Najib should not set bad example to other Ministers by using threat of legal suit against Tony Pua to evade accountability
The Prime Minister, Datuk Seri Najib Razak, should not set the bad example to other Ministers by using the threat of legal suit against the DAP MP for PJ Utara Tony Pua to evade accountability and he should make a Ministerial statement in Parliament on Monday to answer teeming questions on 11 aspects of the multi-billion ringgit 1MDB scandal, viz:
- Why did the Government issue a “letter of support” for 1MDB’s US$3.0 billion (RM9.6bn) bonds issued in Mar 2013 which not only explicitly binds the Government to repay the debt in the event 1MDB fails to do so, but surrendered legal jurisdiction to the Courts of London? Despite the denial that the letter represents an explicit “guarantee”, why isn’t this amount recorded as a Federal Government contingent liability since Malaysia is legally bound to repay the debt in the event of 1MDB default?
- Why did 1MDB pay an average of more than 10% in “certain commissions, fees and expenses” to raise its loans – US$3.0 billion (Mar 2013) and US$1.75 bilion (May 2012), when other developing nations such as Uruguay pay as little as 0.1% to raise US$2.0 billion? Even Penerbangan Malaysia Bhd which raised US$1 billion recently paid only 0.5% in such fees.
- Why did 1MDB divert US$1.1 billion of its US$3.0 billion raised by its subsidiary, 1MDB Global Investment Limited to repay the former’s own debt and cover its operating expenses? The “Use of Proceeds” of the US$3.0 billion bond as stated in the investors’ prospectus was to invest in a 50:50 joint venture with Aabar Investment. Additionally US$1.56 billion is parked at an unknown investment fund overseas while the proposed joint venture is still-born after 18 months.
- Why did 1MDB agree to accept a corporate loan guarantee by International Petroleum Investment Corporation (IPIC) of Abu Dhabi on behalf of 1MDB’s US$3.5 billion of bonds with such onerous terms – 40% security deposit and a 10-year option to acquire 49% of 2 1MDB subsidiaries. The 10-year option is worth at least US$250 million. As a result of the loan’s 5.99% interest, the IPIC guarantee and the 10% of “certain commissions, fees and expenses”, the effective cost of fund to 1MDB for the US$3.5 billion loan is a staggering 13.98%.
- Why did 1MDB invest US$1 billion in a joint-venture with PetroSaudi in 2009, a company with no track record and dubious origins and subsequently converted the investment into a US$1.2 billion loan, which was subsequently increased to US$1.7 billion? Although 1MDB claimed the loan as been redeemed in full and the proceeds parked in Cayman Islands, it must answer for the risks taken as well as the complete lack of transparency and good governance as these sums were entirely funded by debt.
- Why did 1MDB invest the US$2.32 billion proceeds from the redemption of Petrosaudi loans in 2013 in an opaque investment fund with Bridge Capital Partners in Cayman Islands, an unknown fund manager with questionable origins and no comparable track record?
- Why did the Ministry of Finance hastily acquire a 1MDB subsidiary, SRC International Sdn Bhd in March 2012 which has then just received a RM4 billion loan from Kumpulan Wang Amanah Pesara (KWAP) guaranteed by the Federal Government?
- Why did 1MDB overpay for its power assets – Genting Sanyen (RM2.38bn) and Tanjong Energy (RM8.5bn) which required an immediate impairment of RM1.2 billion out of its recorded goodwill of RM2.6 billion? As a result of the high price of acquisition, The Edge Weekly has estimated an annual return on investment of only approximately 5%, lower than the cost of funds to acquire these companies.
- Why did the Ministry of Energy, Green Technology and Water reverse it policy of open tenders for new power plants to directly and hastily award a 50MW solar-power plant and a 2,000MW gas-turbine power plant to 1MDB before even the tariffs are agreed upon?
- Why did the Federal Government sell super-prime land to 1MDB at heavily discounted prices – Bandar Malaysia (RM1.6 billion) and Tun Razak Exchange (RM194 million), allowing 1MDB to revalue their properties by a whopping RM5.22 billion in less than 5 years?
- Why did international auditing firms – Ernst & Young and KPMG quit their lucrative work with 1MDB in 2009 and 2012 respectively? Why hasn’t 1MDB subsidiaries submitted their financial statements to the Companies Commission despite some being overdue by more than 2 years?
Although the current budget parliamentary meeting is to end on Thursday, 27th November 2014, it will the height of irresponsibility for Najib as Prime Minister, Finance Minister and Chairman, 1MDB Board of Advisers to evade and avoid accountability for the numerous questions that have been raised over the 1MDB scandal and which have not been satisfactorily explained by the Deputy Finance Ministe, Datuk Ahmad Maslan. Najib should in fact arrange for a full debate in Parliament to be held on his Ministerial Statement on 1MDB.