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

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