“The parliamentary Public Accounts Committee (PAC) has already established the fact that the government was obligated via explicit and implicit guarantees provided for USD3.15 billion and RM5.8 billion of 1MDB borrowings or approximately RM18 billion in total”
Prime Minister Najib Abdul Razak can no longer escape the need to explain the spectacular disaster that is 1MDB, which happened under his watch, said Pua. “He must explain how 1MDB was going to fund the immediate repayment of USD1.1 billion demanded by IPIC.”
Najib, added Pua who is also DAP National Publicity Secretary, must also explain why the Auditor-General has been unable to confirm USD7 billion of 1MDB’s transactions, cash and assets overseas due to the complete lack of cooperation from 1MDB. “The Prime Minister may have something to hide.”
“The epic collapse of the 1MDB-IPIC debt-asset swap deal means the entire 1MDB rationalization exercise has failed and a multi-billion dollar bailout by the Ministry of Finance was in the works.”
However, he resumed, the most critical anchor to the entire rationalization exercise was the debt-asset swap agreement with IPIC involving up to USD4.7 billion, by far the biggest component in the rationalization plan. “The USD4.7 billion included USD3.5 billion of 2012 bonds, USD1 billion of IPIC advance provided in June 2015 and up to approximately USD200 million of interest payments during the course of the year.”
“Its failure not only now places 1MDB itself at risk, but now involves a bailout by MoF.”
Pua was commenting on Monday’s announcement by IPIC which accused 1MDB of failing to honour the terms of the USD4.7 billion debt-asset swap deal. “It proved 1MDB’s boasts to be ludicrously premature.”
“This follows confirmation that USD3.51 billion of 1MDB’s funds has been siphoned to a fraudulent ‘Aabar Investment PJS Limited’ which was established in the British Virgin Islands (BVI).”
IPIC, quoted Pua, has clearly announced to the London Stock Exchange, “1MDB and MoF continue to be bound by their respective obligations under the terms of the Binding Term Sheet, including their continued indemnification of IPIC and Aabar for any non-performance under the Binding Term Sheet and in relation to any claims which may be made against IPIC pursuant to the guarantees entered into by IPIC in respect of certain 1MDB group bond issuance.”
This clearly means that should 1MDB fail to repay up to USD4.7 billion to IPIC and/or the bondholders, then the MoF has to fork out the difference based on the indemnity provided by the MoF in the debt asset swap agreement. “When I had pointed out this sleight of hand by 1MDB and MoF in June last year, 1MDB had angrily refuted my warnings and concerns,” recalled the MP.
All Arul Kanda has achieved to date was to sell Edra Global at RM9.93 billion which represents a loss of RM2.27 billion as the assets were acquired for RM12.1 billion, lamented Pua. “The loss widens further if one were to take into account the dividends received versus the interest paid on loans taken for the purposes of the acquisition.”
Even for the sale of 60 per cent of Bandar Malaysia, pointed out Pua, only a refundable deposit of RM741 million was paid. “The deal is only expected to be completed by June 2016.”