Wednesday, May 11, 2016

Deputy Finance Minister calls 1MDB's engagement with bondholders "a good move" despite its crumbling financial status

1MDB  is  now  on  the  verge  on  defaulting  on  the  interest  payments  for  its  second  US$1.75 billion bond, after defaulting on the first US$1.75 billion bond last month.

1MDB  has  been forced  to “engage”their  bondholders to negotiate  the  defaults in order to limit the financial damage to both the company and its shareholder, the Ministry of Finance (MoF).

And  yet,  under  such  dire  circumstances,  Deputy  Finance  Minister  Johari  Abdul  Ghani  can everything  is  hunky-dory,  call “1MDB's  engagement  with  its  US  dollar-denominated bondholders is a good move”.

Worse, the MoF is clearly taking a cavalier attitude to the entire financial fiasco by claiming that MoF does “not want to interfere with this because it is between two corporate entities to go and sort out their problems”.

This  must  be  one  of  the  most  irresponsible  statement  by  the  newly  appointed  Deputy Finance Minister who replaced the previous bumbling Datuk Ahmad Maslan.

The  above  bonds  were  guaranteed  by  International  Petroleum  Investment  Corporation (IPIC). However, did he overlook the fact that the MoF has provided an indemnity to IPIC for losses and damages suffered by the latter?

If  it  was  merely  a “dispute”  between “two  corporate  entities”,  then  why  did  MoF  agree  to provide the indemnity to IPIC in the binding term sheet signed between IPIC and 1MDB in May last year?

Worse, while 1MDB is forced to “engage” with bondholders to “restore market confidence”and “prevent  panic”,  what  about  ordinary  Malaysian  tax-payers  who  are  now  liable  for  a multi-billion dollar bailout of the debt-ridden 1MDB?

Doesn’t Datuk Johari see it necessary to “restore the confidence of” and “prevent panic” by Malaysians?

1MDB  has  already  defaulted  on  the  first  US$1.75  billion  bond. It  will  soon  default  on  the second US$1.75 billion bond. 1MDB has at the same time cross-defaulted on another RM7.4 billion of Islamic bonds and possibly a further RM800 million loan from SOCSO. That means that Malaysians  are  liable  to  for  US$3.5  billion  and  RM8.2  billion, or  a  whopping  total  of approximately RM22.2 billion of 1MDB’s mess.

The  above  has  yet  to  take  into  consideration  another  US$3  billion  bond  which  may  be affected at some time in the near future.

Instead of pretending that everything is A-OK, Datuk Johari must explain to Malaysians if we have to foot the bill.

He  has  earlier  promised  the  Parliament  in  December  last  year  that  the 1Malaysia Development Berhad (1MDB) will resolve “its debt and cash flow issue more quickly without help from the Government.”Is this assurance still valid?

Both  the  Prime  Minister,  Datuk  Seri  Najib  Razak  and  1MDB’s  President  Arul  Kanda  have boasted that the rationalisation exercise has been a success and has been completed. Did they both lie to Malaysians to provide a false front for 1MDB?

If  the  answers  to  the  above  questions  are  above  Datuk  Johari’s  pay-grade,  then  he  must persuade  his  boss,  Datuk  Seri Najib Razak,  who is  also  the  Finance  Minister  to  explain  the imploding 1MDB disaster to Malaysians.

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