PUTRAJAYA: Finance Minister Lim Guan Eng slammed 1MDB president and chief executive Arul Kanda as being “utterly dishonest and untrustworthy” at a meeting to discuss the government-owned company’s financial affairs today.
Lim accused Arul Kanda of “singing a completely different tune” compared with statements he had made on 1MDB’s financial viability before the change of government.
“Arul Kanda’s response was utterly shocking and preposterous,” he said in a statement.
Lim also said he had instructed the legal advisers to the ministry to review Arul Kanda’s position as 1MDB president.
Today’s meeting comes a day after Lim had said that the Treasury had been bailing out the troubled state firm with some RM7 billion over the past one year.
Lim said the finance ministry under former prime minister Najib Razak had made payments amounting to RM5.05 billion to Abu Dhabi fund IPIC, as part of a settlement agreement over a disputed investment.
Lim said he had instructed his ministry to take steps to appoint PricewaterhouseCoopers (PwC) to conduct a special position audit and review of 1MDB so that Malaysians would know the true financial state of affairs in 1MDB.
“We would then be able to determine the cost of the shenanigans to the taxpayers.
“We will submit the PwC Report to the 1MDB Special Committee set up by the prime minister once it is completed.”
Lim said he had meetings with the 1MDB board of directors together with the three deputy treasurers-general, Zauyah Md Desa, Ahmad Badri Mohd Zahir and Asri Hamidon.
The first meeting was with 1MDB board of directors Norazman Ayob and Kamal Mohd Ali.
The second was with Arul, who was accompanied by the former chief financial officer (CFO), Azmi Tahir, and the former general counsel, Ivan Chen.
The purpose of the meetings were to determine the financial status of 1MDB, especially with regards to its ability to repay and service its debt obligations.
1MDB can’t service its interest due in April and May 2018
Lim said the 1MDB directors confirmed that 1MDB was “insolvent” and was unable to repay its debts.
Azmi, the former CFO, had written to the ministry in March this year to state that 1MDB would not be able to service its interest due in April and May 2018.
“However, Arul when asked, highlighted that he is on ‘garden leave’ until the end of his contract next month.
“Therefore, he claimed that he is in the dark as to the financial situation of the company.
“I then asked the board of directors as to what had happened to the US$940 million worth of investment ‘units’ previously held with BSI Bank, Singapore, as well as the US$1.56 billion worth of overseas investment funds, belonging to 1MDB Global Investments Limited.
“Together, these investments are worth purportedly some RM9.8 billion. If redeemed, they would be more than sufficient to meet 1MDB’s financial obligations for the next few years.
“The board of directors, who would be supplying the ministry with the 1MDB board meeting minutes, claimed they had repeatedly disputed the value and even the existence of these investments during the monthly board meetings.”
Lim said this was because the 1MDB management had repeatedly failed to supply the board with any evidence over the existence of these investments over the past two years.
“One of the directors, Kamal, called these 1MDB investments ‘a scam’.
“Separately, Azmi responded that these ‘investments’ existed even though BSI Bank was wound up.
“He gave the unbelievable excuse that the fund managers refused to communicate with 1MDB in writing because of the on-going investigations by the United States Department of Justice.”
Lim said Arul, on the other hand, claimed that all financial matters were handled strictly by the company CFO and he was absolutely uncertain as to what the value of these “investments” are or whether they even exist in the first place.
Lim said: “It is completely unbelievable that a highly paid and ‘experienced’ investment banker can be so irresponsibly clueless as to not know whether RM9.8 billion worth of investments are even real.
“Arul’s response was utterly shocking and preposterous because prior to the change of government, he had toured the country preaching the financial viability of 1MDB and the soundness of its investments.
“In fact, Arul is today singing a completely different tune from the song he sang to the Public Accounts Committee as recorded in the Hansard.”