Second Finance Minister Datuk Seri Johari Abdul Ghani announced on November 17 that the government had sent a directive to halt all approvals for high-end residences, shopping complexes and office buildings priced over RM1 million.
The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. The report found that new property launches were skewed towards the high-end sector of the market.
The Second Finance Minister subsequently reaffirmed the blanket ban after his fellow Cabinet colleague, Works Minister Datuk Fadillah Yusof said that developments would be reviewed on a case by case basis.
The ‘blanket ban’ had smacked of being a ‘hare-brained’ policy prescription as the Government started granting exemptions to projects which the Government had a vested interested. In particular, the Minister of Federal Territories, Dato’ Seri Tengku Adnan Tengku Mansor said the 1MDB-linked projects – Tun Razak Exchange and Bandar Malaysia were “pre-approved”, and are hence exempted.
The fact that Bandar Malaysia has not even found a developer with a plan appears immaterial to the ban exemption.
The biased exemption of such projects by Government-linked companies (GLCs) created an uproar among the private sector, who then lobbied hard to ease the ban.
Yesterday, the Government did another double-twist somersault on its ‘blanket ban’. Two statements by Urban Wellbeing and Local Government Minister Tan Sri Noh Omar and Datuk Seri Johari, suggested that the Government will now allow developers to appeal the ban on a case by case basis.
For luxury residential properties, Tan Sri Noh Omar announced that a four-minister committee to review the project applications comprising of Datuk Seri Johari, Datuk Fadillah, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan and himself. The committee would apparently subject its approvals to criteria including the existing housing condition, the number of houses in that location and those priced above RM1 million, as well as the number of unsold houses.
Separately, Datuk Johari said that developers of office spaces and shopping malls could appeal to the relevant ministers if they find locations that lack those properties and can justify their developments. He even went on to say that “anyone can build an office provided you know how to market it”.
Does the Minister actually think that developers are going to build an office block or a mall that they are not confident in selling?
I was among the first who had criticised that the blanket ban would not do much to remedy the property market imbalance. However, now the Ministers have granted themselves full discretionary powers to grant approval to any developers who can sweet talk way to win the hearts of the Ministers.
Have we now become a communist regime where the Government dictates how many left shoes to manufacture? Two big mistakes here certainly don’t make a right.
The multiple twists and turns worthy of a world-class acrobatic act only goes to prove that the Najib administration is completely clueless in policy-making. How does the above, for example, even address the main issue of the lack of affordable housing in the country and the largest oversupply of residential properties were reported at the RM500 000 to RM1 million segment?
The worst type of Government for any investor, foreign or domestic, is the absolutely lack of predictability and consistency in its policies. The current fiasco will certainly have major short to long term negative implications for Malaysia’s economy. The Cabinet must remedy its knee-jerk policy-making mechanism and instead, conduct a thorough study with all stakeholders, Bank Negara and think-tanks to design a consistent, constructive and incentivised policies to ensure continued growth and sustainability for the property sector and our economy.
Showing posts with label TRX. Show all posts
Showing posts with label TRX. Show all posts
Thursday, December 07, 2017
Friday, November 24, 2017
Ku Nan demonstrates “Malaysia Boleh” spirit by declaring Bandar Malaysia plans ‘approved’ even before master developer selection, to circumvent Cabinet luxury development ban.
Federal Territories Minister Datuk Seri Tengku Adnan Mansor has confirmed yesterday that the 1MDB-linked Bandar Malaysia and TRX would not be affected by the freeze on property approvals for condominiums, serviced apartments, offices and shopping complexes price above RM1 million.
He was responding to a question by PJ Selatan MP, Hee Loy Sian, when he said that the two projects had already received approval ‘in principle’ and could not be stopped from developing.
It is quite clear here that the government’s only principle here is to protect the interests of 1MDB. TRX and Bandar Malaysia are two of 1MDB’s largest assets that need to be developed if the fund wants any chance of staying afloat. They are also two of the biggest slated development projects in KL.
The amazing thing is, the Ministry of Finance has not even declared a winner to the tender for the master developer of Bandar Malaysia. The latest response from the Ministry of Finance last week is that there are 8 companies which have “expressed interest” in developing the massive 486-acres project. DBKL Mayor Tan Sri Mohd Amin had himself told Malaysiakini that they had yet to receive an application from Bandar Malaysia.
If exemptions from the freeze can be given just because of approvals had been given ‘in principle’, what worth is the freeze at all? Does this mean that other ‘planned’ high-end developments, which have yet to submit their planning applications, will also get exemptions?
These exemptions raise two worrying questions about the government’s planned freeze on high-end developments.
Firstly, it would mean that the effectiveness of the supposed ban on high-end project would be severely diluted. Bank Negara’s report showed just how grave the supply and demand imbalance was, projecting 1-in-3 office spaces being vacant in the Klang Valley by 2021, if measures aren’t taken to control it. If this freeze on high-end developments is to be taken seriously at all, the government has to make sure it is fairly enforced across the board.
And secondly, 1MDB gets the special treatment which discriminates against all private businesses.
As per my previous statements on this issue, I reiterate that the purported ‘blanket ban’ against high-end projects with unit values above RM1 million is a hare-brained knee-jerk reaction which is faulty due to the unfair and substantial exemptions granted above. In addition, the policy itself will not only fail to achieve its objectives because it is not properly targeted, it will create greater distortions in the market as well as turn away both domestic and foreign investors.
He was responding to a question by PJ Selatan MP, Hee Loy Sian, when he said that the two projects had already received approval ‘in principle’ and could not be stopped from developing.
It is quite clear here that the government’s only principle here is to protect the interests of 1MDB. TRX and Bandar Malaysia are two of 1MDB’s largest assets that need to be developed if the fund wants any chance of staying afloat. They are also two of the biggest slated development projects in KL.
The amazing thing is, the Ministry of Finance has not even declared a winner to the tender for the master developer of Bandar Malaysia. The latest response from the Ministry of Finance last week is that there are 8 companies which have “expressed interest” in developing the massive 486-acres project. DBKL Mayor Tan Sri Mohd Amin had himself told Malaysiakini that they had yet to receive an application from Bandar Malaysia.
If exemptions from the freeze can be given just because of approvals had been given ‘in principle’, what worth is the freeze at all? Does this mean that other ‘planned’ high-end developments, which have yet to submit their planning applications, will also get exemptions?
These exemptions raise two worrying questions about the government’s planned freeze on high-end developments.
Firstly, it would mean that the effectiveness of the supposed ban on high-end project would be severely diluted. Bank Negara’s report showed just how grave the supply and demand imbalance was, projecting 1-in-3 office spaces being vacant in the Klang Valley by 2021, if measures aren’t taken to control it. If this freeze on high-end developments is to be taken seriously at all, the government has to make sure it is fairly enforced across the board.
And secondly, 1MDB gets the special treatment which discriminates against all private businesses.
As per my previous statements on this issue, I reiterate that the purported ‘blanket ban’ against high-end projects with unit values above RM1 million is a hare-brained knee-jerk reaction which is faulty due to the unfair and substantial exemptions granted above. In addition, the policy itself will not only fail to achieve its objectives because it is not properly targeted, it will create greater distortions in the market as well as turn away both domestic and foreign investors.
Wednesday, November 08, 2017
Another ‘top secret’ 1MDB bailout by 1MDB via TRX land buyback by the Ministry of Finance
During the last parliamentary session, I had asked the Minister of Finance what is the cost and size of the land in Tun Razak Exchange (TRX) which its wholly-owned subsidiary, Aroma Teraju Sdn Bhd acquired from 1MDB in 2015.
The reply which I had received from the Dato’ Seri Najib Razak on 31 July, was that the information was protected by a confidentiality clause between the buyer and the seller.
The answer is ridiculous because both entities are wholly-owned by the Ministry of Finance, which in turn is accountable to both the Parliament and the public at large, and hence such information should never be a secret. This is especially since the price of a piece of land is in no way a threat to national security, and the information is certainly not protected by the Official Secrets Act.
Therefore, for the current sitting, I had asked why the land size and price for the purchase of Tun Razak Exchange (TRX) land by MOF-owned Aroma Teraju from 1MDB cannot be disclosed even though both companies were wholly-owned subsidiaries of MOF.
Dato’ Seri Najib Razak responded by saying this was because of the agreement’s confidentiality clause to protect the commercial considerations of both parties. He goes on to say that these terms are consistent with the key terms used in the market among other similar transactions.
The Minister chose to ignore is that both Aroma Teraju and 1MDB are wholly-owned by MOF. What is the purpose of this secrecy when both parties in the agreement are owned by the Government?
There is only one reason for invoking this confidentiality clause, and it has nothing to with the purported “commercial considerations”. It is to cover up the fact that MoF paid over-the-top to buy back a fraction of the prime land it had sold at bargain basement prices to 1MDB in 2010.
Based on the 2011 1MDB Financial Statements, the 70 acre TRX land was acquired from the Government at the value RM194 million, or approximately RM64 per square feet in 2010.
However, in the same year that Aroma Teraju acquired the above-mentioned piece of land from 1MDB, the latter also sold other parcels of TRX land to other government related institutions. Lembaga Tabung Haji acquired 1.6 acres for RM188.5 million or more than RM2,800psf. Affin Bank, a subsidiary of Lembaga Tabung Angkatan Tentera (LTAT), acquired 1.25 acres for RM255 million or nearly an eye-popping RM4,700psf.
If Aroma Teraju paid any where near the prices paid by Tabung Haji or Affin Bank, it would mean that Malaysian tax-payers would be been ripped off beyond their wildest imagination. Very simply, 1MDB purchased land from the Government at RM64psf and sold a fraction of the piece of undeveloped land back to the Government five years later at an exhorbitant thousands of ringgit per square feet.
I challenge the 1MDB, Arul Kanda or the Finance Minister to deny my allegations with facts and figures. Otherwise, it would merely confirm that the secrecy over a simple sales and purchase agreement between two government entities is really to cover up another one of the daylight robberies against the Malaysian tax-payers to bail out the debt-stricken 1MDB.
The reply which I had received from the Dato’ Seri Najib Razak on 31 July, was that the information was protected by a confidentiality clause between the buyer and the seller.
The answer is ridiculous because both entities are wholly-owned by the Ministry of Finance, which in turn is accountable to both the Parliament and the public at large, and hence such information should never be a secret. This is especially since the price of a piece of land is in no way a threat to national security, and the information is certainly not protected by the Official Secrets Act.
Therefore, for the current sitting, I had asked why the land size and price for the purchase of Tun Razak Exchange (TRX) land by MOF-owned Aroma Teraju from 1MDB cannot be disclosed even though both companies were wholly-owned subsidiaries of MOF.
Tony Pua minta Menteri Kewangan menyatakan apa sebabnya keluasan dan harga pembelian tanah Tun Razak Exchange (TRX) oleh syarikat Aroma Teraju daripada 1MDB tidak boleh diumumkan walaupun kedua-dua syarikat tersebut merupakan anak syarikat milik penuh Kementerian KewanganOnce again, in the reply dated 6 November 2017, I received utter nonsense from the Finance Minister which justified his being awarded “Asia’s Worst Finance Minister 2016” by FinanceAsia.
Dato’ Seri Najib Razak responded by saying this was because of the agreement’s confidentiality clause to protect the commercial considerations of both parties. He goes on to say that these terms are consistent with the key terms used in the market among other similar transactions.
The Minister chose to ignore is that both Aroma Teraju and 1MDB are wholly-owned by MOF. What is the purpose of this secrecy when both parties in the agreement are owned by the Government?
There is only one reason for invoking this confidentiality clause, and it has nothing to with the purported “commercial considerations”. It is to cover up the fact that MoF paid over-the-top to buy back a fraction of the prime land it had sold at bargain basement prices to 1MDB in 2010.
Based on the 2011 1MDB Financial Statements, the 70 acre TRX land was acquired from the Government at the value RM194 million, or approximately RM64 per square feet in 2010.
However, in the same year that Aroma Teraju acquired the above-mentioned piece of land from 1MDB, the latter also sold other parcels of TRX land to other government related institutions. Lembaga Tabung Haji acquired 1.6 acres for RM188.5 million or more than RM2,800psf. Affin Bank, a subsidiary of Lembaga Tabung Angkatan Tentera (LTAT), acquired 1.25 acres for RM255 million or nearly an eye-popping RM4,700psf.
If Aroma Teraju paid any where near the prices paid by Tabung Haji or Affin Bank, it would mean that Malaysian tax-payers would be been ripped off beyond their wildest imagination. Very simply, 1MDB purchased land from the Government at RM64psf and sold a fraction of the piece of undeveloped land back to the Government five years later at an exhorbitant thousands of ringgit per square feet.
I challenge the 1MDB, Arul Kanda or the Finance Minister to deny my allegations with facts and figures. Otherwise, it would merely confirm that the secrecy over a simple sales and purchase agreement between two government entities is really to cover up another one of the daylight robberies against the Malaysian tax-payers to bail out the debt-stricken 1MDB.
Wednesday, August 09, 2017
Finance Minister II Dato’ Seri Johari Abdul Ghani should not bluff Malaysians by stating that the Government “has never given public funds to 1MDB to settle its debts”
According to Bernama yesterday, Second Finance Minister, Dato’ Seri Johari Abdul Ghani said that “the Finance Ministry (MoF) has never given any public funds to 1Malaysia Development Bhd (1MDB) to help settle its debt”.
The Minister must think that Malaysians are complete and utter idiots to be served what is one of biggest piece of cow dung amongst all the attempts to cover up the 1MDB scandal.
The Ministry of Finance has on so many occasions come to the rescue of 1MDB over the past 2 years involving billions of ringgit of tax-payers’ monies, and yet Dato’ Seri Johari has the cheek to tell us that the MoF “has never given any public funds to 1MDB”.
Among the most clear-cut examples are the RM800 million loan from SOCSO and another RM2.4 billion Bandar Malaysia sukuk bond which the MoF have assumed as a result of taking over TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.
The Auditor-General has reported that nearly all of the above proceeds of the 1MDB borrowings were never used for the development of the 2 property projects above. Hence when MoF agreed to take over the property projects and assumed the liabilities, MoF has effectively “settled” 1MDB’s RM3.2 billion debt problem.
What’s more, when 1MDB had originally sold a 60% stake in Bandar Malaysia to an Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium, they had collected, and presumably spent the RM741 million deposit which has been paid upon the signing of the sale and purchase agreement in December 2015.
However, when MoF terminated the sale due to IWH payment defaults, it was MoF who coughed up the RM741 million to refund the deposit paid by the consortium. If the deposit, should have been refunded at all, it should have been by 1MDB, and not by the Malaysian tax-payers.
The above doesn’t yet include MoF subsidiary or subsidiaries which actually acquired properties from 1MDB in TRX at inflated prices. The irony is, it was MoF who sold the land to 1MDB in the first place at dirt cheap prices.
We understand the conundrum Dato’ Seri Johari Abdul Ghani is facing as the 2nd Finance Minister who has fallen out of favour and having to defend the indefensible regain the Prime Minister’s favour. It is now clear that he has been dropped by Dato’ Seri Najib Razak from handling the 1MDB imbroglio, particularly in the company’s multi-billion dollar dispute with Abu Dhabi’s IPIC.
However, the Second Finance Minister should not go to the extent to telling outright lies to pull the wool over the people’s eyes. Dato’ Seri Johari should not forget his role and responsibility to the people of Malaysia by sacrificing his own integrity and honour.
The Minister must think that Malaysians are complete and utter idiots to be served what is one of biggest piece of cow dung amongst all the attempts to cover up the 1MDB scandal.
The Ministry of Finance has on so many occasions come to the rescue of 1MDB over the past 2 years involving billions of ringgit of tax-payers’ monies, and yet Dato’ Seri Johari has the cheek to tell us that the MoF “has never given any public funds to 1MDB”.
Among the most clear-cut examples are the RM800 million loan from SOCSO and another RM2.4 billion Bandar Malaysia sukuk bond which the MoF have assumed as a result of taking over TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.
The Auditor-General has reported that nearly all of the above proceeds of the 1MDB borrowings were never used for the development of the 2 property projects above. Hence when MoF agreed to take over the property projects and assumed the liabilities, MoF has effectively “settled” 1MDB’s RM3.2 billion debt problem.
What’s more, when 1MDB had originally sold a 60% stake in Bandar Malaysia to an Iskandar Waterfront Holdings (IWH) Sdn Bhd-led consortium, they had collected, and presumably spent the RM741 million deposit which has been paid upon the signing of the sale and purchase agreement in December 2015.
However, when MoF terminated the sale due to IWH payment defaults, it was MoF who coughed up the RM741 million to refund the deposit paid by the consortium. If the deposit, should have been refunded at all, it should have been by 1MDB, and not by the Malaysian tax-payers.
The above doesn’t yet include MoF subsidiary or subsidiaries which actually acquired properties from 1MDB in TRX at inflated prices. The irony is, it was MoF who sold the land to 1MDB in the first place at dirt cheap prices.
We understand the conundrum Dato’ Seri Johari Abdul Ghani is facing as the 2nd Finance Minister who has fallen out of favour and having to defend the indefensible regain the Prime Minister’s favour. It is now clear that he has been dropped by Dato’ Seri Najib Razak from handling the 1MDB imbroglio, particularly in the company’s multi-billion dollar dispute with Abu Dhabi’s IPIC.
However, the Second Finance Minister should not go to the extent to telling outright lies to pull the wool over the people’s eyes. Dato’ Seri Johari should not forget his role and responsibility to the people of Malaysia by sacrificing his own integrity and honour.
Friday, May 12, 2017
The Ministry of Finance confirmed our worst fears – that tax-payers continue to bear the cost of 1MDB’s multi-billion ringgit losses
Both The Malaysian Insight yesterday and the Edge Financial Daily today confirmed that the Ministry of Finance (MoF) has fully refunded the RM741 million deposit paid by the Iskandar Waterfront Holdings (IWH) consortium for the latter’s 60% acquisition of Bandar Malaysia.
This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.
Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.
When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.
Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.
Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017. This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.
The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.
The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.
In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.
The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed. This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project. The funds were instead siphoned for 1MDB’s “other corporate purposes”.
In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return. However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.
Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.
This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.
Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.
When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.
Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.
Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017. This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.
The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.
The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.
In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.
The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed. This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project. The funds were instead siphoned for 1MDB’s “other corporate purposes”.
In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return. However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.
Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.
Tuesday, May 09, 2017
The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia
Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.
Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.
Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.
Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.
Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.
In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.
The Malaysian Insight quoted sources that “there are potential conflicts of interest”. This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia. What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?
Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards. He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017. Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.
Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another. If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour? Why didn’t the switch take place in March itself, when the transfer was executed?
Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.
The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?
Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.
Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.
Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.
Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.
In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.
The Malaysian Insight quoted sources that “there are potential conflicts of interest”. This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia. What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?
Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards. He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017. Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.
Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another. If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour? Why didn’t the switch take place in March itself, when the transfer was executed?
Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.
The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?
Friday, May 05, 2017
Iskandar Waterfront Holdings Consortium should be forthcoming with the facts and figures in TRX City dispute instead of being cryptic and wishy-washy in statements
The conflicting statements issued by TRX City, a wholly owned subsidiary of the Ministry of Finance, and the consortium led by Iskandar Waterfront Holdings (IWH) have become a complete farce.
In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.
TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.
In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.
"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.
So who is telling the truth? To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?
Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.
Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.
Otherwise, there will be no credibility to the counter-claims made by ICSB. On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.
However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.
In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.
TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.
In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.
"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.
So who is telling the truth? To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?
Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.
Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.
Otherwise, there will be no credibility to the counter-claims made by ICSB. On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.
However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.
Thursday, May 04, 2017
Who will refund the RM741 million deposit paid by Iskandar Waterfront Holdings to acquire the now aborted Bandar Malaysia equity interest – 1MDB or the Ministry of Finance?
The announcement by TRX City Sdn Bhd, now a wholly-owned subsidiary of the Ministry of Finance (MOF), that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed did not come as a surprise at all.
I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value. For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.
Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.
1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”
The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules. My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.
With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.
MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?
Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?
Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia. If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.
Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance. His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.
I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value. For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.
Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.
1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”
The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules. My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.
With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.
MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.
Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?
Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?
Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia. If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.
Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance. His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.
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