Hasan had in his own words, rejected the need to summon Dato’ Seri Najib to the PAC because he has to “cari makan”.

These top officials have betrayed the interest of the rakyat and are traitors to their race, religion and nation.  If they have any iota of honour left in them, they should resign from their positions and let others who have the interest of Malaysians at heart take over these posts.

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The MACC will never shake its politically tainted image unless it starts taking action against power abuse and corruption in relation to 1MDB and SRC International

The Malaysian Anti-Corruption Commission (MACC) has been putting up a brave front in making dozens of arrests of corrupt government officials from state utilities and zakat officials to senior police officers around the country.

While none of the key arrests to date have resulted in convictions in the court of law, the relatively aggressive effort in fighting corruption is to be applauded.

However, all its efforts have failed to redeem the commission’s tarnished and tainted image of being a political tool of the Najib administration, and for its failure in touching anything remotely connected to the two largest scandals afflicting Malaysia today – 1MDB and SRC International.

In comparison, over the period of a year, the Singapore authorities have prosecuted and secured guilty verdicts against various parties involved in facilitating the laundering of illegally sourced funds passing through the Singapore banking system.

The most recent conviction was against a remisier who provided a S$3,000 inducement to a financial analyst to produce a favourable valuation report for a then proposed US$2.4 billion acquisition of Petrosaudi Oil Services Limited (PSOSL) by 1MDB.

In Malaysia, the Auditor-General and Public Accounts Committee (PAC) have already flagged the transaction as highly irregular and failed all tests of corporate goverance and due diligence – with the management both misleading the 1MDB Board of Directors, as well as ignoring the instructions of the latter.

Why is it that while the Singapore authorities have not only completed the prosecution and conviction of those found guilty of being involved in the above fraudulent transaction, but in Malaysia, the MACC isn’t even remotely close to completing its investigations.  In fact, the MACC Chief Commissioner has consistently refused to confirm if there are any investigations on the parties involved in the 1MDB scandal which have burdened the Malaysian tax-payers with RM42 billion of financial liabilities.

As a result, regardless of how many other arrests the MACC made against police officers and other agencies, the rakyat will forever view MACC as a biased agency which will only take action against the fish fries and not the monster sharks.  This is especially since it is now public knowledge, undenied by the Prime Minister, Dato’ Seri Najib Razak himself, that at least US$731 million originating from 1MDB and RM69 million from SRC International Sdn Bhd found its way to his personal bank account with Ambank Bhd.

The Chief Commissioner, Datuk Dzulkifli Ahmad had tried to brush off criticisms of MACC’s tardiness by claiming that actions against politicians are delayed because they didn’t want the issue to be made used of by politicians for the purposes of campaigning.

"There is no issue of 'pilih kasih' (favouritism), it's about timing. If we take action straightaway, then that's favouritism," he told reporters in Kuala Lumpur today.

Datuk Dzulkifli could not be more misguided in his rational for not completing its investigations on 1MDB and SRC International, or prosecuting the politicians involved.  In fact, his failure to take action against corrupt politicians on a timely basis is itself an act of ‘favouritism’.

It is not the business of MACC to interfere with politics or political campaigning. The business of MACC is to prosecute the corrupt, regardless of whether the person is the Prime Minister or a lowly civil servant.  The constitution provides for the fact that all Malaysians are equal under the eyes of the law.

Secondly, Datuk Dzulkifli appears to insinuate that political campaigning against corrupt officials is a despicable and dishonourable activity.  The MACC Chief could not be more wrong. Campaigning against the politically corrupt officials is central and integral to the concept of electoral democracy.

The rakyat must have the opportunity to hear and understand all the relevant facts, so that they are able to make informed choices during the General Election.

So, Datuk Dzulkifli, we call upon you to use the powers vested upon MACC to take immediate and uncompromised actions against political figures who are involved in abuse of power, the misappropriation of state funds as well as corruption.  It will go a long way towards redeeming the severely damaged image of MACC and demonstrating that you really act without fear or favour.

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

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

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

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

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

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

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

The implication between the 2 statements is staggering.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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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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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Unlike DAP Parliamentary Leader Lim Kit Siang who believed that Dato’ Seri Salleh Keruak could be tutored by me on 1MDB, I believe that the Minister is untutorable because he can’t count

DAP Parliamentary Leader Lim Kit Siang asked me to tutor Dato’ Seri Salleh Keruak on 1MDB yesterday. This was in response to the Communicatioarns and Multimedia Minister’s incredible claim yesterday that the 1MDB scandal is only a puny RM1 million scandal compared to the BMF RM2.5 billion scandal.

I really would, if I could.

I now believe that the Minister is actually untutorable because he really cannot count nor understand simple accounting fundamentals.

This was after he insisted yesterday that he didn’t need any tutoring, that “1MDB's start-up capital was only RM1 million” and that debt-stricken company has “RM51 billion worth of assets to show for it plus ongoing development for the next couple of decades.”

Unfortunately, Dato’ Seri Salleh Keruak is spinning a story that even the CEO for 1MDB, Arul Kanda has stopped spinning since a year ago.  And it only goes to prove that he really doesn’t know what he is talking about.

Firstly, while the Government did inject only RM1 million in cash into 1MDB, that Government has provided direct and indirect guarantees to various lenders from whom 1MDB borrowed RM5.8 billion and US$7.73 billion (RM3.4bn), or a total of approximately RM39.8 billion.  The amounts, which have been verified by the Auditor-General as disclosed in the Public Accounts Committee Report on 1MDB included:

• RM5.0bn – 30-year bond guaranteed by the Federal Government (2009)
• RM0.8bn – 10-year loan from SOCSO guaranteed by the Federal Government (2010)
• US$3.5bn –10-year bond guaranteed by IPIC, Abu Dhabi but indemnified by MOF Inc (2012)
• US$3.0bn – 10-year bond backed by a “Letter of Support” signed by the Minister of Finance which effectively guaranteed the debt (2013)
• US$1.0bn – Advance by IPIC to 1MDB, indemnified by MOF Inc (2015)
• US$0.23j– Advance interest payments by IPIC on behalf of 1MDB, indemnified by MOF Inc (2015/6)

All the indemnities, direct and indirect guarantees above mean that should 1MDB fail to pay the above, then the Federal Government of Malaysia, funded by ordinary tax-payers are liable to pay for the RM39.8 billion of 1MDB borrowings.

The above does not yet include additional billions of borrowings by 1MDB which are not officially guaranteed by the Federal Government.  If Salleh Keruak doesn’t trust me or the Auditor-General with the above figures, he could perhaps request for tuition from Arul Kanda instead.

The question is, does 1MDB really have “RM51 billion worth of assets”, a figure Arul Kanda no longer cites and worse, a figure that 1MDB’s own auditors have publicly renounced, to pare down its debts?

Has Dato’ Seri Salleh Keruak completely forgotten the fact that much of the RM51 billion worth of assets have either been sold (at a loss) or worse, been proven to be misappropriated by the investigations published in the United States, Switzerland and Singapore?

The documents which have surfaced since the international scandal broke showed the following sums have been outrightly siphoned from 1MDB:

• US$1.83bn – Investment in or with Petrosaudi, which was mostly misappropriated to Good Star Limited, a company owned by Jho Low (2009-2011)
• US$1.367bn – Purported “deposit” paid a fraudulent Aabar set up in the British Virgin Islands (BVI) which has since been liquidated (2012)
• US$0.855bn – Additional “deposit” paid to the same fraudulent Aabar in 2014
• US$1.56bn – Investment by 1MDB “Global Investment” in fraudulent investment funds (2013)

The total of funds misappropriated and hence completely lost, amounts to US$5.612 billion or approximately RM24.7 billion!  These losses do not yet include losses arising from 1MDB various “real” business transactions like the acquisition of power plants and real estate, astronomical fees paid to Goldman Sachs etc.

And despite all of the above, Dato’ Seri Salleh Keruak still deemed 1MDB “a going concern”.  The Minister obviously do not understand what is the meaning of “a going concern”.  Does he not realise that 1MDB no longer has any income sources despite remaining tens of billions of ringgit in debt?  Even Deloitte has given up auditing the company, and 1MDB itself has failed to produce a single financial statement since March 2013.

I sincerely hope that Dato’ Seri Salleh Keruak is merely pretending to be stupid.  Because if he is really that stupid, then even Arul Kanda would give up on him.  In fact, the 1MDB CEO might just prefer that the Minister keeps his mouth shut to save himself, BN, 1MDB and the Government further outrageous embarrassment.

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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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