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

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