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‘Double bailout of 1MDB and Tadmax an abuse of power’

 | June 17, 2015

MP Tony Pua takes PM to task for letter of support which allowed 1MDB to borrow US$150 million from EXIM Bank to purchase land from Tadamax.

tony pua

PETALING JAYA: Opposition MP Tony Pua today chided Prime Minister Najib Razak for issuing a controversial second ‘letter of support’ for 1Malaysia Development Berhad (1MDB) despite the company being under immense scrutiny and facing financial meltdown.

He added that the Deputy Finance Minister Chua Tee Yong’s confirmation to Parliament on Monday that a previously undisclosed US$150 million ‘letter of support’ had been given in favour of 1MDB proves beyond doubt that the Cabinet had abused its powers to carry out a double bailout of 1MDB and Tadmax Resources Bhd.

According to Pua, EXIM Bank had in March this year granted 1MDB a US$150 million loan to enable 1MDB to purchase a 310-acre plot of land in Pulau Indah from Tadmax Resources Berhad. Tadmax ,Pua said, was linked to Kuala Dimensi Sdn Bhd, the company embroiled in the Port Klang Free Zone scandal which had previously caused massive losses to the government.

Pua alleged that the loan by EXIM Bank constituted an abuse of power because the bank was not mandated to provide loans for domestic property purchases.

The PJ Utara MP claimed that even if EXIM Bank was permitted to grant loans to companies for ‘strategic’ investments as claimed by the Deputy Minister, 1MDB would still not qualify.

“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,” Pua asked.

“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,” he queried.

“Isn’t this an abuse,” he asked adding that in the end the loan would only serve to increase 1MDB’s debts and liabilities.

Pua also questioned why the government had allowed the transaction to go through despite the on-going 1MDB ‘rationalisation exercise,’ pointing out that it would not have been difficult to terminate the transaction and cut its losses on investments.

Instead, he suggested that the acquisition proceeded with the explicit support of the Minister of Finance because it represented a double bail-out of 1MDB and also Tadmax.

“Tadmax CEO Faizal (Abdullah) 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,” Pua noted.

“Tadmax is bleeding financially with a net loss of RM8.52 million on revenue of only RM3.55 million over the same period,” the DAP lawmaker added.

Former Kuala Dimensi CEO Tiong King Sing presently holds a 5.53% interest in Tadmax, according to Pua. Its directors include former UMNO treasurer Abdul Azim Zabidi, and Faizal Abdullah who is the Deputy Chairman of UMNO Kapar Division.


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