What about 3rd letter of support, Mr Prime Minister?

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By Tony Pua

In November 2014, when it was first discovered that Najib Razak had signed a “letter of support” to enable 1MDB to secure a US$3 billion bond in March 2013, it was immediately met with denial in Parliament.

On Nov 6, 2014, Ahmad Maslan, the then deputy finance minister had insisted in Parliament that the government did not issue any such “letter of support”.

However, a few days later, he conceded to the media that such a “letter of support” existed and he was ultimately forced to apologise to the House for his “error” on Nov 18, 2014.

The existence of this “letter of support” had major financial implications for the government because it stated that “In the event, 1MDB as shareholder of the issuer fails to provide the required funds… Malaysia shall then step in to inject the necessary capital into the issuer or make payment to ensure the issuers obligations are fully met.”

This meant that the Malaysian government had effectively guaranteed, one way or another, the US$3 billion 1MDB borrowing above.

As reported by The Edge Financial Daily on Nov 12, 2014, Ahmad Maslan had said that there was “no other letter of support for 1MDB apart from the US$3 billion” during a media conference at the Parliament.

Further on March 16, 2016, when questioned by Indera Mahkota MP Fauzi Abdul Rahman, the finance minister had confirmed that there were only two “letters of support” which were issued by the government, including another for 1MDB’s US$150 million borrowing from Bank Exim in March 2015.

However, we have since discovered, via information provided by the latest United States Department of Justice filing to seize assets acquired with funds laundered from 1MDB that there exists another secret “letter of support” to borrow US$975 million from a Deutsche Bank-led consortium in September 2014.

The US DoJ suit stated that “Malaysian Official 1 (MO1) had, on behalf of the Government of Malaysia, provided a Letter of Support to Deutsche Bank in connection with the US$975 million loan”.

The suit further noted that “internal Deutsche Bank records reflect that 1MDB officials opted to provide a Letter of Support signed by Malaysian Official 1, rather than some form of guarantee by 1MDB… at least in part because a letter of support did not require Bank Negara or Cabinet approval. At the request of 1MDB, all references to the Letter of Support were removed from the Facility Agreement.”

Like the earlier “letters of support”, the government agreed to financial support to 1MDB to ensure the company’s ability to repay. Najib even “waived its sovereign immunity in connection with disputes arising out of the Letter of Support”.

I have submitted a simple question in the current sitting asking the prime minister to confirm if he had indeed issued a “Letter of Support” in connection to the US$975 million loan from Deutsche Bank. The question has been rejected on the basis that it was “sangkaan”, or “presumably questionable assumptions”.

There was no assumptions in my question. I had asked a simple matter as to whether there was indeed a “letter of support” issued in September 2014. If there isn’t, just say “no”. What’s so difficult?

Tony Pua is Petaling Jaya Utara MP and DAP national publicity secretary.

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