Who killed Bandar Malaysia deal?


By Tony Pua

Who made the decision to terminate the agreement for the sale of Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings?

The new season of the blockbuster 1MDB political drama thriller could not have kicked off on a more suspenseful note.

Just when everyone thought (and some were hoping) that the show had run its course and the audience had lost interest, the producers of the show have returned with some impeccable scriptwriting to keep Malaysians glued to the ever-evolving scandal.

Soon after the IPIC-1MDB debt “settlement” agreement where the finance ministry agreed to assume the guarantee provided by IPIC for 1MDB’s US$3.5 billion worth of bonds, the ministry announced on May 3 that the agreement to sell a 60% interest in Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH) had been terminated.

The world was stunned when the ministry’s wholly-owned subsidiary, TRX City Sdn Bhd, which owns Bandar Malaysia announced that the deal with the IWH consortium had collapsed because the latter did not meet payment obligations for its 60% stake.

The consortium then disputed this claim.

While clarity on the above dispute remains unclear – with neither TRX City or IWH providing any evidence to substantiate their claims – there is now a new mystery as to who authorised the decision to terminate the agreement.

Based on Malaysiakini’s report entitled “Arul is against termination of Bandar M’sia deal”, government sources told the news portal that the RM7.41 billion deal was terminated without notifying Arul Kanda, who is president and CEO of 1MDB.

However, at the material times, Arul Kanda was also chairman of Bandar Malaysia Sdn Bhd as well as on the board of directors of TRX City.

Since Arul Kanda was oblivious to the termination of the Bandar Malaysia deal, it meant that the board of directors of both TRX City and Bandar Malaysia never deliberated and made a decision on the matter involving a whopping RM7.41 billion transaction.

The question then arises as to whether Prime Minister Najib Razak made the unilateral decision to terminate the agreement.

If so, it should be clarified as to what powers does the finance minister have to make material and critical decisions of government companies unilaterally, by-passing the companies’ board of directors?

Did Najib abuse his powers as the finance minister and prime minister by terminating the IWH agreement?

It should be recalled that one of the biggest controversies over the 1MDB scandal was the powers granted to the prime minister to make all final key decisions in the investment company.

Clause 117 of 1MDB’s Memorandum of Articles and Association had stated that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.

It was Najib Razak who gave the ultimate approval for all the billions of ringgit of lost investments carried out by 1MDB with Petrosaudi International Limited and Aabar Investment PJS Limited.

The controversial clause has since been deleted upon recommendation by the Public Accounts Committee.

However, it appears that Najib is still calling the shots behind the scene, bypassing key Treasury guidelines, as well as all forms of corporate governance and accountability which we have demanded, to avoid a repeat of the 1MDB imbroglio.

We await the next episode with bated breath.

Tony Pua is Petaling Jaya Utara MP and DAP Publicity Secretary.

With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s (or organisation’s) personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.