Friday, May 12, 2017

The Ministry of Finance confirmed our worst fears – that tax-payers continue to bear the cost of 1MDB’s multi-billion ringgit losses

Both The Malaysian Insight yesterday and the Edge Financial Daily today confirmed that the Ministry of Finance (MoF) has fully refunded the RM741 million deposit paid by the Iskandar Waterfront Holdings (IWH) consortium for the latter’s 60% acquisition of Bandar Malaysia.

This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.

Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.

When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.

Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.

Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017.  This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.

The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.

The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.

In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.

The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed.  This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project.  The funds were instead siphoned for 1MDB’s “other corporate purposes”.

In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.

When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return.  However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.

Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.

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