Sunday, May 31, 2015

TRX and BM Split Underlines Growing Burden on Tax-Payers


Doesn't Tun Razak Exchange (TRX) and Bandar Malaysia becoming separate entities independent from 1MDB but remaining under the Ministry of Finance merely means the tax-payers will have to buy them out from 1MDB and bailing them out in the process?

The Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah announced on Friday that TRX and Bandar Malaysia will be "established as standalone companies, with full autonomy and accountability for their operational and financial performance".

However he emphasised that "the Ministry of Finance (MoF) will remain a key shareholder in TRX and Bandar Malaysia".

While the statement sounds rather innocuous as we see the disastrous 1MDB suffering from RM42 billion of debt being wound down, what does establishing these 2 properties as "standalone companies" under the MoF actually imply?

‎By the natural logic of the statement, it would mean that the MoF would acquire the shares of the companies owning these assets - KLIFD Sdn Bhd and Bandar Malaysia Sdn Bhd respectively.

On top of that, we are made to understand that the motive behind the action is to relieve 1MDB of its overwhelming debt burden.

If we were to put 2 and 2 together, we can only deduce that the Government will assume the debts arising from these 2 assets, and perhaps even pay 1MDB more based on their revalued and inflated asset prices.

Hence the plan to make TRX and Bandar Malaysia independent entities is in actual fact nothing innocuous at all. Instead it is a blatant attempt to bailout 1MDB with billions of ringgit of tax-payers funds!‎

As at 31 March 2014, the 70 acres Tun Razak Exchange land belonging to KLIFD Sdn Bhd has been revalued to RM2.7 billion. It is uncertain if the land has been pledged as a collateral for any loans taken by its parent companies.

At the same time, the 495 acres Sg Besi military airbase land sold to Bandar Malaysia Sdn Bhd has been revalued to RM4.29 billion while the property has been collateralised for a RM2.4 billion loan . In addition, the Federal Government has also given a guarantee to 1MDB Real Estate Sdn Bhd to raise a RM800 million bond to fund the airbase relocation.

If the Government is to assume all the liabilities of the 2 companies, it would cost us RM3.2 billion, before even taking into consideration other contingent liabilities such as payments to Lembaga Tabung Angkatan Tentera (LTAT) for the RM2.1 billion relocation contract.

However, if the Government is even more generous, the tax-payers might have to fork out a whopping RM7 billion based on the "revalued" asset prices of these properties.

If however the Government decided to acquire TRX and Bandar Malaysia at their revalued asset prices of RM7 billion and still relieve 1MDB of their associated loans of RM3.2 billion, then Malaysians will be forking out a total of RM10.2 billion just for these transactions alone.

Such a move will be a massive travesty because the Federal Government sold these 2 properties to 1MDB for only RM194 million and RM1.69 billion respectively, totalling less than RM1.9 billion.

If we were to pay the inflated RM7 billion or worse, RM10.2 billion to buy back these properties from 1MDB after only selling these land to the company at bargain basement prices less than 4 years ago, it would be nothing short of a daylight robbery.

It would only be fair for MoF to reimburse 1MDB only for the cost which have been incurred for the development of the land, amounting to less than RM200 million to date as well as the cost of the land – RM1.9 billion. Any amounts in excess of the above would mean Malaysians have been cheated into financing and bailing out the misadventures of 1MDB.

We call upon Dato’ Seri Ahmad Husni Hanadzlah to explain transparently how the Government intends to make TRX and Bandar Malaysia separate independent entities owned by the MoF.

Tony Pua




Saturday, May 30, 2015

We are "Pleased to Announce" - Desperate Times Calls for Desperate Measures


The Malaysian Ministry of Finance has gotten so desperate, he has to beg the investment arm of a foreign country for a US$1 billion loan to repay the debts of its own subsidiary.

It is only in Malaysia when the a Minister of Finance could be “pleased to announce” that the Ministry’s wholly-owned insolvent subsidiary managed to secure a US$1 billion loan from the investment arm of a foreign country, Abu Dhabi, to repay it own debts.

Dato’ Seri Ahmad Husni Hanadzlah stated that “1MDB has entered into a binding agreement with the International Petroleum Investment Company (IPIC) and its subsidiary Aabar Investments (Aabar)” where IPIC will make a payment of US$1 billion, on or before 4 June 2015.

“This US$1 billion payment will be used to repay a US$975 million (RM3.5 billion) loan, in advance of its due date, to a syndicate of international bank lenders,” according to the Second Finance Minister’s statement.

Malaysians are so embarrassed that our BN Government has no shame and had to resort to begging a loan and/or favour from a foreign government. This is because no other financial institution is willing to lend to 1MDB.

However, what is more important is what Dato’ Seri Ahmad Husni failed to elaborate, leaving Malaysians speculating and fearing for the worse. The US$1 billion payment would not have come for free, and would have had plenty of conditions attached to it. What are these conditions? Did 1MDB sacrifice even more of Malaysians’ future tax-payers’ funds to secure this desperate loan?

This isn’t the first time IPIC has come to the “rescue” of 1MDB. When 1MDB needed to raise funds in 2012 to acquire the independent power producers (IPPs), Tanjong Power and Genting Sanyen, 1MDB had to ask IPIC to provide a guarantee in order to raise the funds via 2 bond issues, each worth US$1.75 billion. The guarantee was necessary despite the fact that 1MDB priced the bonds very attractively at 5.99% coupon rate.

This guarantee was certainly no “friendly gesture” on the part of IPIC or the Abu Dhabi Government, but instead came at a exorbitant price to 1MDB. The extraordinary conditions attached contributed in no small way to the massive annual interest bill and cashflow crunch for 1MDB.

Firstly, 1MDB had to dock approximately 40% of the loan with IPIC as security deposit. This amounted to RM4.47 billion (US$1.4 billion) as disclosed in the March 2014 financial statements. Effectively, this means that 1MDB is paying 5.99% interest on a US$3.5 billion loan despite having access to only 60% of the funds or US$2.1 billion.

Secondly, 1MDB had to offer the option for Aabar to acquire up to 49% equity interest in Powertek Investment Holdings (PIH) and 1MDB Energy (Langat) which are the holding companies for the acquired IPPs in order to secure the guarantee.

Based on the latest financial statements, 1MDB disclosed that its subsidiary 1MDB Energy Holdings Limited has taken a bridging loan facility of US$250 million in May 2014 to buy back these options granted to Aabar Investments. This represents a compensation to Aabar although the final settlement consideration isn’t yet known. In fact, it has been speculated that the options compensation might be as high as an incredulous US$1 billion based on analysis by The Edge Weekly.

Effectively, this US$250 million (or more) represents a fee paid to IPIC in order to secure its corporate guarantee for 1MDB subsidiaries to raise US$3.5 billion, or at least 7.1% of the funds raised!

To put it bluntly, 1MDB might as well have gone to the loan sharks to raise the funds. It is mind-boggling why a 100%-owned subsidiary of the Ministry of Finance needed to become so desperate in paying such outrageous fees, costs and terms in order to secure financing for its activities back in 2012.

Despite the less than pleasant experience above, today we hear the Second Finance Minister proudly announcing that IPIC is extending another US$1 billion to assist 1MDB to repay part of its mountain of debt. He must immediately provide full disclosure on what this US$1 billion “assistance” is going to cost 1MDB, the Malaysian Government and the long-suffering tax-payers.

If not, it will be seen that Dato’ Seri Ahmad Husni Hanadzlah has become complicit in the entire multi-billion ringgit shenanigans Malaysia’s heist of the century.

Tony Pua

Friday, May 29, 2015

Fake vs False Statements - A Subtle, but Major Difference


Arul Kanda’s cleverly-worded denial that he supplied fake documents to Bank Negara Malaysia (BNM) is another one of his trademark slippery attempts to obfuscate Malaysians.

According to Bernama, 1Malaysia Development Bhd (1MDB) President and Executive Director yesterday “rebutted claims that he had submitted a false bank statement to Bank Negara Malaysia”.

“We note with dismay that an online blog, Sarawak Report, continues to carry false information and direct unfounded allegations at 1MDB”. Arul Kanda claimed that the blog accused him of providing “a false bank statement to Bank Negara to imply that 1MDB had cash in a BSI account in Singapore.”

“This is a lie. I have never provided any such statement to BNM. To state otherwise is blatantly false and incorrect, as are any allegations that are based on this premise,” he protested as if he has been harshly victimised.

I was almost moved to lend him my shoulder to cry on. Except that the above was another one of Arul’s cleverly worded denial to mislead Malaysians who may not know any better.

Firstly, I’ve read again the various posts on the Sarawak Report with regards to the accusation Arul made, and I’ve struggled to find any segment in these posts which asserted that Arul Kanda supplied fake documents to BNM.

What I did read in the article entitled “Investigators Conclude 1MDB “Cheated” And “Made False Document” to Bank Negara, Deutsche Bank And Others” was that the Singapore authorities had supplied BNM with information alleging Arul Kanda distributing fake bank statements.

…the Singapore authorities had reported that an alleged bank statement submitted by 1MDB, in order to substantiate evidence about the contents of the fund’s BSI account, was in fact false according to the bank itself.

The bank denied the statement, presented to the authorities by 1MDB CEO Arul Kanda Kandasamy, was an authentic document or that it represented a true picture of the Brazen Sky account, which the PM/ Finance Minister has announced is holding USD$1.103 bil of the fund’s missing money.

Hence the key to the accusation was never specifically about Arul presenting a “false bank statement to Bank Negara”. It was about the fact that he had distributed such statements which was found to be false. It is crucial to note that Arul merely denied that it was specifically distributed to BNM.

Secondly, what was reported in the article was that Malaysian investigators were allegedly accusing 1MDB of

…making a false document (a letter to BNM) and submitted to Bank ‘2’. This is to make Bank 2 believe that BNM was informed that [the] funds are to be remitted to the joint venture’s parent account.

The intention was to mislead the Banks into believing that the beneficiary of the funds transferred from 1MDB to Good Star Limited was in fact to Petrosaudi International. The article also accused 1MDB of

…possible cheating and making false documents by 1MDB against Bank Negara Malaysia” and against two other banks, one of which is believed to be 1MDB’s bank, Deutsche Bank.

Hence what was alleged was a fake letter, purportedly addressed to the BNM but never delivered, which was used to deceive 2 different banks, including Deutsche Bank.

Arul, in his protestations of innocence, never referred to the above letter “addressed” to BNM. Instead he conflated the “false bank statement” and the “fake letter addressed to BNM” to deny that he ever submitted a “false bank statement to BNM” to obfuscate the reading public.

Arul Kanda should stop attempting to twist and turn with seemingly clever evasive manoeuvres. It is no different when he attempted to silence the critics of 1MDB’s investments in Cayman Islands when he announced on 13 January that the balance of the fund had been “redeemed” in its entirety. We now know of course, that the entire redemption was a fraud as there was no cash involved and whatever paper assets there was, was merely shifted from the Caymans to the BSI Bank account in Singapore.

Arul should get straight to the point – (i) did he distribute/present false BSI Bank statements (to anyone) and (ii) was there a fake letter addressed to BNM submitted to 2 banks by 1MDB. The more he tries to dance around the topic, the deeper a hole he will be digging for himself.

Tony Pua

Thursday, May 28, 2015

Mr Jho Low - "Are You Telling Me the PM Doesn't Make His Own Decisions?"


Unfortunately Jho Low told the truth that the Prime Minister is responsible for the RM42 billion 1MDB scandal and hence Dato’ Seri Najib Razak must immediately recuse himself from any further involvement with the 1MDB investigations and decision-making in the Company

The discovery of the Memorandum and Articles of Association (M&A) of 1Malaysia Development Bhd dated 2 September 2009, exposed the Clause 117 which placed absolute powers over the company’s decisions at the hands of the Prime Minister.

Clause 117 dictates that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.

This includes “any financial commitment (including investment), restructuring or any other matter which is likely to affect the guarantee given by the Federal Government of Malaysia for the benefit of the company, national interest, national security or any policy of the Federal Government of Malaysia”.

Other matters which need the Prime Minister’s written approval are amendments to the company’s M&A as well as all appointments and removal of directors and senior management team of 1MDB.

Therefore Jho Low was absolutely right and was telling only the truth when he blurted to Euromoney in March asking, “Guys, it's very simple, there's a board, who's the shareholder?”

“Are you telling me the prime minister doesn't make his own decisions? That the ministry, the finance minister, who is the prime minister – and there are only two to three people in the finance ministry that sign off on shareholder resolutions under law – that none of them... that they just signed without evaluating it?” he added.

With this confirmation of 1MDB’s M&A, all the responsibility over the colosal RM42 billion of debt and billions of ringgit of losses and missing cash falls directly and entirely on the shoulders of Dato’ Seri Najib Razak. He not only signed off all decisions, he was involved every step of the way.

As a result, we demand that Dato’ Seri Najib Razak recuse himself from any further involvement in all decisions over the investigations of the monster 1MDB scandal. Firstly, he must stop taking charge over the direction and manner the investigations are carried out. Secondly, the Auditor-General’s office, which is a department under the Ministry of Finance, must also stop reporting to the Prime Minister, who is also the Finance Minister, on its findings and investigations.

In addition, as Dato’ Seri Najib Razak is directly implicated in the transactions which took place in 1MDB, he must stop immediate participation in all on-going and future investment, restructuring and business decisions of the company until all investigations are completed. This is to prevent any attempt by the Prime Minister to effect any transactions to cover up any incriminating misdeeds which took place in the past.

If the Prime Minister were to continue his involvement in the investigations as well as 1MDB’s business decisions, the integrity and trustworthiness of any reports produced will be questioned and the public interest in the matter will be severely jeopardized.

Instead, the Deputy Prime Minister, Tan Sri Muhyiddin Yassin should be given immediate full authority over the direction of investigation of 1MDB. In addition, the Auditor-General must be directed to reported directly to the Public Accounts Committee over its findings, entirely bypassing Dato’ Seri Najib Razak to avoid any potential conflict of interest.

Finally, all major investments, restructuring and business decisions of 1MDB henceforth, must be approved directly by the Cabinet, and not be the Prime Minister alone, as dictated in the Company’s M&A. Where necessary, the M&A must be immediately amended to ensure that a proper set of corporate governance with the necessary check and balance is adopted by 1MDB.

Tony Pua

Wednesday, May 27, 2015

There Is No Escape - Clause 117 Reveals PM's Absolute Accountability


The latest exposé by The Malay Mail Online and Malaysiakini confirmed that the entire responsibility of the RM42 billion 1MDB scandal lies with the Prime Minister, Dato’ Seri Najib Razak

In a sighted copy of the Memorandum and Articles of Association (M&A) of 1Malaysia Development Bhd dated 2 September 2009, The Malay Mail Online and Malaysiakini both exposed a special Clause 117 which placed absolute powers over the company’s decisions at the hands of the Prime Minister.

Clause 117 dictates that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.

This includes “any financial commitment (including investment), restructuring or any other matter which is likely to affect the guarantee given by the Federal Government of Malaysia for the benefit of the company, national interest, national security or any policy of the Federal Government of Malaysia”.

Other matters which need the Prime Minister’s written approval are amendments to the company’s M&A as well as all appointments and removal of directors and senior management team of 1MDB.

Therefore the above exposé debunked all previous attempts by the Prime Minister to disassociate himself from the management and operations of 1MDB.

When the 1MDB scandal was first exposed by the UK Sunday Times and The Sarawak Report, the former reported on 1 March 2015 that "the Malaysian government said the prime minister was not involved in the day-to-day operations of 1MDB, which is run by a professional and experienced team.”

Previously, even in Dato’ Seri Najib Razak’s letter of demand sent to me on 21 November 2014 over my alleged defamatory statements with regards to 1MDB, his lawyers stated unequivocally that “contrary to your defamatory statements… our client being the chairman of the Board of Advisors of 1MDB only renders advice to the Board of Directors of 1MDB who is tasked for the management and operation of 1MDB.”

In fact, he is even more involved in the matter directly than we, the 1MDB’s harshest critics, have anticipated as his role is specifically cast in stone in the company’s M&A.

With this confirmation, all the responsibility over the colosal RM42 billion of debt and billions of ringgit of losses and missing cash falls directly and entirely on the shoulders of the Prime Minister. Dato’ Seri Najib Razak should drop all pretence of ignorance and give up the farcical charade that 1MDB is a healthy and salvageable company because he is only acting to deny his own culpability and protect his own interest in the matter.

We call upon the Prime Minister to immediately schedule an official Ministerial Statement in Parliament during the current sitting to give a full and complete explanation of the mother of the mother of the mother of all scandals in Malaysia, the 1MDB heist of the century. In particular, the Prime Minister, who also acts as the Finance Minister, must explain in full, his involvement in the initial US$1 billion investment with Petrosaudi International Limited and the additional US$1 billion of loans extended to Petrosaudi. He must also explain his approval for the direct payment of more than US$1 billion to Good Star Limited, a company controlled by the controversial Jho Low as well as the US$260 million of funds siphoned from 1MDB used for the acquisition of UBG Bhd from the latter’s substantial shareholder, Tun Taib Mahmud’s family vehicles.

In addition, Dato’ Seri Najib Razak must now explain why 1MDB proceeded to raise bonds amounting to US$6.5 billion by paying fees in excess of 10% to Goldman Sachs International, as well as why a costly guarantee was sought from Abu Dhabi’s International Petroleum Investment Corporation (IPIC) for US$3.5 billion of these bonds.

Most importantly, he must disclose exactly where all the above 1MDB’s money is today. All of the above have led to 1MDB’s horrendous predicament today where it has no money to repay its mountain of debt nor service its interest amounting to some RM2.5 billion annually.

Tony Pua

Tuesday, May 26, 2015

The Mystery of SRC International's Missing RM3.81 Billion


If Bank Negara Malaysia (BNM_) has already received the investigation report from Monetary Authority of Singapore (MAS), why haven’t there been any action taken at all?

The Minister of Finance has responded to my question with regards to SRC International’s investment in Gobi Coal & Energy Limited on 20 May 2015.

"Jumlah pelaburan SRC Interntional Sdn Bhd dalam syarikat Gobi Coal & Energy Ltd (GCE) adalah sebanyak USD60 juta yang mewakili 9% pegangan saham dalam GCE."

As highlighted by my statement in last month, London Stock Exchange listed company, Origo Partners Limited valued their 14% stake in GCE at only US$13.4 million in June 2014.

This means that SRC International’s 9% stake in GCE would be worth only US$8.6 million (RM31 million) today or a 85.6% drop in the value of investment. This represents a loss of US$51.4 million (RM185 million) to the company.

More importantly, the Ministry of Finance’s reply debunked the impression given earlier that the bulk of SRC investments were placed in GCE. In fact, the US$60 million or RM216 million investment in GCE only represents a small fraction of the RM4 billion of borrowings from Kumpulan Wang Amanah Persaraan (KWAP).

However, the reply by the Ministry raises another crucial question as the GCE investment valued at RM31 million today, represents only 0.8% of the RM3.81 billion of SRC International’s “investment portfolio outside Malaysia”.

The question hence arises, where did the rest of SRC International’s RM3.81 billion go?

In the light of the questionable “level 3 assets” of RM13.4 billion in SRC International’s former parent, 1Malaysia Development Bhd (1MDB) which appears to have gone missing, Malaysians are also interested to know if RM3.81 billion, most of which are also classified as “level 3 asset” are missing.

The Ministry of Finance must immediately disclose what are the RM3.81 billion of “investments” to prove that they are not trying to hide another multi-billion ringgit scandal. The failure to be transparent will only further erode the confidence of ordinary Malaysians in our public institutions and the Najib administration.

Tony Pua

Show Me The Money - Big Loss in GCE Investment Only the First Piece of the Puzzle


If SRC International’s investment in Gobi Coal & Energy Ltd is only US$60 million (RM216 million), then where are the rest of the RM3.81 billion of funds?

The Minister of Finance has responded to my question with regards to SRC International’s investment in Gobi Coal & Energy Limited on 20 May 2015.

"Jumlah pelaburan SRC Interntional Sdn Bhd dalam syarikat Gobi Coal & Energy Ltd (GCE) adalah sebanyak USD60 juta yang mewakili 9% pegangan saham dalam GCE."

As highlighted by my statement in last month, London Stock Exchange listed company, Origo Partners Limited valued their 14% stake in GCE at only US$13.4 million in June 2014.

This means that SRC International’s 9% stake in GCE would be worth only US$8.6 million (RM31 million) today or a 85.6% drop in the value of investment. This represents a loss of US$51.4 million (RM185 million) to the company.

More importantly, the Ministry of Finance’s reply debunked the impression given earlier that the bulk of SRC investments were placed in GCE. In fact, the US$60 million or RM216 million investment in GCE only represents a small fraction of the RM4 billion of borrowings from Kumpulan Wang Amanah Persaraan (KWAP).

However, the reply by the Ministry raises another crucial question as the GCE investment valued at RM31 million today, represents only 0.8% of the RM3.81 billion of SRC International’s “investment portfolio outside Malaysia”.

The question hence arises, where did the rest of SRC International’s RM3.81 billion go?

In the light of the questionable “level 3 assets” of RM13.4 billion in SRC International’s former parent, 1Malaysia Development Bhd (1MDB) which appears to have gone missing, Malaysians are also interested to know if RM3.81 billion, most of which are also classified as “level 3 asset” are missing.

The Ministry of Finance must immediately disclose what are the RM3.81 billion of “investments” to prove that they are not trying to hide another multi-billion ringgit scandal. The failure to be transparent will only further erode the confidence of ordinary Malaysians in our public institutions and the Najib administration.



Tony Pua

Monday, May 25, 2015

Deloitte Malaysia Must Come Clean to Restore an Already Fading Reputation


Deloitte Malaysia has become the laughing stock of the accounting and financial community with their highly questionable audit of 1Malaysia Development Bhd and their being made the shield by the Malaysian government to defend the company

Deloitte Malaysia’s reputation as an independent and established international auditing firm lies in complete tatters as controversy rages over the financial status of the Ministry of Finance wholly-owned subsidiary, 1Malaysia Development Bhd (1MDB).

Deloitte has taken over the auditing duties of the books of 1MDB after the previous auditors, KPMG quit its role well past the March financial year end of the company in 2013. Since then the firm has signed off the accounts of 1MDB without even an emphasis of matter, not to mention any qualification.

However the Deloitte’s auditing standards have been heavily question over the past 6 months as 1MDB struggled to pay its matured debt obligations and service its interests.

In particular, how is it possible that Deloitte’s audit partner, Ng Yee Hong, was able to get it so wrong by signing off its March 2014 accounts in 5 November 2015 without any qualifications when 1MDB was in all practical terms, insolvent. The Auditors wrote that “the Group’s holding of cash and short-term deposits, together with committed funding facilities and net cash flow from operations, are expected to be sufficient to cover its cash flow needs” (page 144).

However, by the end of the same month of November, 1MDB was forced to repeatedly extend its repayment of a RM2 billion loan which was due. In fact, 1MDB had to beg local billionaire, Tan Sri Ananda Krishnan, who assisted by arranging a private loan from local investors to finally settle the loan in February, mere days before a default event was declared.

Since then, 1MDB had received a emergency bailout fund of RM950 million from the Federal Government to assist in servicing its loans. 1MDB is also forced to sell its prized real estate to local government-linked funds to keep itself afloat. On top of that 1MDB has been negotiating to dispose of all its energy assets which it had purchased at an inflated price in order to raise funds to pare down its debts.

It beggars belief that a firm of Deloitte’s standing was so wrong and negligent over a multi-billion ringgit state-owned firm which has resulted in massive losses for the Malaysian tax-payers.

The international accounting and financial community are also scrutinising Deloitte’s assessment of the firm’s classification of RM13.4 billion of “Level 3” assets. “Level 3 fair value measurements are those derived from valuation techniques… that are not based on observable market data (unobservable inputs).”

While the classification may be technically correct, the question remains if Deloitte has its responsibilities “to maintain professional skepticism throughout the audit” and to identify and assess “the risks of material misstatement due to fraud” as required under the International Standards of Auditing (ISA).

The ISA clearly states, “for significant transactions that are outside the normal course of business for the entity… the auditor shall evaluate whether the business rationale (or the lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets.”

As a result of failing to perform its duties professionally and independently, the Prime Minister and the 1MDB Board of Directors have been using the Deloitte name as a shield against any misdeeds or malpractice, to defend the distressed 1MDB. Deloitte’s name gets tainted and dragged through the mud, making the firm the butt of jokes in the financial circles.

As an allegedly reputable international audit and accounting firm, it must come clean and protect its image of auditor independence and compliance with ethical standards in discharging their professional responsibilities. As it remains the auditor for 1MDB for the financial year ending March 2015, Deloitte must now leave no stone unturned for its audit of the company and restate the previous year accounts where appropriate in order to present the true picture of the financial state of the RM42 billion indebted company.



Tony Pua

Sunday, May 24, 2015

An Easy Way Out - PM Shifts Blame of GST-Hiked Prices on Traders


Dato’ Seri Najib Razak should stop being a hypocrite blaming petty traders for unscrupulously raising prices when his administration backed the single biggest profiteering exercise by the mobile telecommunication companies.

Bernama reported yesterday that Dato’ Seri Najib Razak blamed “the action of some traders who exploited the goods and services tax (GST) has burdened the people when the tax system was implemented last April 1”.

He said the traders should have reduced prices after the sales and services tax (SST) was abolished but they did not do so and instead took the opportunity to raise prices by 6% using GST as an excuse. He said,

"The GST issue is caused by traders, these traders are evil, they are not responsible, not the government, we have other policies. When traders exploit the situation, the people blame the government and prime minister."

"We have abolished SST of 10%, 5%, some people do not know about SST before, the problem (abolition) is, it should have reduced prices but another 6% is added, this is the cause."

"If want to be angry, get angry with the traders, they must be blamed because they do not have compassion to think about the people's interest."

The Prime Minister is being a complete hypocrite by shifting the entire blame of the substantial price hikes after the implementation of the GST on the traders, and traders only.

Pakatan Rakyat has repeatedly warned prior to the implementation of the GST that the BN administration was living in cuckoo-land to actually believe that the prices will fall post-GST. Then, the Finance Ministers and their deputies continued to dismiss the simple established economic fact that “price are sticky downwards”. Any Economics student would have been able to educate these Ministers on the simple dictum.

However, the Najib administration has believed that they could defy gravity and chose to proceed with the implementation of the GST. Dato’ Seri Najib Razak even had the audacity to claim in is 2015 Budget Speech that

"Of the 944 goods and services in the basket of goods of the CPI, the prices of 532 items or 56% are expected to reduce up to 4.1%... Meanwhile, about 354 goods and services may experience some price increase but less than 5.8%."

It is hence no surprise that the Prime Minister, who is also the Finance Minister, looks like a complete fool today.

What is even more galling is the sheer hypocrisy of the attempt to shift the blame on the petty traders when it is his administration which is endorsing the single biggest profiteering exercise by the multi-billion ringgit telecommunications industry.

On Tuesday last week, the Communications and Multimedia Minister, Datuk Seri Ahmad Shabery Cheek repeated his defence in Parliament for these companies to raise tariffs by 6% with the switch from the SST to GST.

Prepaid mobile users no longer receive RM10 of airtime for each RM10 purchase despite a 6% SST being imposed. Instead today, they will enjoy only RM9.43 of call services for every RM10 paid after the switch to the 6% GST.

The Minister isn’t only supporting a industry-wide profiteering exercise, he is endorsing their anti-competitive behaviour as these companies colluded to implement a uniform and concurrent 6% price hike.

Hence the Najib government has betrayed the rakyat’s interest in favour of even more profit for the already highly profitable telecommunication companies. Last year, despite absorbing the 6% service tax, Maxis Communications, Digi Telecommunications and Celcom Axiata made pre-tax profits of RM2.44 billion, RM2.65 billion and RM3.1 billion respectively in 2014.

In total, they collected RM12.8 billion in prepaid mobile services revenue for the year. Why is the BN Government helping these highly profitable companies make an additional estimated RM770 million in profits? These numbers doesn’t even include the multi-million ringgit revenue and profits made by other mobile virtual network operators (MVNO) in the country like U-Mobile, Tune Talk and XOX.

While the Ministry of Domestic Trade attempts to punish the restaurants raising the prices of roti canai by 30 sen, the Najib Government embraces the RM770 million windfall profits for the mobile telcos. There can be no bigger unscrupulous profiteering exercise in the country today as a result of the GST implementation and Dato’ Seri Najib Razak chooses to be a blatant hypocrite to fully endorse the burden to be placed on the man-on-the-street.



Tony Pua

Friday, May 22, 2015

A Very "Costly" Mistake - Dato’ Seri Ahmad Husni Blames 1MDB Asset/Cash Mix-Up on Mistaken Impression


Second Finance Minister Dato’ Seri Ahmad Husni Hanadzlah’s excuse that the mistake over “cash” or “assets” in 1MDB’s BSI Bank Singapore’s bank account due to “wrong impression” is lame, unbelievable and inexcusable.

Dato’ Seri Najib Razak finally confirmed what Malaysians feared earlier this week that there isn’t any cash redeemed from the Caymans investment. Instead, whatever held in BSI Bank is only in the form of “assets”.

The Second Finance Minister, Dato’ Seri Ahmad Husni Hanadzlah further explained yesterday that the error was due to a mistaken “impression”.

“There’s a mistake… mistake in the sense that, the impression (given by 1MDB) when they said they have redeemed (the funds) and saved (them) in the Singapore bank (Singapore BSI).... so the impression is that there’s cash, (but) actually that is a saving,” Ahmad Husni said told reporters at the Dewan Rakyat yesterday.

“That (the redemption) is (in) unit... that’s what it is… in unit, and then, that is being backed sovereign wealth funds,” Ahmad Husni said.

The “mistake” by 1MDB and/or Ministry of Finance (MoF) due to a wrong “impression” is not only lame and inexcusable, it is unbelievable and inexcusable. How can anyone one given the responsibility of managing US$1.1 billion (RM4 billion) in a bank account make such an audacious error of mistaking assets for cash?

Who is to blame for such a massive mistake? Is it the MoF which misunderstood 1MDB, or was it 1MDB which provided MoF with the wrong information?

In fact, we can’t even be sure if Dato’ Seri Ahmad Husni understood what exactly is deposited the BSI Bank, now that he is describing the assets as “in unit”. After all he has been giving various misleading information in Parliament over the 1MDB scandal even in the last sitting, particularly over the role of CIMB Bank in the sale of 1MDB’s energy assets.

More critically, the various press statements by the President and Executive Director of 1MDB, Arul Kanda specifically confirmed that the money was kept in cash in Singapore, with the specific purpose to repay the interest for 1MDB’s US Dollar denominated bonds.

Arul Kanda in an interview with the Singapore Business Times published on 7 February, announced that “as we have US$6.5 billion (RM23.06 billion) in bonds out there, in which interest payments come up to nearly US$400 million (RM1.4 billion) a year.”

The 1MDB President specifically stated, “the cash is in our accounts and in US dollars. I can assure you (about that)... I have seen the statements.”

Hence what statements did he actually see? Did he also succumb to a mistaken “impression” of the US$1.1 billion in the bank statement too? After all, Arul Kanda boasted that 1MDB made a profit of US$488 million which were included in the “cash” of US$1.1 billion above.

The repeated patterns of half-truths, misleading statements and outright lies over the 1MDB fiasco have resulted in a complete distrust for the discredited Barisan Nasional Ministers and 1MDB senior executives. The only way for them to regain any semblance of credibility is to publish the actual BSI Bank statement reflecting these “units” of “assets” that are allegedly worth US$1.103 billion.

Surely the Ministers of Finance can demand the statement from 1MDB and make available the information to the Malaysian public? Or would they rather hide the information because the statements will reflect worthless “units” of “assets”?

The sheer dishonesty, the scale of the cover up and the magnitude of incompetence certainly justified the Deputy Prime Minister Tan Sri Muhyiddin Yassin’s call for the entire Board of Directors of 1MDB to be sacked.

However, that’s not enough. We have 2 Finance Ministers and 2 Deputy Finance Minister, all four of whom have been utterly incompetent and clueless over the entire RM42 billion scandal. If they are not able to even provide Malaysians with simple accurate information as to whether the US$1.1 billion is in “cash” or “assets”, or what exactly these “unit” of “assets” are, then their heads should roll too.



Tony Pua


Thursday, May 21, 2015

The Cayman Bluff - Arul Kanda's Manipulation Deserves The Sack


1Malaysia Development Bhd (1MDB) President and Executive Director, Arul Kanda Kandasamy must be sacked immediately for lying to Malaysians about the non-existent US$1.1 billion cash in Singapore

On 5 January 2015, Arul Kanda Kandasamy was appointed as President and Group Executive Director of 1Malaysia Development Bhd (1MDB).

The Chairman of 1MDB, Tan Sri Dato Seri Lodin Wok Kamaruddin stated that:

Arul brings a wealth of experience from the financial world and a proven track record of transforming businesses. His transaction expertise and operational excellence will be invaluable to 1MDB as it undertakes a strategic review of the business, the objective of which is to ensure that 1MDB is best positioned to fully realise value from its investment portfolio and fulfil its broader economic objectives.

However, instead of using his “wealth of experience” to ensure that 1MDB stops leaking and starts taking full responsibilities of it’s financial crisis, Arul Kanda has chose to cover up the highly dubious transactions in the company and blatantly lied to the Malaysian public.

On 13 January 2015, in one of his first 1MDB transactions, Arul Kanda announced that the company “has now redeemed in full the US$2.318 billion invested by the company in a Cayman Islands registered fund”.

By redeemed, it would have meant that 1MDB has sold its investments based in Cayman Islands for US$2.318 billion and the money is received by 1MDB.

Arul Kanda subsequently confirmed the above presumption in an interview with the Singapore Business Times published on 7 February. He announced that while the funds amounting to US$1.103 billion would not be repatriated back to Malaysia, it would be kept in US dollars “as we have US$6.5 billion (RM23.06 billion) in bonds out there, in which interest payments come up to nearly US$400 million (RM1.4 billion) a year.”

The 1MDB President specifically stated, “the cash is in our accounts and in US dollars. I can assure you (about that)... I have seen the statements.”

When questioned in Parliament, the Minister of Finance, Dato’ Seri Najib Razak confirmed to me in writing on 10 March 2015 that the US$1.103 billion held in cash is parked with the Swiss branch of BSI Bank in Singapore.

Hence it came as a complete and utter shock to Malaysians when the Finance Minister in a subsequent reply to me 2 days ago, informed us that 1MDB now claims there isn’t any cash redeemed from the Caymans investment. Instead, whatever held in BSI Bank is only in the form of “assets”. There is also no clarity as to the nature and value of these “assets”, which may be worthless for all we know.

In effect, we know now that all the new 1MDB President executed was a “slight-of-hand” transaction by just moving the “assets” to BSI Bank. He then pretended that the moving of assets to be a “redemption exercise”. There was in fact no actual sale of the Cayman assets!

Arul Kanda then tried to bluff gullible Malaysians that 1MDB got back all it’s money and even “made a profit of US$488 million” in the entire Petrosaudi to Caymans transactions.

To arrest the persistent queries over the nature and whereabouts of the redeemed funds, Arul Kanda then blatantly lied by assuring us that “the cash is in US dollars” and that he has “seen the statements”. He even cooked up the excuse that the money needs to be kept in US dollars because it is needed to service the interest of 1MDB’s US dollar bonds.

The above proved that Arul Kanda is an unscrupulous liar and a man without any honesty and integrity. His continued leadership of 1MDB will certain hamper the discovery of the truth and the culprits, which may result in further unbearable losses to the financially stricken company.

The Prime Minister, Dato’ Seri Najib Razak and the Board of Directors of 1MDB will have no other choice but to immediately relieve Arul Kanda of his roles and duties in 1MDB. The failure to immediately sack Arul Kanda will further taint the Prime Minister and the Board of Director’s culpability for the monstrous sins of 1MDB.




Tony Pua

Wednesday, May 20, 2015

KLIA2 ever-Ballooning Costs - Dato’ Seri Liow Tiong Lai's Crumbling Defence


Dato’ Seri Liow Tiong Lai is the most blinkered Transport Minister ever by claiming that there was never a cost overrun for the construction of the KLIA2 Airport.

Malaysians are left in a state of disbelief when the Transport Minister, Dato’ Seri Liow Tong Lai told the Parliament, in response to a question from my fellow DAP Member of Parliament for Raub, Datuk Mohd Ariff Sabri Abdul Aziz that:

Actually, the KLIA2 project has never experienced cost overruns. The cost of the project increased because of an additional scope due to the new design concept for klia2, or the specific needs of the stakeholders like airlines and the government.

The Minister’s reply yesterday runs contrary to all the facts staring at Malaysians in the face, and all the previous announcements by both the Ministry of Transport and the Malaysia Airports Holdings Bhd (MAHB).

The initial budget for the airport when it was first announced by Dato’ Seri Ong Tee Keat, the then Transport Minister in July 2007 was only RM1.7 billion. The budget was subsequently increased to RM2.0 billion in March 2009, and then RM2.5 billion in October 2010.

MAHB then shocked Malaysians by disclosing that the cost of the new airport has ballooned to RM3.9 billion due to cost overruns in November 2011. Following that, in October 2012, we were told in Parliament by the then Deputy Transport Minister, Dato’ Abdul Rahim Bakri that the cost was increased to RM4 billion.

These findings were investigated at length and confirmed by the Public Accounts Committee which tabled its report to the Parliament last November. The report on the RM4 billion ringgit KLIA2 scandal had found many suspicious and controversial decisions by by MAHB. Not only the cost of the airport more than doubled the original budget of RM1.7 billion, it was delayed multiple times by more than 2 years.

The findings included the decisions to locate KLIA2 at KLIA West, a site which has been documented by engineers as costly and ill-suited for airport construction; and the choice of a satellite-type terminal instead of a finger pier terminal as proposed by the airport consultants as among key causes for the massive cost-overrun.

However, Dato’ Seri Liow Tiong Lai chose to pretend that none of the above findings existed and continued to deny the obvious, like a blinkered horse, claiming that any increase in cost was due to “additional scope”.

In fact, Dato’ Seri Liow should be held in contempt of the PAC findings because he has stubbornly refused to accept the parliamentary committee’s primary recommendation – that is for the Ministry to instruct the Auditor-General to carry out a thorough and complete audit of the KLIA2 project.

This is despite the fact that the Transport Minister himself expressed support for the above recommendation for in January this year. It appears that the “support” expressed is nothing more than another empty promise to deflect criticisms by the public and the media for transparency and accountability.

Clearly Dato’ Seri Liow is worse than his predecessor, former MCA President and Transport Minister, Dato’ Seri Ong Tee Keat who at least had the courage, after much criticism to call for an independent audit by PriceWaterhouse Coopers (PwC) on another RM12.5 billion Port Klang Free Zone scandal.

The current MCA President however, lacks any authority, courage and backbone to do the right thing and ensure that those accountable for the RM4 billion KLIA2 fiasco are punished to ensure that such transgressions are never again repeated in all government and government-related projects. Instead, Dato’ Seri Liow became the most hopeless Transport Minister ever by backing and defending the culprits who caused substantial losses to Malaysian taxpayers.



Tony Pua

Tuesday, May 19, 2015

Delloite, 1MDB's (not so) Invisible Shield


Dato’ Seri Najib Razak needs to stop using Deloitte auditors like an invisible shield which will be able to deflect all bullets and start giving some real answers.

The Prime Minister, Dato’ Seri Najib Razak has been touring the country to defend his flagship investment baby, 1Malaysia Development Bhd (1MDB) in the light of heavy criticisms pouring in against the company and his leadership in managing the company.

While Dato’ Seri Najib Razak, who is also the Finance Minister, pleaded for the critics to wait for the investigation reports by the Auditor-General before judging 1MDB, he himself have no qualms to immediately absolve 1MDB from any wrong-doings, embezzlement and misappropriations.

Last Saturday, he had the nerve to tell UMNO Selangor members in Klang that "the [1MDB] RM42 billion is not lost. There, the 70 acres TRX and 500 acres Bandar Malaysia lands." That argument is ridiculous because 1MDB only paid RM1.86 billion for these pieces of land.

Yesterday, he tried to convince the UMNO former lawmakers’ club, Mubarak, that RM42 billion could not have disappeared “because the accounts were audited by Deloitte. Auditors will not sign if even RM1 million is missing. Now it is said that RM42 billion has vanished. How can it vanish? It hasn't vanished, there are assets, there are liabilities."

This argument takes the same line as the one taken by the 1MDB Board of Directors where they stressed last week “that 1MDB accounts are audited by an international audit firm, Deloitte”. It said that Deloitte signed off 1MDB’s 2013 and 2014 accounts without qualification.

For the well-informed, the attempt to use Deloitte as a shield is clearly misleading and disingenuous.

Firstly, Deloitte could very well have abetted or assisted 1MDB in producing their “unqualified” accounts. Such complicity would not be the first as we have seen how the world’s largest auditing firm, Arthur Andersen collapsed overnight over their role in the multi-billion dollar Enron financial scandal in the United States.

Deloitte has at the very least been negligent because 1MDB failed to produce the necessary funds to repay a RM2 billion loan at the end of November 2014, despite the auditors signing off the accounts in the first week of the same month. Surely a firm with facing such imminent going concern crisis should never have had their accounts signed off without even an “emphasis of matter”.

Alternatively, the management of 1MDB could very well have misled Deloitte. For example, it was recently exposed by The Sarawak Report that 1MDB’s bank statements in BSI Bank, Singapore were purportedly forged and circulated by the top management of 1MDB to secure loans from lending banks.

Secondly, while Deloitte did sign off the 1MDB accounts for March 2013 and 2014, it did not mean that there were no questionable elements highlighted in the financial statements.

While the balance sheet of 1MDB in 2014 would show that it has RM51.4 billion of assets which is more than its RM50.0 billion of liabilities, the Auditors classified 26% of these assets or RM13.4 billion as “Level 3” assets. “Level 3” assets are where “fair value measurements are those derived from valuation techniques that include inputs… that are not based on observable market data (unobservable inputs).”

In other words, the Auditors have put on record that they are unable to vouch for the veracity and accuracy of these numbers which were supplied by the 1MDB management. Therefore even a mere 20% shortfall in the above “Level 3” asset valuation would trigger a severe liquidity crisis by 1MDB, as we witness today.

The RM13.4 billion “Level 3” assets doesn’t even include another questionable US$1.4 billion (RM5 billon) pledged to Aabar Investment PJS as collateral for the guarantee provided by the latter’s parent, International Petroleum Investment Corporation (IPIC).

If 1MDB is as healthy as Dato’ Seri Najib Razak insists it is, then there would have been no need for the company to beg local billionaire, Tan Sri Ananda Krishnan to arrange for a RM2 billion loan to assist 1MDB to repay its matured debt. There would also not have been a need for the Cabinet to approve an emergency RM950 million “standby credit facility” for 1MDB to service its outsized loans.

Therefore, the Prime Minister must stop misleading the people of Malaysia with half-truths and lies by claiming that being audited by Deloitte is proof that 1MDB is in the pink of health. While the UMNO brethen may not know any better, such attempts to absolve 1MDB and himself from the monster scandal only serve to worsen his credibility and reputation in the financial community.



Tony Pua

Monday, May 18, 2015

TNB CEO Datuk Azman Mohd - "1MDB Are Not In a Position to Dictate Terms."


We wholly support Tenaga Nasional Berhad’s position not to pay 1Malaysia Development Bhd (1MDB) any premium in the event that TNB is to take over the 2000MW coal-fired power plant from the latter.

The Minister of Energy, Green Technology and Water, Datuk Dr Maximus Ongkili confirmed on 12 May 2015 that Tenaga Nasional Bhd (TNB) is in discussion with 1Malaysia Development Bhd (1MDB) over acquiring the biggest equity in the 2000MW coal-fired power plant, known as Project 3B.

Malaysians’ concern had been that TNB would be arm-twisted into paying a premium for the project which was controversially won by 1MDB despite the latter failing to fulfil the terms of the concession. In particular, 1MDB has failed to secure the necessary funding to finance the RM11 billion project which has resulted in at least 8 months delay.

If TNB were to pay a “premium” on the concession, it would not only constitute a bailout of 1MDB by TNB, but also the consequential increase in the electricity tariffs for Malaysians as a result of increased cost to TNB.

Therefore it came as a massive relief to Malaysians when TNB CEO Datuk Azman Mohd announced on the same day that TNB “will not pay a premium for the project. We will just pay them (1MDB) for costs incurred. If anything, we will ask for a discount. They (1MDB) are not in a position to dictate the terms.”

In the event that TNB is to acquire 1MDB’s interest in Project 3B, then we are in full support for the position taken by Datuk Azman Mohd to rightly seek a discount on the cost incurred by 1MDB, instead of paying a unjustifiable “premium” to bail out the latter.

However, we are also concerned that Datuk Azman Mohd will be seeking “a revision in the tariff” in the event TNB takes over, claiming that the project may not otherwise “be commercially viable”.

As the project was awarded via an open tender, the Energy Commission (EC) must not approve any transfer in the rights of the power plant concession if it will involve any changes in the tariff agreed. Such a revision will make a complete mockery of the “open tender” exercise to seek the lowest possible tariffs among qualified bidders.

In fact, 1MDB only managed to win the concession as the lowest bidder after another consortium led by YTL Power was disqualified last minute on controversial technical grounds despite submitting the lowest price.

Therefore, in the event that the sale of the 2,000MW power plant concession involves a potential change in tariffs or any “premium” payout, then the EC must reject the transfer, terminate the concession and re-open a new tender exercise for the power plant. In fact, the EC must also financially penalise 1MDB for failing to fulfil their obligations in the concession contract and jeopardising Malaysia’s energy cost and security.

In fact, the TNB CEO rightly pointed out that the EC “can take it back and do a rebidding. It is up to the government to decide.”

Hence, to protect the independence, integrity and good governance of the Government and the regulating authority, the EC must immediately prepare to call for a new open tender exercise for the Project 3B to ensure that the power producer with the lowest possible tariffs are given the right to carry out the project. Otherwise, ordinary Malaysians will be faced with the inevitable burden of having to pay for higher electricity costs.



Tony Pua


Sunday, May 17, 2015

Mr Prime Minister, QUIT Lying to Us


It impresses me how Dato’ Seri Najib Razak can tell the biggest of lies with the straightest of faces by claiming that 1MDB’s RM42 billion isn’t lost because it has 500 acres of Bandar Malaysia and 70 acres of Tun Razak Exchange

I cannot help by be amazed by how the Malaysian Prime Minister could tell such a big lie with such a straight face, and fully expecting the audience to believe him hook, line and sinker.

Yesterday, Dato’ Seri Najib Razak to hundreds of UMNO Selangor members in Klang that "the [1MDB] RM42 billion is not lost. There, the 70 acres TRX and 500 acres Bandar Malaysia lands."

Firstly, are the 70 acres of Tun Razak Exchange (TRX) and 500 acres of Bandar Malaysia worth even anything remotely close to RM42 billion?

Based on the latest available financial statements of 1MDB as at 31 March 2014, the 2 parcels of land are worth only RM5.83 billion. How could RM5.83 billion be boasted and inflated to justify 1MDB’s RM42 billion debt?

Secondly, Dato’ Seri Najib Razak failed to inform the audience that the respective piece of land was purchased for only RM194 million and RM1.67 billion from the Government. The cost to 1MDB was a meagre total of RM1.86 billion! And yet, the Prime Minister, who is also the Chairman of 1MDB’s Board of Advisors has the nerve to boast that the RM42 billion in 1MDB isn’t lost because of these two sweetheart deals purchased for less than RM2 billion.

To be fair to 1MDB, the company did purchase another piece of expensive land for RM1.27 billion in Penang. It also acquired 3 independent power producers valued at RM10.9 billion in 1MDB’s books.

However, even if you add up all of the above “investments” – RM1.86 billion, RM1.27 billion and RM10.9 billion, it only totals up to RM14.0 billion. That leaves a whopping RM28 billion out of the RM42 billion debt completely unaccounted for. A primary school student would have been able to do the maths can call out Dato’ Seri Najib’s big bluff.

Unfortunately, perhaps the UMNO President thought his UMNO brethren in Selangor are easy targets to delude and deceive. The Prime Minister even put up the false bravado that “If I am a rich man, I would buy a land at the prime area because I know the value (of the land) in 20 years.”

Well, Mr Prime Minister, if I were a rich man and you offered me the Bandar Malaysia and TRX land for the rock bottom price of RM74 and RM64 per square feet respectively, which are the prices 1MDB paid, I would bite your hands off too. I won’t need you to give me such ‘perceptive’ advice.

Former Prime Minister, Tun Dr Mahathir Mohammed is absolutely right when he told fellow UMNO members in Ipoh yesterday that Najib “never speaks the truth, always lies”. He even asked “how to be a leader?”

We call upon the Prime Minister to stop lying to Malaysians. He must explain with solid evidence where did the rest of 1MDB’s RM42 billion went, after deducting the RM14 billion of real estate and energy companies.

At this point of time, the only perceivable reason why 1MDB is unable to service or repay its debt, is because the rest of the RM28 billion are either locked into worthless paper assets, or have vanished altogether.


Tony Pua

Saturday, May 16, 2015

1MDB Board Tells Malaysians to be Patient!


The Board of Directors of 1MDB has no moral right to tell Malaysians “to be patient” as they have failed in their fiduciary duties to protect the interest of the Malaysian tax-payers.

Finally after the Chairman of the 2nd largest bank in Malaysia, Dato’ Seri Nazir Razak told the Board of Directors and Management of 1MDB to resign if they could not get their act together, we got a response from the Board. Two days ago, Dato’ Seri Nazir Razak said:

It is your basic responsibility. There is a complete mistrust in your financial situation. You have to responsibly deal with that. But instead you sit there and wait for the AG. To me that is irresponsible. If you do that then it is better for you to step down and let someone else come in and take over.

The Board of Directors responded yesterday that they “would like to stress that 1MDB accounts are audited by an international audit firm, Deloitte”. It said that Deloitte signed off 1MDB’s 2013 and 2014 accounts without qualification and similarly KPMG signed off the 2010, 2011 and 2012 accounts with no qualification.

All the management, Board of Directors and the Prime Minister, Dato’ Seri Najib Razak has done to date is to hide behind the fact that “1MDB accounts are audited by an international audit firm, Deloitte”. They have stubbornly refused to entertain specific criticisms arising from the damaging exposés by opposition leaders, whistleblowers and the media.

If the Board of Directors have not been negligent, or worse, complicit with the embezzlement and mismanagement of 1MDB, why haven’t they responded to the accusations which were supported by evidence that out of US$1 billion which was meant for the 1MDB Petrosaudi joint venture, US$700 million was siphoned by Good Star Limited, a company controlled by Jho Low in 2009?

Worse, after the above transaction, 1MDB continued to funnel money to Good Star Limited under the guise of providing loans to Petrosaudi International. Good Star Limited siphoned an additional US$490 million between 2010 and 2011 out of US$830 million of loans granted to Petrosaudi.

The Board have obstinately refused to answer if the alleged US$1.1 billion “parked” in BSI Bank Singapore, which was the balance redeemed from 1MDB’s mysterious Caymans investment is held in actual cash, or unvalued paper assets. This is despite evidence published that BSI Bank Singapore has denied the authenticity of a statement provided by 1MDB President, Arul Kanda Kandasamy.

Even today, the Management and Board has refused to provide clarity if 1MDB will be able to repay its US$975 million loan as demanded by its lenders led by Deutsche Bank.

None of the above crucial and urgent questions require a full “audit” by the Auditor-General (AG) to answer. The Board has the responsibility to reassure the Malaysian tax-payers and financial markets with facts and evidence that all the above are either untrue or perhaps justified.

Instead, the entire country is upset and the markets are in a panic because it is plain to us that 1MDB is already an insolvent company which is unable to service its debts. If the so reputable “international” Deloitte signed off the 1MDB accounts on 5 November 2014 without any qualifications, then why is it that 1MDB is unable to repay a RM2 billion loan due at the end of November 2014? Why did 1MDB have to resort to begging for a loan arranged by local billionaire, Tan Sri Ananda Krishnan?

If 1MDB is indeed so healthy as audited by the very reputable “international” Deloitte, why is it that it needed the Cabinet to approve an emergency RM950 million in February to help 1MDB repay interest due on its RM42 billion loans?

If all the above critical allegations and exposes are untrue, why is it that 1MDB is trying to quickly dispose of all its land which it acquired at bargain basement prices to government-linked funds like Lembaga Tabung Haji and Kumpulan Wang Amanah Persaraan (KWAP) at sky-high prices? Why is it unable to carry out its initial public offering (IPO) for its energy subsidiaries?

Therefore, the 1MDB Board of Directors have no moral right to demand Malaysians to be patient if it can’t even be responsible and transparent in its dubious transactions and activities.

It is laughable that the Board even threatened to sue its detractors. It claimed that it “takes malicious and slanderous allegations seriously and reserves the right to undertake legal action.” Why wait until today to take legal action when the most damaging allegations have been circulating in the public sphere for nearly a year already?

While the Prime Minister has already sued me over the 1MDB issue, I would welcome the 1MDB Board of Directors to throw their hat into the ring. Go ahead and take legal action against Dato’ Seri Nazir Razak and myself. Since we could not get the Board to talk in public, the least we could do is to get them to answer from the witness box and let Malaysians be the judge of their culpability.

Tony Pua


Friday, May 15, 2015

1MDB - Why so shy Arul?


The suddenly media shy 1MDB President, Arul Kanda Kandasamy should confirm if he was involved in the US$975 million loan to 1MDB while he worked in the Abu Dhabi Commercial Bank (ADCB), prior to joining 1MDB

After it was exposed by the Singapore Business Times 2 days ago that the Deutsche Bank-led banking consortium will be recalling their US$975 million loan to 1MDB, it was discovered that Abu Dhabi Commercial Bank (ADCB) was one of the consortium lenders.

As highlighted by The Edge Financial Daily yesterday, the current 1MDB President, Arul Kanda Kandasamy was working in ADCB when the banking consortium granted the loan on 1st September 2014.

In addition, The Edge have reported 2 months ago that the proceeds of the above loan substantially went towards buying back options granted to ADCB’s sister company, Aabar Investments Limited to acquire 1MDB’s power assets. The 1MDB March 2014 financial report stated that the company had “agreed to compensate [Aabar] at a consideration agreed under the terms and conditions” of a 22 May 2014 settlement agreement which was never disclosed.

These options were initially granted to Aabar as part of the terms for Aabar’s parent, International Petroleum Investment Corporation (IPIC) to provide a guarantee for 2 1MDB bond issues amounting to US$3.5 billion (RM12.6bn).

Hence, the Daily rightly reported that:

This begs the question whether Arul was involved in putting together the loan to 1MDB and whether he was involved in the dealings of of IPIC and Aabar when he was working in Abu Dhabi.

Given the fact that ADCB, IPIC and Aabar are all owned by the Abu Dhabi government, it makes Arul’s role as 1MDB president even more delicate and subject to scrutiny of possible conflict of interest.

Given the above exposés, Arul Kanda would have no choice by to respond to the above claims to explain his degree of involvement in 1MDB fund-raising exercises prior to him joining the company. His silence on the matter will only strengthen the speculation that his interest may be conflicted, and 1MDB may have been compromised instead.

In addition, Arul Kanda must also disclose how much exactly did 1MDB pay to “buy back” the above options granted to Aabar Investments. The only amount cited in the March 2014 financial statements is US$250 million which was raised via a bridging loan facility in May 2014. However, the amount was not finalised and “final settlement will depend on the final valuation of the initial public offering”.

Therefore, the question is whether the US$975 million was also used to pay Aabar for the options. If it is indeed so, 1MDB would have paid an astronomical US$1.23 billion to the Abu Dhabi companies in order to secure a guarantee from IPIC for the US$3.5 billion loan. Under such circumstances, it would not be an exaggeration that 1MDB secured a guarantee from an international loan shark.

I am in a rare agreement with Kepala Batas Member of Parliament, Datuk Seri Reezal Merican Naina Merican who chided the Board of Directors of 1MDB. He told Malaysiakini that

The issues have been left unanswered for too long and this has tainted the government's image… The board bears the biggest responsibility in governing a company. But what the hell are they (1MDB's board) doing?

The Najib administration and Barisan Nasional Government is indeed already tainted beyond repair by the negligent and incompetent 1MDB Board of Directors. However, if they continue to be evasive of pressing and pertinent questions raised about the wholly-owned Ministry of Finance subsidiary, the Malaysia’s economy, reputation and credibility will be severely damaged as a result.


Tony Pua

1MDB's "Little" Debt Secret


1MDB CEO Arul Kanda Kandasamy should not hide behind the skirt of “banking confidentiality” to avoid responding as to whether 1MDB will be fulfilling its US$975 million debt obligations to a consortium of 6 foreign banks

The Singapore Business Times reported yesterday that a consortium of “jittery” banks led by Deutsche Bank has asked for their US$975mil loan to be repaid by 1Malaysia Development Bhd (1MDB) more than 3 months ahead of its due date.

The US$975mil loan was secured with 1MDB’s wholly owned Brazen Sky’s US$1.103bil. The report by Singapore Business Times said that money by Brazen Sky is said to have been kept at Swiss private bank BSI Singapore. However, quoting sources, the report said the “securitisation document” for the loan has now been deemed “incomplete”, as one of the covenants was allegedly not fulfilled.

This has followed the exposé by The Sarawak Report which cited leak investigation reports that the BSI Bank statements lodged by 1MDB to these banks was fraudulent. Allegedly BSI Bank only held “paper assets” and not “cash” as claimed by 1MDB.

The decision by the “panicky” Deutsche Bank-led consortium can lead to serious consequences where all of 1MDB’s RM42 billion of debt immediately default. Despite the severity of the issue, 1MDB has chosen to remain silent by ridiculously citing “banking confidentiality”.

President and group executive director Arul Kanda Kandasamy, in an email reply to The Malaysian Insider's query said

We are aware of recent press reports and statements concerning a loan taken by 1MDB in September 2014. While we would like to respond in detail, this relates to a confidential banking matter, which prevents us from commenting at the present time. However, we intend to update the market as soon as we are in a position to do so.

The excuse provided in the reply is highly irresponsible and is the reason why the entire market is flooded with various speculations, true and wild as 1MDB has failed to address key questions in a frank and transparent manner. As a result, confidence in the financial markets has been shaken and the Malaysian ringgit has been adversely affected.

Malaysians are not asking Arul Kanda to reveal the loan agreement. Malaysians are interested to know if 1MDB will be able to fulfil its financial obligations to repay the US$975 million (RM3.6 billion) loan as demanded by the Banks in a timely manner. It will also provide great comfort to Malaysians if 1MDB can prove its ability to repay the loan because the last time, it had to beg local billionaire Tan Sri Ananda Krishnan to arrange a group of private investors to help pay-off a RM2 billion local loan.

Malaysians are also interested to know if the US$1.1 billion parked in BSI Bank is indeed held in cash or is it just some “paper assets”. The Prime Minister Dato’ Seri Najib Razak has responded to me in the last parliamentary sitting that the amount is held in cash, before the exposé by the Sarawak Report.

None of the above questions involved the “confidential” details of the lending agreement.

Unfortunately, Arul Kanda chooses to conveniently use ridiculous the banking confidentiality excuse to cover up everything. It is this massive cover up that Malaysians have lost confidence, not only in the 1MDB management and board of directors but also the Prime Minister, Dato’ Seri Najib Razak and the Barisan Nasional coalition government.


Tony Pua



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Thursday, May 14, 2015

GST Prepaid - What You Pay Is NOT What You Get


Datuk Seri Ahmad Shabery Cheek’s announcement that the mobile prepaid reload “reverts” to RM10 for RM10 credit with GST deducted only upon mobile usage proved that the BN Government and him are deceitful cheats

We read with complete disbelief that the Communications and Multimedia Minister, Datuk Seri Ahmad Shabery Cheek proudly announced that consumers who purchase an RM10 mobile prepaid reload will receive an RM10 credit upon activation. However, in the same breath, he said users will subsequently be taxed 6% GST on their usage.



The announcement is highly deceitful because users no longer receive RM10 of airtime for each RM10 purchase. Instead, they are effectively receiving only RM9.43 of call services for every RM10 paid. There is hence no difference at all from the controversial hike in mobile prepaid prices by the telecommunication companies on 1st April where consumers had to pay RM10.60 for RM10 of airtime.

This disappointing announcement comes after Datuk Seri Ahmad Shabery promised Malaysians on live television a week ago that “the rakyat want to purchase RM10 worth of prepaid credit, and they want to get airtime worth RM10. That’s what the people want… That’s why I have made the decision that if this is what the rakyat want, then that is my decision.”

It also means that the Minister has betrayed the rakyat’s interest in favour of even more profit for the already highly profitable telecommunication companies. Prior to 1st April 2015, users received RM10 of airtime for every RM10 spent, as every telcos absorbed the then 6% service tax. By using the switch from a 6% service tax to the 6% GST as a ruse, the Minister is supporting the collusion by the telecommunication companies for a uniform 6% price hike.

Last year, despite absorbing the 6% service tax, Maxis Communications, Digi Telecommunications and Celcom Axiata made pre-tax profits of RM2.44 billion, RM2.65 billion and RM3.1 billion respectively in 2014. In total, they collected RM12.8 billion in prepaid mobile services revenue for the year. Why is the BN Government helping these highly profitable companies make an additional estimated RM770 million in profits?

The above decision makes a complete mockery of the Anti-Profiteering Act which sought to prevent businesses from raising prices unreasonably in conjunction with the implementation of the GST.

The Prime Minister, Datuk Seri Najib Razak blamed the GST burden currently experienced by the people on “profiteering activities” and demanded that the relevant authorities “come down hard on the profiteers and unscrupulous traders who manipulated the GST for their own extra financial gains”. Yet, when dealing with multi-billion ringgit telcos, the Najib administration turns a blind eye on these unscrupulous profiteers.

The prepaid mobile services price hike doesn’t only run afoul of the Anti-Profiteering Act, it also breaches the competition clauses of the Communication and Multimedia Act 1998. This is because all the telecommunication companies are raising prices by a uniform 6% at the very same time. It clearly reflects an anti-competitive and collusive practice.

Under Part IV (Economic Regulations), Chapter 2 (General Competition Practices) Clause 133, telecommunications operators are prohibited from “entering into collusive agreements”. It says that a licensee shall not enter into any understanding, agreement or arrangement, whether legally enforceable or not, which provides for rate fixing and market sharing, among other terms.

Therefore, we call upon the Minister stop being a cheat with his play of numbers and words. He must stop being deceitful to the Malaysian public by constantly twisting and turning his positions in order to support the multi-billion ringgit profits of the large telecommunication companies. The Najib administration must stop the duplicity of taking action against petty traders for alleged profiteering, while letting these big sharks get away scot free.



Tony Pua

Tuesday, May 12, 2015

1MDB Whimper

Media Statement by Tony Pua, DAP National Publicity Secretary and Member of Parliament for Petaling Jaya Utara in Kuala Lumpur on Tuesday, 12 May 2015:

After all the fire and brimstone by top UMNO leaders about the 1MDB bailout over the last few days, the UMNO Supreme Council Meeting ended with a whimper, pledging complete support to the Prime Minister, Dato’ Seri Najib Razak

This is the proverbial story of the wolf or in this case, wolves who huffed and puffed with great pomp and vigour, but just couldn’t blow the house of Najib down.

Top UMNO leaders lined up to speak up against the 1MDB imbroglio which touched a raw nerve when it sold a piece of land to Lembaga Tabung Haji at RM2,773 per square feet (psf) which 1MDB bought from the Government for less than RM64psf 4 years ago.


Just a day ago, the Deputy Prime Minister Tan Sri Muhyiddin Yassin sternly warned “Umno’s image cannot be smeared just because of 1MDB. It affects the trust i.e. the core belief that the people have in the party.”

UMNO Youth Chief, Khairy Jamaluddin even demanded that the Ministry of Finance cancels the land transaction between 1MDB and Tabung Haji to “avoid negative perception”.

UMNO Vice-President, Datuk Shafie Apbal warned that if the 1MDB crisis isn’t handled well, the credibility of the Government will continue to be questioned.

Even fellow UMNO Vice-President and cousin to the Prime Minister, Dato’ Seri Hishamuddin Hussein broke his silence to demand that an international auditor be appointed to audit 1MDB.

But in the UMNO Supreme Council meeting held last evening, everything ended up business as usual. The much-anticipated fireworks ended with a pathetic whimper.

UMNO President, Dato’ Seri Najib Razak disclosed that “the Supreme Council expressed renewed support for the president and the deputy president. The Supreme Council wants the president, deputy president, the council and all Umno leaders to unite as a team to face all the challenges and take positive action to strengthen Umno and Barisan Nasional’s position among the people”.

The support from the all-powerful UMNO Supreme Council comes after the Prime Minister publicly proclaimed that he will not bow to pressure to resign two days ago.

Hence it cannot be clearer that UMNO is like a leopard which can never change its spots. No matter how serious the degree of abuse of power, incompetence, gross mismanagement and corruption involved in the party, they will continue to support their supreme leader who wields near absolute powers.

Despite the massive public uproar over the bailout of 1MDB via the sale of land purchased at bargain basement prices from the Government to other government-linked financial institutions at astronomical prices, it remains business as usual for UMNO. Over the past week, both Tabung Haji and the Pension Fund (KWAP) have been exposed as having purchased land from 1MDB at very high prices, providing the latter with the necessary life-support to service its interest payments.

Tonnes of evidence have surfaced which pointed to Jho Low embezzling billions of ringgit of 1MDB’s borrow monies into his own company’s accounts. Despite that, Dato’ Seri Najib continued to insist that Jho Low wasn’t involved and the UMNO Supreme Council happily falls in line.

The above only goes to show that UMNO leaders are nothing more than a bunch of power-hungry hypocrites. At the end of the day, despite all the foaming at the mouth to express their disgust and anger against the billions lost by the taxpayers, it is more important to toe the line of the all-powerful party President.

The Rakyat should not have any expectation that UMNO is able to change its DNA. The only expectation they should have is, as long as UMNO is in power, grand corruption, abuse of power and sheer incompetence will not only be tolerated, they will only become more blatant and brazen, as they did since the days of Tun Dr Mahathir Mohammed.


Tony Pua

Monday, May 11, 2015

Riza Aziz Should TRX Land From Tabung Haji

According to Bernama yesterday, the Prime Minister, Dato’ Seri Najib Razak pointed out that Lembaga Tabung Haji’s (LTH) plan to turn over the land it bought from 1MDB to the private sector was a sound commercial decision as it would see the fund earn a few million ringgit overnight.

The Prime Minister, who is also the Finance Minister must be joking.  If it is so easy for LTH to “earn a few million ringgit”, then why did 1MDB, who is so desperate for funds, not sell it to those parties who are allegedly willing to purchase it for more money than what LTH was willing to pay?

Instead, LTH is forced to pay cash upfront for the land and undertake the entire risk of holding the land on behalf of 1MDB to look for a buyer.  Why couldn’t 1MDB have found the alleged willing-buyers who were not only so readily available, they are allegedly willing to pay RM5 million more than what LTH has paid?

There’s absolutely no credibility in the claims by the Chairman of LTH, Datuk Abdul Azeez Abdul Rahim that the land would be sold in a week.  He even committed that the land will be sold to a buyer at a profit of at least RM5 million and will be concluded within the next few weeks.

Hence we call upon Dato’ Seri Najib Razak to lead by example and immediately advise his own stepson, Riza Aziz to dispose of his luxury properties in the United States and purchase the above land from LTH.

It was reported in January this year by the New York Times, that Riza Aziz has purchased his New York Park Laurel luxury condominium and Los Angeles Beverly Hills bungalow for US$33.5 million (RM121 mil) and US$17.5 million (RM63.2 mil) respectively.  What was more amazing was that these properties worth US$51 million (RM184 mil) were acquired in cash from none other than Jho Low!

We now know of course, one of the reasons why 1MDB is in such dire straits with RM42 billion of debt was because Jho Low’s companies siphoned billions of ringgit from 1MDB.  And now, 1MDB is forced to dispose of all its assets which it acquired on the cheap from the Government to raise funds to service its debts.  In this case, 1MDB sold the 1.56 acre of land to LTH for RM2,773 per square feet (psf) despite acquiring the land for less than RM64 psf.

Under such circumstances, since the Prime Minister believes that paying more than RM2,773 psf for the piece of land is still such a good deal, he should immediately advise Riza Aziz to dispose of his RM184 million of properties in the United States and bring back the cash to buy this piece of land from LTH.

If Dato’ Seri Najib insists that Malaysians have to bailout 1MDB for its monstrous financial problems, then it is only right that he set the example by asking his family members of unexplained immense wealth to repatriate their money to bailout 1MDB first.