Tuesday, June 30, 2015

A Response to Shafee's Plea for My Removal from the PAC

Is Datuk Seri Shabery Cheek so afraid that the 8 Barisan Nasional (BN) representatives in the Public Accounts Committee (PAC) can’t tackle one opposition member in the Committee?

First, we had the top UMNO lawyer, Tan Sri Mohammed Shafee Abdullah calling for me to recuse myself from the Public Accounts Committee (PAC) five days ago. This call was subsequently supported by the Barisan Nasional Backbenchers Chairman, Tan Sri Shahrir Samad.

Yesterday, the demands for my removal escalated when the Minister of Communications and Multimedia, Datuk Seri Ahmad Shabery Cheek went on a rant against my position in the PAC.

"He should leave the PAC. He will not only shame the PAC, but also the parliamentary system itself… he is no longer qualified to sit in the PAC. He makes biased statements, he should be ashamed, his party should be ashamed, his supporters and those associated with him should also feel ashamed," he said.

I am very amused because I cannot for the life of me understand why I should be in anyway ashamed of the statements which I have made with regards to the monstrous RM42 billion 1MDB scandal. I am also clueless as to why my party, my supporters and “those associated” with me should feel ashamed about me bringing to light the misappropriations and mismanagement in 1MDB.

Conversely, I believe that the Malaysian public will be disgusted, and the credibility of the PAC severely jeopardised if I were to be forcefully removed from the PAC by Barisan Nasional.

Instead, those who should be “ashamed” are the Ministers and BN leaders wholeheartedly and blindly supporting the and the bailout of 1MDB taking place at the expense of tax-payers’ funds.

The Prime Minister for example, assured Malaysians only in October last year that there will be no bailout of 1MDB. But in February this year, he made a complete U-turn by extending an emergency RM950 million credit to 1MDB to keep it afloat.

The trust of public financial institutions are never lower when Lembaga Tabung Haji was called upon to rescue 1MDB with a RM188 million land purchase at RM2,774 per square feet in Tun Razak Exchange (TRX), when 1MDB purchase this same piece of land for only RM64 per square feet.

The Cabinet has even approved another “Letter of Support” to EXIM Bank to extend US$150 million of loan to 1MDB in March this year for a questionable land purchase in Pulau Indah. This is despite the fact that the wholly-owned government bank is not mandated to provide credit for domestic property purchases.

These BN Ministers and leaders are obviously afraid of being incriminated in the panel’s investigation on the troubled state-owned firm. As of two days ago, 1MDB has reiterated that President, Arul Kanda Kandasamy and former 1MDB CEO, Datuk Shahrol Halmi will attend the PAC hearing. 1MDB said that it “has every confidence in the PAC process and trust that the honourable members will carry out their role in a fair and professional manner.”

If Arul Kanda and Datuk Shahrol do not fear coming to the PAC with me as a sitting member, why are the ministers suddenly so fearful of me?

Nevertheless, I am even more surprised that these BN Ministers and leaders have absolutely no confidence that the 8 BN representatives in the PAC will not be able to perform their duties to contain or debunk any allegedly unfounded and frivolous claims I might raise in the meetings.

Therefore, let me re-emphasize the fact that there is absolutely no conflict of interest for me to sit as a member of the PAC over the 1MDB scandal. Instead, if the BN leaders are so concerned about shaming the investigation process, they should be asking Dato’ Seri Najib Razak to take leave as the Finance and Prime Minister as he is directly implicated in the RM42 billion scandal by the simple virtue of the fact that every single major transaction undertaken by 1MDB carries his explicit “written approval”.

How can Dato’ Seri Najib Razak be allowed to direct the manner, timing and mechanism of investigations over such a monstrous scandal where he is also a prime suspect?

Tony Pua

1MDB Denies IPIC Indemnification, Yet Another Saga of "Twist and Turn" Replies

Is 1MDB saying that IPIC misled the London Stock Exchange by announcing that the Ministry of Finance had indemnified IPIC in relation to the advance of US$1 billion and future additional payments on behalf of 1MDB?

1Malaysia Development Bhd (1MDB) has denied outright my allegation that the Malaysian Government has effectively provided a guarantee of up to US$4.71 billion or RM17.7 billion to Abu Dhabi’s International Petroleum Investment Corporation (IPIC).

I had alleged yesterday that the guarantee was provided in order to secure the agreement for IPIC to advance US$1 billion to 1MDB to settle its immediate outstanding loans, pay interests on 1MDB’s behalf for US$3.5 billion of bonds.

In addition, subject to the “transfer of assets” of “the aggregate value” of all of the above together with the US$3.5 billion bond by 30 June 2016, IPIC will also take over the bonds from 1MDB.

However, 1MDB swiftly denied the allegation, claiming that “neither the Ministry of Finance (MOF), nor the Government of Malaysia, have provided guarantees for the recent commercial transaction between 1MDB and IPIC.”

However, in its absolute denial, 1MDB made no reference at all to the fact that IPIC’s announcement clearly stated “1MDB and MOF have agreed to perform the obligations contemplated in the binding term sheet and to indemnify IPIC and Aabar for any non-performance, and vice versa.”

According to the Collins English Dictionary, “indemnify” means both 1MDB and MOF signed a binding term sheet agreeing “to secure against future loss” or “to compensate for loss” by IPIC.

In simple terms, if 1MDB fails to transfer the necessary assets of the required “aggregate value” to IPIC by 30 June 2016, MOF will be required to repay IPIC at the very least, whatever advances IPIC has made by that date. That will include the US$1 billion advance already paid, and an estimated US$209.7 million worth of interest incurred by the bonds over the next 12 months.

If IPIC were to further assume the US$3.5 billion of bonds, it would mean the MOF would have to indemnify an additional US$3.5 billion to IPIC. That will total up MOF’s contingent liabilities in the agreement up to US$4.71 billion!

The very simple question for 1MDB to answer then is, are they saying that IPIC misled the London Stock Exchange and its bondholders by claiming that MOF provided an indemnity to IPIC over the above “binding” agreement?

1MDB further alleged that I had “deliberately misled the public by failing to mention the crucial ‘and vice versa’ clause in relation to the ‘indemnity’, i.e. the indemnity applies both ways – to IPIC as well as 1MDB – in relation to performance of obligations by the parties”.

This is the classic misdirection tactic utilised by 1MDB whenever they are faced with difficult questions. I never disputed that IPIC also provided a “vice-versa” indemnity. But all the indemnity amounts to is the fact that IPIC has to advance the US$1 billion and pay for the year’s worth of interest, or 1MDB would not need to fulfil its part of the bargain on the “transfer of assets”. There is absolutely no loss involved for IPIC in such an event.

What’s more, IPIC has already fulfilled its obligations to advance US$1 billion to 1MDB and has “has assumed the obligations to pay (on an interim basis) all interest due under two IPIC guaranteed 1MDB financings”. Hence the question of IPIC indemnifying 1MDB is moot.

However, the MOF indemnifying IPIC isn’t moot. The indemnity effectively means MOF has guaranteed to pay IPIC in the event 1MDB fails its part of the bargain by 30 June 2016. The IPIC announcement was written as plainly in English as possible for the London Stock Exchange, targeted presumably at an English-speaking financial community.

Finally, if MOF was not needed to indemnify IPIC, then why should MOF be a party to the binding term sheet in the first place? If it is strictly a “commercial transaction” as claimed by 1MDB, why wasn’t it just between 1MDB and IPIC alone?

Once again, 1MDB should stop twisting and turning in its replies, or it will end up with eggs on its face again, just like the “redeemed” “units”, “cash” or “assets” farce.

Tony Pua

Monday, June 29, 2015

1MDBs IPIC Obligations, Government's Guarantee, Malaysian's Burden

Why did the Government give another US$4.71 billion of guarantee for 1Malaysia Development Bhd to raise the amount from International Petroleum Investment Corporation?

It was previous announced by the Second Finance Minister, Dato’ Seri Ahmad Husni Hanadzlah, 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 (US$3.75 billion), on 4 June 2015. This US$1 billion payment will be used to repay a US$975 million loan, in advance of its due date, to a syndicate of international bank lenders.

What the Minister failed to disclose however, is the fact that the binding agreement isn’t just between IPIC, Aabar and 1MDB. Instead, the Government of Malaysia is also an integral party to the agreement.

While the Malaysian Government was completely opaque, IPIC has announced on the London Stock Exchange the outline of the agreement on the 10 June 2015.

It disclosed that “on 28 May 2015, IPIC, Aabar, Minister of Finance, Inc., Malaysia (MOF) and 1Malaysia Development Berhad (1MDB) entered into a binding term sheet”.

The principal terms included:

1. on 4 June 2015, IPIC provided US$1 billion to 1MDB for 1MDB to utilise immediately to settle certain of its liabilities

2. from 4 June 2015, IPIC has assumed the obligations to pay all interest due under two IPIC guaranteed 1MDB financings amounting to US$3.5 billion with 5.99% interest coupons.

3. by 30 June 2016, IPIC is to have received a transfer of assets with an aggregate value of an amount which represents the sum of all the above payments as well as the US$3.5 billion of bonds

4. upon the completion of the “transfer of assets”, IPIC will directly assume liability for all payment obligations in the above bonds and forgive certain financial obligations of the 1MDB Group to the IPIC Group; and

Essentially, the above announcement states that IPIC will immediately advance US$1 billion and cover the interest payments for the US$3.5 billion of bonds over the next year. IPIC will also take over the bonds if by 30 June 2016, 1MDB transfers assets worth all of the above to IPIC.

The question hence arises as to why IPIC will be agreeable to provide such a huge advance to 1MDB, including the assumption of one year or US$209.65 million of interest payments for the “transfer of assets” which has yet to be executed, and their value determined?

Based on the IPIC announcement, we now know why the investment arm of Abu Dhabi was so remarkably “generous”. It was because 1MDB and, more crucially, MOF “have agreed to perform the obligations contemplated in the binding term sheet and to indemnify IPIC and Aabar for any non-performance”.

Effectively, the Malaysian Government has provided a US$4.71 billion (RM17.7 billion) guarantee to IPIC such that in the event 1MDB is unable to fulfil its obligations to transfer assets worth the same value to IPIC by 30 June 2016, the Government will indemnify IPIC by assuming the obligations.

This discovery is shocking as it will increase Malaysia’s contingent liability which stands officially at RM157.5 billion as of 31 December 2014, by more than 11%. Officially, the Government has already guaranteed RM5.8 billion of loans for 1MDB.

However, the “official guarantee” does not include other indirect guarantees. The Government has provided 1MDB with 2 letters of support to raise loans amounting to US$3 billion (RM11.25 bn) and US$150 million (RM540 million) in May 2013 and March 2015 respectively. The Government has also extended 1MDB with a direct loan amounting to RM950 million.

Together with the latest RM17.7 billion guarantee above, the total amount to be borne by the Government should 1MDB fail to repay their loans has inflated to a earth staggering RM36.2 billion ! This has outstripped Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) which is backed by RM29.2 billion of government guarantee as the single highest recipient.

The Prime Minister must immediately explain the shocking development, the massive guarantee and effectively another attempted multi-billion ringgit bailout of 1MDB.

Tony Pua

Sunday, June 28, 2015

Reevaluate your Evaluations - "Discounted" Over-the-Top Prices Hints at Well-Disguised Bailouts

The proof of land valuations is in the pudding, or rather in the actual transactions which took place.

Recently, many companies – particularly government-linked ones criticized for their overpriced land purchases, have defended their acquisitions by referring to higher property valuations.

Out of the blue, Majlis Amanah Rakyat (Mara) chairman Tan Sri Annuar Musa has now claimed that Mara purchased the Dudley International House property at a price that was lower than market valuations at the time of purchase in 2013, according to a report in The Star.

Annuar reportedly told RTM1 in an interview yesterday night that the property was valued at RM71 million at the time of purchase. Thus, Mara's move to pay RM63.6 million for the property was because it was lower than market valuations, he said.

Firstly, the issue or scandal has never been about the actual valuation of the property Mara purchased. It was about the Mara top executives conspiring with the vendor and other parties to defraud Mara, and secure AUD4.75 million of kickbacks for themselves.

Therefore, even if Mara did indeed acquire the property for less than market valuation then, the Mara executives acted strictly against the interest of the government entity. Hence, why is Mara chairman suddenly raising this issue? Is it a step towards exonerating or diminishing the crimes of those who cheated Mara?

However, more importantly, was the valuation really RM71 million as alleged? If it was really RM71 million, it begs the question as to why would the vendor be willing to sell for a significantly lower price and yet still have to pay kickbacks to the purchasers? Were the vendor-developers stupid or astoundingly kind hearted?

Similarly, when 1Malaysia Development Bhd (1MDB) acquired a 125ha piece of land in Pulau Indah for RM294.37 million or RM21.80 per square feet (psf), I had accused 1MDB of overpaying. The property was last valued by Tadmax in its 2011 Annual Report for RM9.93 per square foot.

Both Tadmax and the Government on behalf of 1MDB, denied the allegation, claiming that the market value of the property is actually much higher. Datuk Chua Tee Yong has pointed out that the land was worth between RM55 to RM66 psf based on surrounding property transactions. He implied that 1MDB bought the land at a bargain.

If only it were true. Firstly, if the land was indeed worth RM55 psf, why would Tadmax, which was in deep financial trouble be agreeable to sell the piece of property for ‘only’ RM21.80?

Secondly, if indeed it is worth as much as RM55, wouldn’t Tadmax directors be failing their fiduciary duties to their shareholders to ensure that the latter receives maximum returns and value from the approved transactions? Would not the Securities Commission have red-flagged the transaction as against the interest of minority shareholders?

Similarly, when Tabung Haji was accused of bailing out 1MDB by acquiring a 0.64ha piece of land in Tun Razak Exchange (TRX) for RM188.5, the former justified that it was acquired at a discounted price. The Chairman of Tabung Haji, Dato’ Seri Abdul Azeez Abdul Rahim even boasted on the 10 May 2015 that there are already 3 firms queueing up to buy the piece of land from Tabung Haji. The quick-flip transaction would have enabled Tabung Haji to make an easy profit of RM5 million within 2 weeks.

A quick RM5 million profit would have been nice, except it has been 7 weeks since the announcement. There has been no buyer confirmed, not even any payment of a 1% earnest deposit. Anyone would have known that Dato’ Seri Abdul Azeez was making an empty boast. If it been so easy to secure a buyer for the property, 1MDB would have sold it to them long before Tabung Haji got its chance. After all, 1MDB is in severe financial crisis and is in need of all the cash it can lay its hands on.

Therefore all these attempts to absolve the crimes of the GLC executives by claiming that the assets were acquired below market value are all hogwash. Just as the proof of the pudding is in the eating, the proof of market value is in the actual money transacted.

If no one is willing to pay a higher price for the Melbourne, Pulau Indah and TRX properties, then at the very best what was paid was fair valuation. At worse, as we fear, these over-the-top prices are merely well-disguised bailout attempts to save financially stricken companies like 1MDB and Tadmax, or as cover for illegal kickbacks for corrupt officials.

Tony Pua

Friday, June 26, 2015

The MARA Controversy - Malaysian Money and Officials, But Our Investigation Stalls for an Australian Request

Why are the Malaysian Police so tardy when investigating Government-Linked Companies (GLCs)?

On 23 June 2015, The Age, an Australian newspaper reported that a “top” Mara officer, senior official and former politician have allegedly spent millions of government funds to buy an apartment block in Melbourne in a property scam.

In the exclusive report, the Australian paper alleges that “a group of super-rich Malaysian officials” overpaid by A$4.75 million (RM13.8 million) for an apartment block in the city in 2013. The trio had allegedly “overbid” for the building, called Dudley International House, from A$17.8 million to A$22.5 million (RM65.3 million), with the difference pocketed as bribes back home.

Within 2 days of the report, the Australian Federal Police officers have launched raids in Melbourne as part of an international bribery and money-laundering investigation involving high-ranking Malaysian officials, businessmen and the purchase of Melbourne property.

The Federal agents seized computers and files on Thursday morning from a home in Vermont South and it's believed several other properties were targeted across Melbourne. The urgency of the raid was necessary to prevent the tampering and destruction of valuable evidence.

Unfortunately, all we get in Malaysia is finger pointing among top Mara officials over who is ultimately responsible for the scandalous property transaction. There was no visible urgency among our law enforcement authorities to uncover the scandal and investigate those who were named and involved in the dodgy transactions at the expense of Mara.

All we have heard is that the Federal Commercial Crime Investigation Department director, Datuk Seri Mortadza Nazarene, said Bukit Aman was aware of the issue based on media reports, but had yet to receive any request from Australia.

“We are always ready to help in any way but so far, we have not received any request from Australia. The investigation is being conducted in Melbourne and we can only get involved if local police ask for assistance,” he said.

Malaysians cannot be blamed for feeling completely helpless that even the Police are not doing anything to uncover the crimes against institutions entrusted to judiciously protect. Why is Bukit Aman waiting for a “request from Australia” before conducting its investigations?

While the crime transaction may have taken place in Melbourne, the money is from the Malaysian government and the alleged criminals are all Malaysians residing in the country. Does that not give sufficient basis for the Police to urgently conduct its own investigations by conducting the necessary raids?

The heavy inertia doesn’t just stop at the recent Mara scandal. Malaysians today are staring at the single largest financial scandal in the history of Malaysian – the RM42 billion 1Malaysia Development Bhd imbroglio. However the Police has failed to demonstrate any sense of exigency despite the scandal boiling over for the past 6 months.

All we got was a short statement by the Inspector General of Police (IGP), Tan Sri Khalid Abu Bakar who only confirmed “that the investigation is being carried out.”

In fact, Tan Sri Khalid Abu Bakar even alluded to the fact that none of the key protagonists like Low Taek Jho or the top management of the 1MDB scandal have been called for questioning when he asserted, “…in commercial cases such as this, we do not arrest first and then investigate. We have to investigate it first and then only make the arrest if needed”.

As far as we are aware, no raids have been conducted either on the relevant companies.

Hence the speed at which the Australian Police have reacted to the media report puts our own force to shame. All we have is a Prime Minister who appeared more interested in emphasizing yesterday that all these culpable GLC bigwigs are “innocent until proven guilty”.

Tony Pua

Thursday, June 25, 2015

1MDB's Innocence Can be Resolved Through the Simplest of Measures

The way to prove “tampered data” is not to allege “tampered data” based on a wishy-washy statement but by making the untampered versions public.

The Barisan Nasional Government machinery is working overtime to intimidate and suppress public information, discourse and criticism over 1Malaysia Development Bhd monster scandal which is threatening to unhinge the Najib administration.

The Home Minister, Dato’ Seri Ahmad Zahid Hamidi is now threatening news organisations which publish stories based on information exposed by The Sarawak Report. In particular, leaked email conversations between the various protagonists in 1MDB, Jho Low and his associates as well as PetroSaudi as well as documents such as the 1MDB Petrosaudi joint venture agreement has shaken the Najib reign to the very core.

However, the Home Minister based his claim entirely on a statement from an anonymous source from UK-based cyber security firm Protection Group International (PGI), which was hired by PSI to investigate the leaks. The source said “Simply put, it is incomplete data, creatively selected and edited to fit a desired narrative.”

Even if, and that’s a big “if”, the above allegation is technically true – nothing in it actually debunks the information exposed by The Sarawak Report, provided by the whistleblower as untrue!

It may indeed be “incomplete data” because some key transaction documents were not available in these leaked emails. To Petrosaudi and 1MDB, the emails may be “creatively selected”, but to the Malaysian taxpayers, they may be intelligently filtered. PGI alleged that the information was “edited to fit a desired narrative” – to which I would say, of course they were!

I would even say that the very allegation by the unnamed source from PGI is guilty of all of the above. The allegations provides “incomplete data”, is “creatively selected and edited to fit [1MDB’s] desired narrative”!

There was not even any mention, whether by Petrosaudi, 1MDB or PGI on what exactly has been edited, or worse, tampered by any party. Was the joint venture agreements wickedly doctored? Were key words in the emails replaced other malicious words? Or where all of the above complete works of fiction?

Therefore Dato’ Seri Zahid Hamidi has no right to abuse his powers to threaten any media agency in Malaysia to stop the criticism of 1MDB, especially in the light of all the subsequent corroborating evidence which has been discovered – such as the fact that there was no “cash” in the BSI Bank of Singapore, the fact that 1MDB was unable to repay even a RM2 billion loan which was due in November 2014, or the fact that 1MDB overpaid for its energy assets.

Instead, the best way for Petrosaudi or 1MDB to debunk, once and for all, all the various allegations published and exposed by The Sarawak Report or any other media organisations, is to provide the proof to the contrary.

1MDB unfortunately, has made absolutely no attempt to do so. Since January 2015 when the first incriminating documents first surfaced on The Sarawak Report, 1MDB has made no attempt to produce evidence and documents to prove the allegations in The Sarawak Report as false.

They have not even verbally denied the specifics of the exposes like the fact that 1MDB top management signed a US$1 billion investment in the 1MDB Petrosaudi joint venture within 5 days of meeting Petrosaudi. There was no denial that US$700 million and subsequently another US$550 million was transferred to Good Star Limited, a company controlled by Jho Low. 1MDB to date, has been unable to provide anyone with information on what exactly did they invest US$2.318 billion in the Cayman Islands, since redeemed and substantially spent, with the balance kept as mysterious “units” in BSI Bank Singapore.

In fact, the publisher of The Sarawak Report, Clare Rewcastle, even taunted all the relevant parties to sue her in the Court of Law if she has misrepresented any emails or documents in her website. There was no attempt by Petrosaudi, 1MDB or Jho Low to do so. All we get is meek and general denials, merely brushing aside the very serious allegations as “tampered information”.

Come on, 1MDB. Man up, or own up. Stop hiding underneath the Government skirt pleading secrecy while threatening to abuse its powers.

Tony Pua

Shafee Abdullah Wants Me Out of the PAC. Oh the Irony !

Tan Sri Mohamed Shafee Abdullah should be asking Dato’ Seri Najib Razak to take his leave as the Finance and Prime Minister to avoid the conflict of interest over the 1Malaysia Development Bhd (1MDB) investigation, and not for me to recuse myself.

If not for the fact that it is highly likely there will be a concerted sinister attempt to oust me from the Parliamentary Public Accounts Committee (PAC) investigating the RM42 billion 1MDB scandal, I would have found Tan Sri Mohamed Shafee Abdullah’s attempt to have me recused from the PAC highly laughable.

Tan Sri Mohamed Shafee claimed that I have “issued a lot of statements which can affect investigations into the company”. As such, he proposed that I withdraw myself from the PAC “to return the public's confidence that the inquiry can be conducted fairly and transparently.”

The above is nonsensical on so many levels. Firstly, how does issuing statements and carrying out my daily responsibility as an elected representative of Malaysians in any way jeopardizing the investigations into 1MDB?

If I had made completely unfounded statements and 1MDB is able to debunk my allegations during the PAC hearing, the Barisan Nasional Members of Parliament will not let go of the opportunity to deride me in the committee meetings. Worse, the entire proceeding is recorded verbatim and will be published in the report tabled in Parliament and made available to the public. So, if 1MDB was able to make a complete fool of me, my foolishness will be recorded permanently in history.

If however, I am correct in my statements and extensive research on 1MDB, then wouldn’t that make me perfectly qualified to sit in the PAC to grill those involved in this heinous scandal?

In fact, is that the very reason why there may now be a concerted campaign to get me disqualified or removed from the PAC so that the top management of 1MDB will not be facing the much feared or anticipated intense grilling?

BN Backbenchers Club chairperson Datuk Seri Shahrir Abdul Samad even immediately called on Datuk Nur Jazlan Mohammad to consider Shafee's remarks and to drop me from the investigation team. He argued that since I know a lot about 1MDB, I should be a witness instead of being part of the team investigating 1MDB.

Datuk Seri Shahrir Samad sullied what credibility he has left with such a fallacious argument. If his claim that I know “a lot about 1MDB” is indeed true, all the more I should be part of the investigation team. Why should I be a witness since I’m not in anyway related to the various questionable transactions carried out by 1MDB? What’s more, I can share whatever knowledge I have with fellow committee members during the proceedings without having to “testify” as a witness.

As rightly highlighted by both my PAC Chairman Datuk Nur Jazlan Mohammad and former Prime Minister, Tun Dr Mahathir Mohammed – the PAC comprises of 8 BN MPs and 5 Opposition MPs. Surely, if I step out of line, the 8 BN MPs will pounce on me and give no quarter.

Tan Sri Mohamed Shafee further argued, "PAC members including Pua should be like judges in this case, and not by making accusations and making public statements. It is better they be witnesses if they want to issue such statements".

In this aspect, he is wrong on two counts. The PAC or its members are not judges and juries. We have no power to mete out any form of punishment. We are representatives of the people and the relevant political party tasked to draft a report by consensus on any issue put before the Committee.

Instead, if the honourable lawyer and infamous prosecutor is so concerned about conflict of interest, he should be asking Dato’ Seri Najib Razak to take leave as the Finance and Prime Minister as he is directly implicated in the RM42 billion scandal by the simple virtue of the fact that every single major transaction undertaken by 1MDB carries his explicit “written approval”.

How can Dato’ Seri Najib Razak be allowed to direct the manner, timing and mechanism of investigations over such a monstrous scandal where he is also a prime suspect? Shouldn’t the lawyer in Tan Sri Mohamed Shafee who claims to uphold natural justice balk at such a massive conflict of interest?

However, we can’t expect such high hopes on the same person who acted as the Public Prosecutor on behalf of the Government against Opposition Leader, Dato’ Seri Anwar Ibrahim, who then proceeded to take part in a nationwide public roadshow to demonize the defendant. And he has the cheek now to ask me to shut up over the investigation of 1MDB. What irony.

Tony Pua

Tuesday, June 23, 2015

Robbing Peter to Pay Paul - The Curious Case of Dato' Nazri Aziz's Statement

So to Dato’ Seri Nazri Aziz, a robber who donates some of his ill-gotten wealth to "charity" means that money isn’t lost.

Malaysians were left shaking their heads in disbelief when Tourism Minister, Dato’ Seri Nazri Aziz legitimized “robbing Peter to pay Paul”.

This came after The Wall Street Journal (WSJ) has exposed the fact that companies which benefited from 1Malaysia Development Bhd (1MDB)’s generous acquisition offers have separately contributed to a “charity” controlled by the Prime Minister. The leading international financial paper further claimed that some of these donations were then channel to activities related to Barisan Nasional election campaigns.

According to Tourism and Culture Minister Nazri Abdul Aziz, if the report is true, this means the money spent before GE13 was not wrong. He even thanked WSJ for setting the record straight with its report.

"If the report carried by WSJ is proven true, then it is good, as it shows the money was not lost. Then why do you (critics) say the money is lost? What's wrong with (Finance Ministry wholly-owned 1MDB's) money being spent on the people?" he told Malaysiakini yesterday.

"This wasn't misappropriation of funds. This shows we did not squander the money," he added, reiterating that it was used for the rakyat.

It was an “OMG” moment as we pondered if Dato’ Seri Nazri Aziz just legitimized the act of a robber, if part of his ill-gotten wealth is donated to charity.

If the WSJ is indeed correct in its report, it means that 1MDB had outrageously overpaid Genting Berhad for the latter’s power plants. The transaction allowed Genting to make a reported extraordinary profit of RM1.9 billion on a mere RM400 million of assets. After the acquisition, the Genting group of companies made a total of RM190 million or 10% of its profit to charities, of which Yayasan Rakyat 1Malaysia (YR1M) received at least RM25 million according to WSJ.

Hence, Dato’ Seri Nazri Aziz must answer if just because up to RM190 million out of RM1.9 billion of extraordinary profits went to “charities”, it is perfectly alright for 1MDB to massively overpay for its assets?

Worse, there is nothing in the Companies Commission (SSM) documents pertaining to YR1M, a company limited by guarantee, is in anyway related to the Government. Instead, YR1M looks like a private vehicle controlled entirely by the Prime Minister, Dato’ Seri Najib Razak.

If so, why should these allegedly “charitable” deeds be handed out by this private vehicle and not directly and transparently by the Government? What’s more, the WSJ further alleged that the YR1M funds were utilised to pay for Barisan Nasional (BN) election campaign expenses and handouts. Surely, ill-gotten proceeds from the Government cannot be justified by its use for BN and the Prime Minister’s private political interests?

Now, even if against all ethical standards, “robbing Peter to pay Paul” is legit as argued by Dato’ Seri Nazri Aziz, it does not in anyway explain the money 1MDB “lost”. 1MDB has been criticised to have lost anything between RM15 billion to RM25 billion out of its RM25 billion debt. The RM190 million “donation” by Genting barely explains 1.3% of the total missing funds. Therefore, the Tourism Minister was extremely disingenuous to claim that the WSJ report proved that 1MDB’s funds did not go missing.

Indeed, based on the above, the Prime Minister, Genting Berhad, 1MDB and YR1M must not only be investigated by the Election Commission for committing electoral fraud as demanded by Bersih. They must be investigated by both the Police and the Malaysian Anti-Corruption Commission (MACC), for possible embezzlement and misappropriation of public funds, criminal breach of trust as well as corrupt practices.

Tony Pua

Monday, June 22, 2015

YR1M - The PM's Private Charity?

Is Yayasan Rakyat 1Malaysia Dato’ Seri Najib Razak’s private charity or a charity organization owned by the Government of Malaysia?

The Wall Street Journal has exposed the fact that companies which benefited from 1Malaysia Development Bhd (1MDB)’s generous acquisition offers have separately contributed to a “charity” controlled by the Prime Minister.

The international financial daily revealed that Yayasan Rakyat 1Malaysia (YR1M) received RM35 million in donations from Genting Plantation soon after the 1MDB acquisition of Genting Sanyen was completed. Kinibiz.com had separately reported that the various companies in the Genting group had donated a total of RM190 million during the same financial quarter.

We have already discovered earlier that all 1MDB’s decisions must, without exception, obtain the Prime Minister’s “written approval”. Hence such contributions by companies such as Genting Bhd, which benefit from the over-the-top prices for its assets, to a separate entity controlled by the Prime Minister raises a clear conflict of interest. It is tantamount to a breach of trust and borders of corruption.

The next question that needs to be asked is, who owns this particular ‘charity’, Yayasan Rakyat 1Malaysia (YR1M)? Is this a private charity or an entity owned by the Government of Malaysia?

The YR1M website (http://yayasanrakayat.com.my) stated that “the Foundation is chaired by YAB Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak, the Prime Minister of Malaysia”, without mentioning anyone else being involved in any official capacity.

A search with the Companies Commission shows that it is a company limited by guarantee, and the four Directors of the company are – Dato’ Sri Najib Razak, Dato’ Azlin Alias, Dato’ Wan Ahmad Shihab Wan Ismail and Tan Sri Che Lodin Wok Kamaruddin. (See attached Companies Commission extract.)

Dato’ Azlin Alias is the Prime Minister’s Chief Private Secretary, sometimes referred to as Dato’ Seri Najib’s Chief of Staff who recently passed away in a helicopter mishap. Dato’ Wan Ahmad Shihab, on the other hand, has been a Special Officer to Dato’ Seri Najib ever since 2004.

Only Tan Sri Che Lodin does not work in the Prime Minister’s office. However he is appointed by the Prime Minister to be the trusted Chairman of 1MDB.

It is therefore clear from the above information and documents that YR1M is a charity fully controlled directly and indirectly by the Prime Minister. YR1M can be described as a “foundation” whose funds could be utilised according to his whims and fancies. As alleged, with examples cited by the Wall Street Journal, these donations were then channelled to activities related to Barisan Nasional election campaigns.

Hence BERSIH is right to raise their concerns over electoral malpractices by Dato’ Seri Najib Razak in the last General Elections. However, it is equally important for Malaysians to know if there has been any criminal breach of trust as well as whether there were corrupt practices involved in the above transactions.

The stink of the entire YR1M funding and expense structure is made worse by the fact that YR1M has failed to submit its financial statements to the Companies Commission, due by December 2014 ever since it was set up in January 2013. It is unfathomable to think that the Prime Minister is wantonly breaking the law of this country.

We call upon Dato’ Seri Najib Razak, who prides himself with “nothing to hide”, to immediately make available the financial records of YR1M – its funding receipts and itemised expenditure, to prove that everything in the “Foundation” is above board. For example, did Tanjong Power and the Farlim Group which sold the Penang land also contributed significantly to YR1M or any other charities which the Prime Minister control?

The failure to do so immediately will result in the Prime Minister being perceived guilty of serious financial misdeeds by the ordinary man on the street, as he clearly has everything to hide.

Tony Pua

Friday, June 19, 2015

Where Exactly Did the EXIM Bank Loan Go? Local or Overseas?

The evasive half-truth response by 1MDB to the question of the use of its Bank Exim proceeds is the reason why nobody trusts the answers by the company and consequently, extinguishing whatever confidence left in the Najib administration.

I had posed the question in Parliament to the Finance Ministry on the use and/or abuse of a US$150 million loan by EXIM Bank to 1Malaysia Development Bhd (1MDB) with a “Letter of Support” from the Minister of Finance on Monday this week. My adjournment speech had included questions on why a loan was given to finance the acquisition of an overvalued property in Pulau Indah.

Deputy Finance Minister, Datuk Chua Tee Yong confirmed that the loan and the letter of support was indeed issued, but defended the valuation of the property.

Consequently, I had accused the Finance Minister and EXIM Bank of abuse of power as the mandate of the wholly-owned government bank was only for the purposes of international trade and strategic investments overseas.

Two days later, the other Deputy Finance Minister, Datuk Ahmad Maslan however, denied outright that the loan was used for a local property transaction and insisted that the proceeds were used only for 1MDB’s overseas power plants. However, when pressed to confirm the veracity of his information, he promised to double-check and provide his response in writing.

Yesterday, 1MDB President Arul Kanda issued a statement to clarify the matter. However, nothing was clarified in the clarification drafted in the most sly and evasive manner. He said in a short 2 paragraph statement,

'I refer to media reports on USD150 million loaned to 1MDB by the Export-Import Bank of Malaysia (EXIM). It is a well-known fact that the 1MDB Group includes Edra Energy, a leading international independent power producer, with a portfolio of 13 power and desalination plants in five countries.

1MDB confirms that loan proceeds were utilised per the terms of the agreement, which is to “finance the general corporate purposes including but not limited to the working capital requirements, future capital expenditures and equity infusion of the energy business within the 1MDB Group of Companies”.

Effectively, he said that 1MDB owned power plants overseas, a fact which was never disputed. But he didn’t say that the US$150 million loan was used for its plants overseas.

Then he confirmed that the “loan proceeds were utilised per the terms of the agreement”, but such terms he outlined did not preclude the use of the proceeds to purchase of local real estate.

What is most farcical however, was what he didn’t write. He did not at any point in the two paragraphs deny that the proceeds or a substantial portion of it, was used to pay the balance of RM262 million to acquire the Pulau Indah land from Tadmax Resources Bhd. All Arul Kanda did was a miserable attempt to insinuate that the funds were used for its investments overseas, without actually saying so. That way, he can’t be accused of lying outright.

This is exactly the reason why Tun Dr Mahathir Mohamed called Arul Kanda “dishonest”. The former Prime Minister may be wrong about a lot of things, but he is absolutely spot on about the integrity and character of the 1MDB President.

It is Arul Kanda’s perpetual refusal to come clean on the state of 1MDB and its dodgy transactions which has destroyed the credibility of not only 1MDB, but also the Prime Minister, Dato’ Seri Najib Razak.

Arul was extremely evasive of the role Tan Sri Ananda Krishnan played to assist 1MDB to repay a long-overdue RM2 billion debt. He claimed that 1MDB’s investments in its Cayman Islands funds were “redeemed”, but they are still in indeterminate “units” today. He told the Singapore Business Times that US$1.1 billion cash was sitting in BSI Bank Singapore before later denying that he ever said it was “cash”. When the Public Accounts Committee discovered that statutory audit has not commenced in 1MDB, he would respond to claim that audit has started with one of the subsidiaries.

It is amazing how the Ministry of Finance tolerates such a shifty character to lead its most controversial subsidiary laden with debts in excess of RM42 billion.

We call upon Datuk Ahmad Maslan to honour his promise to provide a written reply to the EXIM Bank loan, which has not been received as at yesterday evening. In the event where he fails to honour his promise, we will not hesitate to once again refer him to the House Rights and Privileges Committee for misleading the Parliament. He will have the ignominy to apologise again for his mistake for the second time in less than a year.

At the same time, if Arul Kanda comes to the Public Accounts Committee hearing with the same kind half-baked answers, I will personally ensure that he will receive the fairest of hearings by the Committee.

Tony Pua

Thursday, June 18, 2015

Felda's Rationale Behind EHP Acquisition Demands a Deeper Ponder

We fully support the position of the Employee Provident Fund (EPF) to oppose Felda Global Venture’s (FGV) acquisition of 37% of Eagle High Plantations for US$680 million and call on all other public funds to do the same

Employees Provident Fund (EPF) CEO, Shahril Ridza confirmed yesterday that the EPF’s representative questioned the rationale behind the US$680 million, or RM2.55 billion, acquisition of EHP, particularly the generous premium reportedly accorded to the deal, at FGV’s annual general meeting (AGM) on Tuesday.

We fully support the position EPF questioning the unbelievably expensive acquisition of Eagle High Plantations, which was traded at 72% above its last traded price and 267% above CIMB Research’s fair valuation of the company. There was not a single investment research house which did not have a negative report on the proposed acquisition.

CIMB also warned that the group “may have to write down the value of EHP post acquisition to reflect current market price, post this acquisition. The write down could amount to RM1.07 billion”. The amount is massive relative to FGVH’s net profits of only RM306.4 million for its financial year ending December 2014, a 69% drop from RM982.2 million in the previous year.

Felda Global Venture Holdings Bhd (FGVH) has been the undisputed worst plantation stock performer ever since its initial public offering (IPO) in July 2012. The share price decline was so bad that the company was removed from the Bursa Malaysia KLSE Index stocks.

As of yesterday, the market was unanimous in giving FGVH a big thumbs down for the proposal. The share price, already at a record low of RM1.86 before the announcement of the deal, tanked a further 9.7% to RM1.68. This price represents a 63% drop since its IPO.

We call upon all other institutional funds which invests on behalf of Malaysian tax-payers to openly oppose the deal to ensure that FGV performance does not get any worse than it already is.

Besides the EPF which owns a 5% stake in FGV, other major shareholders include Lembaga Tabung Haji, Retirement Fund Incorporated (KWAP) and the Pahang government, which hold 7.8%, 5.6% and 5%, respectively.

The other Government entities which must raise their objections to the deal are Lembaga Kemajuan Tanah Persekutuan (Felda), Felda Assets Holding Company and Koperasi Permodalan Felda Malaysia owning 20%, 13.66% and 5.75% respectively.

If the above funds were to combine their shareholding strength of 62.8%, the acquisition exercise will be stillborn and further losses to FGV can be consequently averted.

The above funds and institutions must publicly pledge their opposition to the exercise because the entire deal stinks to high heavens with the insidious objective of allowing PT Rajawali Capita, the seller of EHP shares to profit astronomically.

The Rajawali group which is controlled by Indonesian tycoon, Tan Sri Peter Sondakh had only acquired their stake in EHP at an average price of Rp400 in December 2014. Less than six months later, FGV decides to the said 37% stake at Rp775, giving Peter Sondakh an eye-popping profit of US$328 million (RM1.23 billion). Why is a Malaysian government-linked company helping to further enrich an Indonesian tycoon, who just happens to be the Prime Minister’s friend?

The Prime Minister Dato’ Seri Najib Razak and his Cabinet Ministers must put a stop to the above exercise to prevent Felda settlers from losing even more money in the investment turkey.

Tony Pua

Wednesday, June 17, 2015

EXIM Bank $150 mil Loan Raises Questions on Double-Bailout of 1MDB/Tadmax

Another previously undisclosed US$150 million “Letter of Support” for 1MDB proves beyond doubt the Cabinet will abuse its powers to conduct a double bailout of 1MDB and Tadmax Resources Bhd

The Deputy Finance Minister, Datuk Chua Tee Yong confirmed in Parliament on Monday evening that “the Government has given a ‘letter of support’ to EXIM Bank for a loan by 1MDB”. He however, refused to disclosed the detailed terms of the loan citing banking secrecy.

The above US$150 million (RM560 million) loan was believed to have been granted in March this year, and was used to pay for a piece of 310 acres land from Tadmax Resources Bhd (Tadmax) located in Pulau Indah which was purchased in 20 February 2014.

Tadmax is formerly known as Wijaya Baru Global Bhd prior to November 2013. The Group was infamous for their complicity in the RM12.5 billion Port Klang Free Zone (PKFZ) scandal which has caused massive losses for the Malaysian Government. Kuala Dimensi Sdn Bhd (KDSB) which was appointed the turnkey developer by Port Klang Authority (PKA) for PKFZ is a subsidiary of Wijaya Baru Global Bhd (Tadmax). KDSB also sold the controversial 753 acres piece of land in Pulau Indah to PKA at the astronomical price of RM1.09 billion in 2004.

Tadmax’s single largest shareholder then was Datuk Seri Tiong King Sing, who was also the Chief Executive Officer of KDSB. He has however sold his 30.15% equity in Tadmax in 2011, and holds only a 5.53% interest in the company today. The directors of Tadmax includes its Chairman, Dato’ Seri Abdul Azim Zabidi, the former treasurer for UMNO and its Chief Executive Officer, Dato’ Faizal Abdullah who is the Deputy Chairman of UMNO Kapar Division.

The above loan by EXIM Bank is an abuse of power because EXIM Bank is not mandated to provide loan for domestic property purchases. This was admitted by the Deputy Finance Minister himself despite providing a vague exception to companies involved in strategic investment for Malaysia.

"Kesemua pinjaman yang diberi oleh EXIM Bank kepada pelanggan-pelanggan EXIM Bank memenuhi mandat EXIM Bank untuk menyokong syarikat-syarikat Malaysia yang terlibat dalam pasaran atau pelaburan di luar negara tidak terkecuali sokongan pinjaman import kepada syarikat-syarikat Malaysia yang terlibat dalam pelaburan strategik kepada ekonomi negara."

What is so “strategic” about 1MDB’s land purchase in Pulau Indah, especially in the light that 1MDB is winding down and disposing of much, if not all of its key assets?

In addition, why did the Government provide a letter of support for a US$150 million loan which was more than double the RM262 million outstanding amount payable to Tadmax for the property purchase? Isn’t this an abuse which is not only to provide 1MDB with desperately needed cashflow, but will in the end only increase the company’s debts and liabilities?

Despite the on-going “rationalisation exercise”, Datuk Chua insisted that 1MDB had to still pay for the land because the sales and purchase agreement was signed before the company’s strategic review in February this year.

It is not difficult for 1MDB to terminate the above transaction and cut losses on its investments which are creating an immense strain on the company’s cashflow. This is especially since the land was only valued at RM9.93 per square feet (psf) by Tadmax itself in August 2011 but was sold to 1MDB for massive profit of RM21.80psf.

However, the acquisition proceeded with the explicit support of the Minister of Finance because it represents a double-bailout of not only 1MDB, but also Tadmax.

Tadmax CEO, Dato’ Faizal had previously admitted that the sale will ease the debt burden for the company which has only RM124,000 in cash reserves against borrowings of RM220.5 million as at September 2013. Tadmax is bleeding financially with a net loss of RM8.52 million on revenue of only RM3.55 million over the same period.

Hence, despite the immense scrutiny on 1MDB today and the financial crisis it is facing, Dato’ Seri Najib Razak has moved to issue the controversial second “letter of support” for 1MDB to rescue 1MDB with additional cashflow funds as well as Tadmax to pay off its debts.

Tony Pua

And Here's to Another Tale of Irresponsibility...Arul Kanda Lies to Cover Up Yet Another Lie

1Malaysia Development Bhd (1MDB) President Arul Kanda is a liar extraordinaire.

1Malaysia Development Bhd (1MDB) yesterday issued a lengthy statement to deny many assertions made by Tun Dr Mahathir Mohamed against the company. I agree that strictly speaking, some of the figures which were cited in the former Prime Minister’s critiques were inaccurate. However, the gist of the arguments was definitely sound.

Arul Kanda’s many responses within the statement therefore did not address the key questions which key critics like myself have raised many times previously. However, one particular response by 1MDB proved that Arul Kanda is a liar extraordinaire.

The statement said that “despite Tun Mahathir’s vigorous claims, it is a fact that Arul Kanda never said he “saw the cash”. He is on the record as saying he had “seen the statements”, referring to the fund unit ownership and redemptions.”

This was in reference to the balance of US$1.103 billion of investments located in Cayman Islands which was redeemed in January this year and parked in BSI Bank Singapore. The controversy was whether this amount was “cash” or in “assets”.

The above however, is an outright lie to cover up another lie.

In an interview with the Singapore Business Times published on 7 February 2015, Arul Kanda clearly stated 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 said, “the cash is in our accounts and in US dollars. I can assure you (about that)... I have seen the statements.”

It is therefore disingenuous for 1MDB to just quote Arul Kanda having “seen the statements” without also quoting the sentence, “the cash is in our accounts and in US dollars.”

The 1MDB statement then further added,

"There was indeed a misunderstanding on information provided by 1MDB to MOF, which required the original Parliamentary answer to be subsequently amended. This is a matter of public record and has been acknowledged by 1MDB."

"As the President of the company, Arul Kanda takes full responsibility for this misunderstanding and will ensure better communication with all stakeholders."

This conceded “misunderstanding” is however, completely unbelievable. Firstly, is Arul so incompetent as make a mistake between US$1.1 billion of cash as opposed to assets or “units” of indeterminate value?

Secondly, if there was indeed “misunderstanding” in the response provided to the MoF, why did Arul not immediately correct the massive mistake on the 10 March when the “cash” answer was provided and widely published?

Instead, Arul waited until more than 2 months later on the 19 May after I had posted the question again in Parliament, before issuing the correction. If I didn’t ask the question, the truth would never have surfaced. Such a massive delay in clarifying the mistake is the height of irresponsibility by the 1MDB President.

Arul Kanda had 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. 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.

Was Arul Kanda forced to finally admit that there was no “cash” in BSI Bank was as a result of being caught with his pants down, after Singapore authorities handed evidence to Bank Negara Malaysia?

It begs the question, why is the Prime Minister, Dato’ Seri Najib Razak and the Board of Directors of 1MDB still entrusting such a person to manage and “turnaround” the country’s largest scandal in history?

Tony Pua

Tuesday, June 16, 2015

Najib, a Master Manipulator at Work - Capped Debt at 55% GDP a Mockery

Dato’ Seri Najib Razak should stop providing false appearances and assurances on the Federal Government budget using highly misleading statistics.

Bernama reported yesterday that the government remains committed to strengthening public finance without jeopardising growth, while providing fiscal support for reform initiatives.

"Our fiscal targets for 2015 remain intact. The deficit will be further reduced to 3.2% of the gross domestic product (GDP) from 3.4% in 2014," Dato’ Seri Najib Razak said at the Budget 2016 Consultative Council meeting today. Najib, who is also finance minister, said the federal debt would be capped within 55% of the GDP.

None of the above statistics stated by the Finance Minister is any where near accurate due to various creative manipulation of government expenditure, especially over the past 5 years.

We already know that much of the Government’s expenditure are via newly created Ministry of Finance subsidiaries which undertook RM157.5 billion of loans guaranteed by the Federal Government as at 31 December 2014. If the above contingent liabilities figure were to be included in the official federal government debt, it would add up to nearly 70% of our GDP.

Hence it is a mockery that Dato’ Seri Najib Razak continues to insist that the Federal Government debt remains “capped” within 55% of GDP.

In addition, the contingent liabilities figure doesn’t even reflect all the Government’s “off balance sheet” expenditure.

In a Parliamentary reply on 8 June 2015, Dato’ Seri Najib Razak stated that “up till May 31 2015, there are nine government-owned companies via the Finance Ministry Incorporated (MKD) which has expenditures that have been classified as off balance sheet, currently borne by the government.”

For example, one of these wholly-owned MKD subsidiaries, Pembinaan PFI Sdn Bhd (PPFI) has borrowed and spent RM27.9 billion on various projects. However, none of these projects or expenditures was ever reflected in any of the Budgets tabled over the past five years. The result is a significantly understated budget deficit.

In fact, the PPFI loans from the Employees Provident Fund (EPF) and Kumpulan Wang Amanah Persaraan (KWAP) do not even get reflected as a contingent liability of the Government via a clever financing agreement between PPFI and the Government.

What the Ministry of Finance has done was to shift various sorts of expenditure “off balance sheet”. As a result, these expenditures which are ultimately bourne by the Federal Government, are hidden from the annual budget figures and statistics. These off-balance sheet expenditures are a clear loophole for the Government to spend well above what has been officially approved by the Parliament in the Budget.

The Finance Minister also admitted that as a result of these off-balance sheet expenditure, “the annual payment for this between 2015 and 2020 is between RM4.76 billion and RM11.62 billion”. This represents the commitment on future government expenditure without the debt or liabilities reflected the budget or balance sheet today.

All of the above mean that the official debt of the government is severely understated to keep the figures below the 55% debt limit. The budget deficit is correspondingly understated to give a false picture of a low, sustainable or reducing deficit. These render the figures meaningless.

It is hence disingenuous for the Prime Minister to continue using these figures to give the façade that “the government remains committed to strengthening public finance”.

If Dato’ Seri Najib is really serious about commitment to “strengthening public finance”, the Government must exercise transparency in these off-balance sheet projects and incorporate all these expenditures into its annual budget tabled for approval in the Parliament. Only then can we be assured that the budget and debt statistics reflect the actual spending by the Government, allowing the Members of Parliament and financial analysts to evaluate the prudence and appropriateness of Government policies.

Tony Pua

Friday, June 12, 2015

Who to Trust: The Home Minister or the IGP?

Why are there conflicting status reports on the investigation of 1Malaysia Development Bhd by the Home Minister and the Inspector-General of Police?

I had asked the Home Minister, Dato’ Seri Zahid Hamidi for my parliamentary question on the 10 June 2015 to state

"…kedudukan siasatan pihak Polis ke atas penyelewengan dalam urusniaga 1MDB yang telah menyebabkan kerugian berbilion-bilion ringgit."

"Adakah Low Taek Jho telah disoalsiasat sebab dokumen-dokumen yang terbongkar menunjukkan bahawa wang 1MDB telah disalurkan ke dalam akaun beliau?"

The Home Minister completely avoided responding to whether Low Taek Jho has been investigated. However, he surprised everyone by claiming that the Police have completed their probe into debt-laden 1Malaysia Development Bhd (1MDB) and is now waiting for further instructions from Attorney-General (A-G).

In referring to a police report lodged by former Batu Kawan Umno division vice-chairman Datuk Seri Khairuddin Abu Hassan, Zahid said the case was classified under Section 409 of the Penal Code for criminal breach of trust by public servant or agent.

"The investigative papers have been referred to the A-G on March 9 this year for further action," he said.

Firstly, I’m disappointed that there was no reference made to the police report which I had made personally on the 4 March 2015 against the various parties relating to 1MDB, including Low Taek Jho.

However, I’m even more surprised that the investigation over 1MDB has been completed and submitted to the attorney general more than 3 months ago on 9 March.

This is because on 9 March itself, Tan Sri Khalid Abu Bakar had confirmed that police are investigating the debt-ridden 1Malaysia Development Berhad (1MDB), with a new task force formed to probe the strategic investment company. He said the task force set up several days ago by the Attorney General (A-G), which included the Malaysian Anti-Corruption Commission (MACC), the A-G Chambers and the police.

"We are part of the task force set up by the A-G. We are investigating those reports lodged," he said on that day.

Since then Bernama reported on 22 March 2015 that the IGP reiterated, “as the police have received information and reports on the case, the special squad [to investigate 1MDB] felt that we should undertake an investigation without having to wait for the report of the National Audit Department.”

Even as late as a week ago on 4 June 2015, the Inspector General of Police (IGP) was still pleading for time and patience from the Malaysian public for the investigations to be completed.

"I don't want to speak on behalf of the task force. I am not their spokesperson but I just want to confirm that the investigation is being carried out. So I don't want to give out any details of the investigation. This is because if I divulge details of the investigation, it will disrupt the task force's probe," he said

In fact, Tan Sri Khalid Abu Bakar even alluded to the fact that none of the key protaganists like Low Taek Jho or the top management of the 1MDB scandal have been called for questioning when he asserted, “…in commercial cases such as this, we do not arrest first and then investigate. We have to investigate it first and then only make the arrest if needed”.

However, if the Home Minister is telling the truth, then we have to ask what is the A-G doing sitting on the investigation papers for the past 3 months?

The glaring question therefore is, how is it that Dato’ Seri Zahid Hamidi could inform the Parliament that the Police have completed their probe into 1MDB and the investigation papers have been sent to the A-G on March 9 this year when everything the IGP has publicly announced points to the complete? Or is this another example of the Home Ministry’s left hand being totally clueless about what the right hand is doing, a state of affair which is becoming the norm rather than the exception in the Najib administration?

Tony Pua

Thursday, June 11, 2015

Arul Kanda Beating Around the Bush Yet Again

Arul Kanda’s denial doesn’t explain why Deloitte Malaysia has not been able to commence audit on 1Malaysia Development Bhd (1MDB).

Earlier today, I have issued a statement alleging that “1MDB is already more than 2 months past the 31 March financial year end for this year and yet no work has been started at all by the auditors on the holding company. No dates have also been set by the company or by its sole shareholder, Ministry of Finance for the audit to begin.”

Unfortunately, Arul Kanda’s commendably immediate denial misses the point and is an attempted misdirection.

He claimed that “the audit of a major 1MDB subsidiary, Edra Global Energy Bhd, has already commenced and is well under way”.

I asked about the holding company, 1MDB, where all the controversy over its funds, cashflow prblems and alleged misappropriations lie, but Arul tells us that the audit has commenced on its subsidiary.

What’s more, the commencement of audit work for Edra isn’t at all surprising. It is expected because the company is preparing for their initial public offering.

However, what Malaysians want to see is the March 2015 financial statements for “the holding company” which I highlighted in my statement. We want to know about the controversial assets held in various overseas banks. We want to know what is the true debt situation in 1MDB and the extent of the company’s cashflow problems.

All we got from Arul Kanda in his denial was “the board and management of 1MDB met Deloitte as early as February 2015 to discuss commencement of an audit after the financial year-end of 31 March 2015.”

Unfortunately, what we didn’t get from Arul Kanda was, when the audit will actually commence. More worryingly, we would like to ask the President of 1MDB, why is it that since the discussion was more than 3 months ago, the audit for 1MDB has not yet commenced?

Arul Kanda separately highlighted the fact that “1MDB is currently undergoing a thorough review and investigation of its accounts by the National Audit Department.”

Let me state that the fact that the Auditor-General (AG) reviewing the past financial statements of 1MDB does not in any way justify the fact that the statutory audit for 1MDB has not commence. These are two different and independent processes which surely a multi-billion ringgit public-interest company cannot afford to neglect.

In fact, given that there is a parallel on-going AG review, Deloitte should be invited to commence their audit earlier so as to provide the auditors with a longer lead-time to complete the report.

Regardless, the fact remains that the Company’s Act 1965 states very clearly that a companies’ audited report must be lodged with the Commission within 6 months after the financial year end.

Any breach of the Act is serious enough to dictate imprisonment for 5 years or a RM30,000 fine “if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company… has by his own wilful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act.”

Let me reiterate our demand for the Prime Minister to direct 1MDB to allow Deloitte to carry out their audit exercise immediately to protect the reputation of the Finance Ministry and to uphold good corporate governance and financial integrity in 1MDB.

Arul Kanda on the other hand, should stop giving excuses and give his assurance to Malaysians that the statutory financial audit for the scandal-ridden 1MDB for the 31 March 2015 financial year-end will be completed by 30 September 2015 as required by the law.

Tony Pua

Time is Running Out - Deloitte Audit Delays Arouses Suspicion

Dato’ Seri Najib Razak must explain why 1Malaysia Development Bhd (1MDB) has not instructed Deloitte Malaysia to commence their audit for the financial year ending 31 March 2015.

As disclosed by Public Accounts Committee Chairman, Datuk Nur Jazlan yesterday, Deloitte Malaysia has not been allowed to commence the statutory audit of 1MDB’s financial statement for the year ending 31 March 2015.

The discovery that the audit has yet to commence is highly surprising given that normally the audit work for the company the size of 1MDB would have started as early as 3 to 4 months before the financial year end.

However, 1MDB is already more than 2 months past the 31 March financial year end for this year and yet no work has been started at all by the auditors on the holding company. No dates have also been set by the company or by its sole shareholder, Ministry of Finance for the audit to begin.

Given the size and complexity of the company, it is once again assured that 1MDB will be late for the submission of its financial statements to the Companies Commission. Clause 169(1) of the Companies Act states very clearly that a companies’ audited report must be lodged with the Commission within 6 months after the financial year end.

In fact, under Clause 171(1), the Act dictates imprisonment for 5 years or RM30,000 “if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company… has by his own wilful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act.”

Hence the Ministry of Finance and directors of the company are wilfully flouting the law by refusing to allow Deloitte to commence the audit of the company, which will result in the failure by the company to submit its accounts by the 30 September 2015 due date.

We call upon the Companies Commission not to grant any extension to 1MDB as it did in the past to submit its annual returns because the delays are purely because of 1MDB’s explicit decision delay the audit exercise. In addition, if 1MDB did indeed fail to submit their accounts by the due date, the Directors of the company must face the full weight of the law. There should be no bias or favours granted to the Directors of 1MDB under such circumstances.

We would also call upon the Prime Minister to immediate demand that 1MDB allow Deloitte to carry out their audit exercise immediately to protect the reputation of the Finance Ministry and to uphold good corporate governance and financial integrity in 1MDB.

Surely given the number of times Dato’ Seri Najib Razak has used the good name of Deloitte to justify the financial state of 1MDB as at 31 March 2014, he would welcome the audit to be carried out to prove that 1MDB continues to remain not only a going concern, but a strong company with huge potential as at the financial year end 31 March 2015.

Tony Pua

Wednesday, June 10, 2015

The Sheer Irony of Najib's "Wild" Accusations - Come Out and Show Yourself !

Dato’ Seri Najib Razak should stop being a hypocrite when he asked to be judged on facts over the 1MDB scandal but blatantly blocks all attempts to obtain facts via parliamentary questions.

Prime Minister Datuk Seri Najib Razak wrote on his blog that he too wants answers "quickly" on the 1Malaysia Development Berhad (1MDB) controversy but added that any action taken by Putrajaya must be based on facts and not mere allegations.

"Is the government supposed to base its actions and prosecutions on wild allegations and tabloid exposes? Now that would be silly," Najib said.

Yes, it would be silly indeed if the Government’s “actions and prosecutions” are based on “wild allegations and tabloid exposes”. However, what is more silly is the fact that Dato’ Seri Najib Razak, who is also the Finance Minister, blocks all attempts to secure facts via the most proper channels.

In fact, there is no better and higher platform for facts to be obtained and revealed than the Parliament, and yet, most of the MPs attempts to secure answers to simple questions are met with a brick wall.

I had asked the Finance Minster on 9 Jun 2015 on:

"sebab Menteri enggan memberikan pecahan fi Goldman Sachs dan diskaun bon kepada pelabur untuk terbitan bon-bon bernilai US$3 bilion, US$1.75 bilion dan US$1.75 bilion untuk 1MDB Global Investment, 1MDB Energy dan 1MDB Energy (Langat) yang diminta pada sesi lalu"

The question refers to a question I had asked in the last sitting. However, because the Minister had refused to provide the details of the breakdown to my question, I had asked for the reason why he had refused to do so.

The reason I have asked for the above information was to obtain the necessary facts to evaluate if 1MDB has overpaid Goldman Sachs for the 3 bond issue exercises where the latter received more than 10% in “certain commissions, fees and expenses” which was abnormally high. However, 1MDB claimed that the above had included “discounts” to the bond investors and hence I had asked for the breakdown in the figures.

However, almost expectedly, Dato’ Seri Najib Razak once again demonstrated absolute contempt for the Parliament by refusing to answer give the requested breakdown or the reasons why the breakdown cannot be provided. Instead, he practically repeated the same answer as he did the last sitting.

"…rundingan dan penentuan hasil (yield) yang dibuat adalah mengikut proses standard pasaran di antara penerbit dan pelabur semasa rundingan bagi penjualan dan pembelian fixed income security. Goldman Sachs bertindak sebagai “principal” dan bukan dalam kapasiti agensi bagi transaksi ini.

Keseluruhan hasil yang diperolehi oleh Goldman Sachs daripada harga terbitan bon, fi dan kupon adalah berpatutan dengan saiz terbitan, tempoh, ketidakcairan (liquidity) dan risiko kredit (credit risk).

The only difference was this time, he said the answer is based on answers provided by the 1MDB management (“berdasarkan maklumat yang dikemukakan oleh pihak pengurusan 1MDB”).

Instead of providing the impartial facts for the public to judge, the Minister of Finance asked 1MDB to give their own evaluation as to whether the fees they paid were fair (berpatutan). Dato’ Seri Najib Razak may as well have asked a murder suspect to judge himself in the court of law whether the latter is guilty.

Hence Malaysians have no choice but to judge the Prime Minister as a big hypocrite who pretends that he wants to judged on facts but at the same time denies these same facts to the public. Given such unforthcoming, shifty, secretive and dodgy behaviour, Dato’ Seri Najib Razak cannot blame anyone but himself for Malaysians presuming him guilty of wrongdoings over the massive RM42 billion 1MDB scandal.

Tony Pua

Tuesday, June 09, 2015

Ladies and Gentlemen, our Minister of Finance...

Do we have a nincompoop as a Minister of Finance?

I am shocked and horrified by the reply from Dato’ Seri Najib Razak to my question in Parliament on 28 May 2015.

I had asked the Finance Minister to explain:

"…sebab Menteri meluluskan pinjaman sebanyak US$1.9 bilion daripada 1MDB kepada anak syarikat Petrosaudi International Limited hanya dengan jaminan Petrosaudi International yang tidak mempunyai modal berbayar (paid-up capital) melebihi US$150,000 sahaja."

"Adakah pinjaman ini diluluskan pada ketika itu oleh lembaga pengarah?"

The brief reply provided is as follows:

"Berdasarkan maklumat yang dikemukakan oleh pihak pengurusan 1MDB kepada Kementerian Kewangan, pinjaman tersebut diluluskan bagi mengurangkan risiko berbanding dengan pegangan ekuiti di dalam syarikat usaha sama tersebut.

Untuk makluman Ahli Yang Berhormat, semua keputusan dan urusniaga 1MDB adalah dibuat oleh pihak pengurusan dan Lembaga Pengarah 1MDB."

The question really needs to be asked – do we have a nincompoop running our Ministry of Finance?

Firstly, my question was addressed to the Minister of Finance. For the third time this Parliamentary sitting, he refused to answer the question directly. I had asked for the Minister’s reply, but instead I got 1MDB’s reply. This is once again a clear cut abdication of Ministerial responsibility for fear that the 1MDB’s reply may be untruthful.

Secondly, the above disclaimer by Dato’ Seri Najib Razak is even more ridiculous given that he was the person who diectly approved the US$1.9 billion of loans to the Petrosaudi International Limited’s (PSI) subsidiary. In fact the actual total lent to PSI is even higher at US$2.03 billion via the subscription of Murabaha Notes, and not the US$1.9 billion I quoted in the question.

Essentially, I had asked the Finance Minister why he approved the loans, but he needed 1MDB to give the reason why he approved the loans. Am I to conclude that we have a nincompoop for a Finance Minister who doesn’t even know why he approved US$2.03 billion to be lent to some foreign company and had to ask 1MDB to give the response?

Thirdly, the reason provided by the Minister (based on the information given by the 1MDB management) defies all business logic. He said that the approval of the loan was to reduce the risk exposure as opposed to holding an equity stake in the joint venture with PSI.

How in the world would the risk be any lower when 1MDB would have absolutely no control over how the US$2.03 billion would be spent by PSI, as compared to having joint management control via an equity stake in the 1MDB Petrosaudi joint venture? Worse, how can Dato’ Seri Najib Razak accept the “collateral” of a corporate guarantee from PSI for the US$2.03 billion loan when the paid up capital of PSI was less than US$150,000? Bank Negara Malaysia would have demand the sacking of any CEO of any Bank in Malaysia who exposes the country’s financial system to such credit risks.

The response also doesn’t explain why Dato’ Seri Najib Razak approved multiple increases in loans to PSI. 1MDB had originally invested US$1 billion in the joint venture company in 2009. The equity stake was converted to a US$1.2 billion loan via the subscription of Murabaha Notes in June 2010. However, 1MDB went on to lend even more money via additional subscriptions totalling US$830 million of Murabaha Notes throughout the 2011 financial year, adding up to US$2.03 billion.

Hence, if indeed the joint venture was so risky that it demands the conversion of equity to US$1.2 billion, then why did the Prime Minister continue to approve additional US$830 million of lending to PSI?

If the reply provided by the Dato’ Seri Najib Razak is indeed a truthful and accurate reply, then Malaysians have no choice but to conclude that we don’t only have a reckless Finance Minister lending such large sums of money, we have the stupidest and most unqualified Finance Minister in the history of Malaysia. What a nincompoop.

Tony Pua

Monday, June 08, 2015

Pakatan Rakyat's End Will Not, and Ever, Delude Our Principles

Pakatan Rakyat Selangor is in unchartered waters post-PAS Muktamar.

The PAS General Assembly (“Muktamar”) has decided to sever all ties (“putus hubungan”) and stop all political cooperation “kerjasama politik” with DAP. As a result, Pakatan Rakyat in Selangor has undoubtedly entered unchartered waters. The only thing certain under such circumstances is that nothing can or will be the same again.

It is inconceivable for anyone to think or believe that Pakatan Rakyat can continue to exist in its current state given the above unequivocal motion. The Pakatan Rakyat government comprises of three political parties which subscribed to a common policy platform. However, when the common policy platform is breached, compounded by the decision of one party to stop cooperation with another within the coalition, then the coalition naturally collapses.

How does the Government function, when the state executive councillors (Exco) of PAS refuses to cooperate with the Exco from DAP when carrying out their respective duties? Can one even imagine how surreal the state Exco meeting will be, with the PAS Exco ignoring the DAP Excos or pretending that they don’t exist?

The problems do not just exist within the Executive Council, but with all levels of the Selangor Government. Will PAS local councillors for example, pay no heed to all comments, suggestions and proposals by DAP local councillors when carrying out their responsibilities at the local government level?

What’s more, such refusal to cooperate will be egged on by PAS leaders such as Nasruddin Hassan Tantawi, the top vote-getter amongst the 18 newly elected central committee members. After all, he urged the Party faithfuls to fight DAP with his now-famous war cry, “We may be dressed in jubah (robes) and turbans, but you must remember that underneath this jubah, there are elbows and knees that can be used (against DAP).”

Hence it will never be “business as usual” again. The question which remains, and is still unanswered is what form of political realignment will take place to allow a new coalition government to remain in power in Selangor.

As my colleague, Johor state chairman and MP for Kluang, Liew Chin Tong has alluded to, there is now a vacuum in the anti-establishment, moderate and progressive Malay political space after PAS swerved hard to the far-right. He said,

"In the weeks and months to come, the search for new paths by the progressives and all other Malay moderate opinion leaders to fill the vacuum would see major political realignments in Malaysian politics."

The ability for this gap to be filled, whether by the DAP and/or PKR, or by the rise of new factions or parties, will determine the future of the new coalition for Selangor.

The failure of this gap to be filled, which will allow a tenable coalition which subscribes firmly to the “Common Policy Platform” endorsed by the Rakyat in the last general election, may lead to a collapse of the Selangor state government and for elections to be called.

As of today, no final decision have been made by DAP Selangor. In the coming days, we will engage and discuss with DAP Central Executive Committee and abide by any decision which is made at the national level. Unlike leaders of several other political parties we know of, Malaysians can be assured that DAP leaders in Selangor will not be hypocrites and betray our principles to remain in power at all cost.

Tony Pua

Sunday, June 07, 2015

Our Public Accounts Committee (PAC) Needs a Serious Reform

Reform the Public Accounts Committee (PAC) in line with the best global parliamentary practices.

I have just completed the 5th Westminister’s Workshop organised by the Commonwealth Parliamentary Association for Public Accounts Committees in Malta over the past week.

It was a highly fruitful session where PAC members from across the Commonwealth discussed best practices to ensure greater effectiveness, particularly towards the objective of making the Government more transparent and accountable when spending public funds.

There were several key take aways which I thought was highly relevant for Malaysia as I’ve discovered how Malaysia’s PAC lags behind many of our peers in terms of reforms and effectiveness.

For a start, 67% of the Commonwealth PACs were chaired by members of the Opposition, as opposed to members of the governing party. Some of these countries practise this rule as a convention, while others have that clearly stated in the Standing Order or the law.

The obvious reason for this practice is to ensure that there will be greater scrutiny of Government expenditure. An elected representative of the governing party will naturally and inevitably be saddled with the conflict of interest of not wanting to make the ruling coalition look bad. On the other hand, the PAC chaired by an Opposition member will offer the necessary check and balance for the committee where the majority remains with the ruling party.

Unfortunately for the Malaysian Parliament, the historical convention has been for the Barisan Nasional (BN) coalition to elect one of its own to chair the committee despite frequent pleas by the Opposition to adopt the global best practice. It appears that while the BN government is happy to cite global practices as a reason to adopt a policy like the Goods and Services Tax, when it comes to issues relating to democratic norms, it would prefer to turn a blind eye.

Fortunately in Selangor, we even passed a Bill to automatically appoint the Opposition leader as the PAC Chairman. But we were left stunned when the then Opposition Leader then resigned from his position, leaving the Opposition bench in a limbo. It is hence clear that BN would rather sacrifice any role to check and balance the Government, than to take part in any proceedings to ensure transparency and accountability in the governing administration.

Secondly, I have discovered that some three quarters of Commonwealth countries hold their Public Accounts Committee hearings in public today, in full presence of the media. Ironically, nearly all of the African Commonwealth contingent practised public hearings despite their often derided “less developed” status.

If the Parliament proceedings today can be open to the public, why should the hearings of a committee within the Parliament be conducted in closed doors. Exceptions are granted when sensitive national security matters are discussed but that is certainly not be the norm.

For example, why should the hearings relating to the 1BestariNet, the National Feedlot Corporation, the KLIA2 project or the on-going 1MDB inquiry not be made public because they do not touch on any national security matter. They could of course turn out to be highly embarrassing and detrimental to the reputation of particular Ministers, but that should not be the concern of the PAC.

In addition, the public scrutiny of the proceedings will ensure that the appointed members of the PAC will be more diligent in carrying out their duties.

Finally, as I’ve argued in my statement earlier this week, we should make the National Audit Department an independent office under the auspices of the Parliament and not a Department reporting to the Finance Minister. This will ensure and protect the independence of the Department regardless of which party is in Government, and who are the Ministers.

The UK National Audit Office for example, is fiercely protective of its independence, asserting that “we are not civil servants and do not report to any Minister”.

The Auditor-General of Malta on the other hand, is not only an “officer of the House of Representatives”. He is “appointed by the President acting in accordance with a resolution of the House of Representatives supported by the votes of not less than two-thirds of all the
members in the House”.

In line with the discussions of proposed reforms led by the Dewan Rakyat Speaker, I would like to call upon the House Committee which is meeting tomorrow on 8 June 2015 to also adopt the above reforms to the PAC. This is to ensure that we become a truly world class parliament, and not a rubber stamp, where Malaysian democratic rights are oppressed by the Executive which tramples on the sanctity and role of the Parliament.

Tony Pua

Saturday, June 06, 2015

Nothing to Hide? Don't Be Fooled.

As the Prime Minister chickened out of his own 1MDB “Nothing to Hide” forum, the Minister of Finance II Dato’ Seri Ahmad Husni Hanadzlah told tall tales on live television.

Dato’ Seri Najib Razak must be panicking and scampering around like Chicken Little who believed that “the sky is falling” on him. Not only did he have to make flimsy excuses to justify weaselling out of a “Nothing to Hide” Forum choreograph to make him look good, his Second Finance Minister was caught red-handed telling tall tales about 1MDB on live television.

In fact, Dato’ Seri Ahmad Husni Hanadzlah told at least 3 mighty tall tales on the RTM1 Dialogue “1MDB: Where Did the Money Go?” in a vain attempt to convince the audience that all is well at the wholly owned subsidiary of the Ministry of Finance.

Firstly, when the host raised the question I tweeted, with regards to the US$1.2 billion paid by 1MDB to Good Star Limited using the pretext of a loan to Petrosaudi International Limited, Dato’ Seri Ahmad Husni deflected it by claiming that the media only claimed US$700 million and the opposition is always lying.

He then tried to cover up even the US$700 million siphoned to Jho Low’s company, by claiming that 1MDB has gotten back all the money from Petrosaudi International and even made a tidy profit of US$488 million. Hence the issue of money being siphoned, and Jho Low’s involvement is immaterial or does not arise.

Dato’ Seri Ahmad Husni was obviously attempting to make light of a very grave matter. Otherwise, how could a Finance Minister not know that the allegations that Jho Low’s company siphoned US$1.2 billion has been published not only in blogs and major news portals, but also the leading financial papers like The Edge . While US$700 million was transferred to Good Star directly in 2009, another US$160 million and US$330 million was transferred in the 2010 and 2011 financial years respectively, totally US$1.2 billion.

What’s more, the so-called “profit” is a lie because the alleged US$1.1 billion (which includes the US$488 million profit) sitting in BSI Bank Singapore isn’t cash but in units of assets of indeterminate value.

Secondly, the Second Finance Minister made a complete fool of himself by claiming that it is a normal practice for Auditors to be changed or “rotated” every 3 years. While that might possibly explain why KPMG was replaced with Deloitte in 2013, it didn’t at all explain why Ernst & Young quit even before it signed its first accounts in 2010!

However more pertinently, the above argument by Dato’ Seri Husni is a complete piece of fiction because there is no such principle for auditor rotation every 3 years. No other Ministry of Finance owned or Government-linked companies ever rotated their Auditors with any regularity.

While the makcik and pakciks watching the live screening at home may be swayed by his bullshit, the Minister has single-handedly destroyed the credibility of his office in the local and international financial community. Bankers and investors alike must think that Malaysia has an idiot as a Finance Minister.

However, the tallest of the tall tales told by Dato’ Seri Husni must be when he claimed that Syarikat Prasarana Bhd, a completely unrelated Finance Ministry subsidiary, won a RM215 million bid to operate and maintain a Metro line in Saudi Arabia in May 2015 through the efforts of 1MDB. This was allegedly a result of 1MDB’s joint venture with Petrosaudi International in 2009. What the Minister didn’t say was that the joint venture was already disbanded in March 2010, long before Prasarana’s bid into secure the project.

The Second Finance Minister was caught with his pants down when The Sun Daily reported that Dato’ Shahril Mokhtar tweeted “As a former CEO of Prasarana I started d venture into Saudi Arabia and it has got nothing to do w Petro Saudi.” The tweet has since been deleted but the damage is already done – Dato’ Seri Ahmad Husni’s erstwhile relatively trustworthy reputation has been blown to smithereens.

The failure of the Second Finance Minister to explain truthfully to the Malaysian public, coupled with the Prime Minister’s disgraceful no show at the “Nothing To Hide” forum staged just for him, have proven that it is impossible to cover up the RM42 billion 1MDB scandal. Both Dato’ Seri Najib Razak and Dato’ Seri Ahmad Husni Hanadzlah have now got no other choice but to resign disgracefully from the Cabinet.

Tony Pua

Friday, June 05, 2015

900% - TRX, Bandar Malaysia Revaluation Nothing Short of Daylight Robbery

Second Finance Minister Dato’ Seri Ahmad Husni Hanadzlah let slip another bombshell during his RTM1 live interview on the valuation of 1MDB’s Tun Razak Exchange and Bandar Malaysia.

I had eagerly followed Dato’ Seri Ahmad Husni Hanadzlah’s live television interview with RTM1 to hear the Second Finance Minister’s explanation on where did 1MDB’s money went.

While there were many other oft-repeated excuses to explain the “missing funds” and his refusal to entertain questions with regards to the enigmatic Jho Low were widely publicised in news reports, what stunned me was Dato’ Seri Ahmad Husni’s revised valuation of 1MDB’s real estate properties.

As he rattled off the list of highly valued assets in 1MDB’s possession, he explained that the 70-acre Tun Razak Exchange (TRX) and 495-acre Bandar Malaysia are now worth RM7 billion and RM11 billion respectively. He argued that their combined value of RM18 billion will go a long way to proving that 1MDB will comfortably pay off its monster debts over the longer term.

These revised valuations are shockers because even the previously revised valuations presented in the 31 March 2014 financial statements are only worth a fraction of the newly disclosed figures. The Tun Razak Exchange land belonging to KLIFD Sdn Bhd was already then revalued to RM2.7 billion. Similarly, the Sg Besi military airbase land sold to Bandar Malaysia Sdn Bhd was then revalued to RM4.29 billion. These numbers add up to barely RM7 billion.

The question hence is how did the valuations of these pieces of properties leap by 157% in just one year?

Worse, these properties were purchased from the Malaysian Government at only RM194 million and RM1.69 billion back in 2011 and 2012 respectively. In less than 5 years, 1MDB gets to “profit” nearly 900% despite having done almost nothing on these pieces of prime land over the last few years.

We want to know if the 2nd Minister of Finance was spewing gibberish and just plucked these new outlandish valuations out of thin air to present an optimistic picture of 1MDB. How were these new valuations arrived at? Or are there more sinister reasons why the values have been massively inflated?

I had written earlier on 31 May 2015, in response to Dato’ Seri Ahmad Husni’s earlier statement that the TRX and Bandar Malaysia will be made separate “independent” entities owned by the Ministry of Finance. I had expressed my concern that the Minister’s statement meant that the Federal Government will essentially acquire KLIFD and Bandar Malaysia from 1MDB at very high prices.

Based on March 2014 accounts, I had already warned that if the Government pays 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.

However, based on the latest bombshell from the Second Finance Minister, the Government would now have to fork out a whopping RM18 billion, or as much as RM21.2 billion if KLIFD and Bandar Malaysia’s associated loans are taken into consideration.

Is this the real, devious and deceptive scheme the Ministry of Finance is planning to cover up the massive multi-billion ringgit losses and missing money in 1MDB while keeping the pretence that everything is above board? If so, it is certainly nothing short of daylight robbery of the tax-payers’ monies.

Dato’ Seri Ahmad Husni must provide a detailed explanation on the above and not evade it like he did the Jho Low poser. This isn’t some alleged tabloid speculation. These bits of information came from the Minister himself and it would be the ultimate act of irresponsibility for him to refuse response to the above questions.

Tony Pua

Thursday, June 04, 2015

Thanks for the Disclosure Arul, But Can You (Please) Answer the Question?

1MDB President Arul Kanda’s disclosure of where the RM42 billion of 1MDB debt not only disclosed nothing new, it raised more questions.

1MDB President Arul Kanda issued a statement late yesterday out of the blue to quash the allegations that there was money missing in 1MDB. He said,

"We provide a summary of what the RM42 billion has been used for, information that is fully disclosed in 1MDB's audited and publicly available accounts from March 31, 2010 to March 31, 2014. We trust this clarification will help to clear any confusion on this matter."

In the statement, Arul Kanda outlined that RM18 billion was for purchasing independent power producers, RM1.7 billion for purchasing land, RM5.8 billion for financial expenditure and RM16.4 billion for investments funds which constituted the RM41.9 billion of debt.

For the RM16.4 billion investment funds, the further breakdown was RM6.1 billion in Brazen Sky, RM4.2 billion in deposit with Abu Dhabi’s Aabar Investment and RM5.1 billion in 1MDB Global Investment Limited (GIL) funds.

None of the above figures are new as we have already derived as much from the March 2014 Financial Statements. As such, none of the above explains the criticisms which have been rained on 1MDB to date.

The questions I’ve been asking, both in and out of Parliament, over the past 2 to 3 years included what exactly were these RM6.1 billion of investment in Brazen Sky which was parked in Cayman Islands? Why is it that despite Arul Kanda announcing that all of Brazen Sky’s investments have been “redeemed”, there’s still no cash at all in the BSI Bank Singapore? This is despite Arul Kanda assuring us in February that the cash is sitting safely in the bank.

I’ve also repeatedly asked where is the RM5.1 bllion of funds invested by 1MDB Global Investment Limited and yet the Finance Minister, Dato’ Seri Najib Razak consistently and repeatedly refused to list the investments made by 1MDB GIL in Parliament. He even refused to disclose where the fund is managed or located!

What’s more, we were fully aware that 1MDB has RM5.1 billion “deposited” with Aabar Investment. However, our question was why did 1MDB agree to such onerous “loan-shark” terms to secure a US$3.5 billion guarantee from Abu Dhabi’s International Petroleum Investment Corporation (IPIC)? Why borrow and get to use only 60% of the funds?

Hence the revelation by Arul Kanda essentially revealed nothing that we don’t already know. The questions which we asked however, remained completely unanswered.

Worse, his disclosure raised even more questions for 1MDB.

He had detailed that the RM5.8 billion for financial expenditure included - RM4.5 billion for cost of finance and working capital, RM0.9 billion for foreign exchange cost and RM0.4 billion for taxes.

Is Arul Kanda trying to tell us that 1MDB took additional loans to pay interest to its loans and its taxes? Is he confirming that the returns from whatever assets purchased with the earlier loans couldn’t even cover interest and tax expenses such that 1MDB had to borrow an additional up to RM5.8 billion to pay for them?

Does that not imply that the whole 1MDB investment strategy is an absolute disaster and the management is at best, completely incompetent or at worst, involved in fraud and embezzlement?

We call upon Arul Kanda to stop being coy with the truth and start answering the questions in full. 1MDB cannot regain any trust or confidence from Malaysians by just giving half-baked answers and pretend to itself that it managed to quash all doubts and criticisms. It certainly does not “clear any confusion”, but instead it encourages even more suspicion and speculation as to why 1MDB is so unreasonably evasive.

Tony Pua