New 1MDB audit into ‘scam’ behind RM9.8 billion ‘units’

Kamal Mohd Ali, a 1MDB board member, described the “units” as a scam, says the Finance Ministry.

PETALING JAYA: Some RM9.8 billion in investments by 1MDB, previously referred to mysteriously as “units”, have been described by a 1MDB board director as “a scam”, the Treasury said today.

In a statement today after meetings with the 1MDB board and 1MDB president Arul Kanda Kandasamy, Finance Minister Lim Guan Eng said he had ordered a special audit and review of 1MDB’s finances.

Copies of the board minutes are also to be scrutinised by the ministry.

Lim said the 1MDB management had repeatedly failed to produce any evidence about the existence of the investments over the past two years.

One director, Kamal Mohd Ali, described the investments as “a scam”, Lim said.

The audit, by PriceWaterhouseCoopers, would determine “the cost of the shenanigans to the taxpayers”. A report will be submitted to the prime minister’s 1MDB Special Committee.

He said the 1MDB directors had confirmed that the company is insolvent and unable to pay its debts. Interest payments were due in April and May this year.

Lim said 1MDB president Arul Kanda Kandasamy, who is on “gardening” leave until the end of his contract next month, had said he was in the dark about the company’s financial situation as all financial matters then were handled strictly by the company’s chief financial officer.

Arul said he was uncertain about the value of these “investments” or whether they even existed in the first place.

Lim said he had asked the 1MDB board of directors about US$940 million worth of “investment units” previously held with BSI Bank Singapore, and US$1.56 billion in overseas investment funds, belonging to 1MDB Global Investments Limited.

The investments, purportedly amounting to RM9.8 billion would be more than sufficient to meet 1MDB’s financial obligations for the next few years.

However, “the board of directors claimed they had repeatedly disputed the value and even the existence of these investments during the monthly board meetings.”

The chief financial officer at the time, Azmi Tahir, responded that these “investments” existed, even though BSI Bank had been wound up, and that the fund managers had refused to communicate with 1MDB in writing because of 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 existed in the first place.

The 1MDB directors and the 1MDB management met separately with Lim and the Ministry’s three deputy treasurers-general, Zauyah Md Desa, Ahmad Badri Mohd Zahir and Asri Hamidon.

The directors who attended were Norazman Ayob and Kamal Mohd Ali, and the 1MDB management team comprised Arul, former CFO Azmi Tahir, and former general counsel Ivan Chen.

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