Tuesday, May 09, 2017

The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia

Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.

Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.

Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.

Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.

Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.

In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.

The Malaysian Insight quoted sources that “there are potential conflicts of interest”.  This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia.  What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?

Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards.  He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017.  Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.

Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another.  If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour?  Why didn’t the switch take place in March itself, when the transfer was executed?

Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.

The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?

Friday, May 05, 2017

Iskandar Waterfront Holdings Consortium should be forthcoming with the facts and figures in TRX City dispute instead of being cryptic and wishy-washy in statements

The conflicting statements issued by TRX City, a wholly owned subsidiary of the Ministry of Finance, and the consortium led by Iskandar Waterfront Holdings (IWH) have become a complete farce.

In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.

TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.

In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.

"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.

So who is telling the truth?  To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?

Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.

Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.

Otherwise, there will be no credibility to the counter-claims made by ICSB.  On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.

However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.

Incoming RM42 billion taxpayers' bailout: Bandar Malaysia deal collapse, sale of Edra Energy at a loss and 1MDB-IPIC “settlement” mark total failure of 1MDB “rationalisation exercise”

The entire 1MDB “rationalisation exercise” announced as “completed” by the Prime Minister on 2016 New Year’s Day has been completely unravelled with the latest announcement that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed.

The Government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.

The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets.  Edra Energy had acquired the power plants for a total of RM12.1 billion.  In addition, the Government of Malaysia had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.

However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion.  The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions which amounted to more than RM3 billion over the period.

Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds which were raised for the power plant acquistion in 2012.

As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Ministry of Finance (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.

This had come as a complete shock to Malaysians as 1MDB and the Finance Ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.

Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants.  The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.

Now with the latest collapse of the proposed sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings Bhd (IWH), the entire “rationalisation” exercise architected by Arul Kanda and hailed by the Prime Minister and Cabinet has been completely unravelled.

The devastating implication of the rationalisation failure staring at our faces is staggering.  Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians tax-payer will have to pay for most of 1MDB’s still-outstanding debts including:

(i)             RM5 billion 30-year bond guaranteed by the Federal Government issued in 2009;
(ii)           US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc.;
(iii)          US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by the Minister of Finance, Dato’ Seri Najib Razak;
(iv)          US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc,;
(v)            RM800 million loan from SOCSO in 2010, guaranteed by the Federal Government; and
(vi)          RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF

The above sums up to RM8.2 billion and US$7.73 billion, or a combined total of RM41.7 billion

While I have called for Arul Kanda, the 1MDB President and CEO to resign or be sacked yesterday, it is the Prime Minister, Dato’ Seri Najib Razak who must be ultimately accountable.

He is not only the official with the ultimate decision-making authority in 1MDB as specified in the company’s Memorandum and Articles of Association, his promises of resolution of the above scandal without a bailout by the Malaysian Government have been irredeemably broken.

What’s more, banking documents exposed by the United States Department of Justice (US DOJ) have shown Dato’ Seri Najib Razak to have received in his personal bank account in Malaysia, the sums of US$731 million originating from 1MDB.  He has never denied the US DOJ allegations and steadfastly refused to provide any explanations to the Parliament or the Malaysian public.

With Dato’ Seri Najib Razak’s iron-grip control over UMNO and Barisan Nasional, the country’s legislative, enforcement and prosecution institutions, it is now up to Malaysians to sack the Prime Minister in the coming general elections to ensure that he is made accountable for the single biggest financial scandal in the history of Malaysia.

Thursday, May 04, 2017

Who will refund the RM741 million deposit paid by Iskandar Waterfront Holdings to acquire the now aborted Bandar Malaysia equity interest – 1MDB or the Ministry of Finance?

The announcement by TRX City Sdn Bhd, now a wholly-owned subsidiary of the Ministry of Finance (MOF), that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed did not come as a surprise at all.

I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value.  For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.

Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.

1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”

The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules.  My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.

With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.

MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.

Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?

Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?

Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia.  If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.

Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance.  His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.

Tuesday, May 02, 2017

Why is the PAC Chairman, Datuk Hasan Arifin as quiet as a mouse over the 1MDB-IPIC “settlement” where the Finance Ministry agreed to assume US$3.5 bil. of 1MDB liabilities from IPIC?

Malaysians are still up in arms over the 1MDB-IPIC “settlement” which was announced less than two weeks ago where the Ministry of Finance has agreed to assume US$3.5 billion of 1MDB bond liabilities which were previously bourne by the International Petroleum Investment Corporation (IPIC) of Abu Dhabi.

The Malaysian Government had agreed to do so despite the fact that both 1MDB and the Cabinet Ministers had in the past insisted that 1MDB had already paid to IPIC’s subsidiary, British Virgin Island-registered Aabar Investment PJS Limited (“Aabar(BVI)”) a total of RM3.51 billion between 2012 and 2014.

The Second Finance Minister, Dato’ Seri Johari Abdul Ghani had previously said he was “very confident” of 1MDB winning the arbitration fight against IPIC.  Despite the bravado displayed, it was 1MDB which capitulated before the arbitration proceedings commenced in full, with the Malaysian parties conceding pretty much to all substantive demands from IPIC.

However, the Second Finance Minister denied any responsibility for the outrageous settlement terms.  Instead, he shifted the blame to Dato’ Seri Najib Razak by pointing out that “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.

Dato’ Seri Johari Abdul Ghani even defended himself by revealing that there was a letter from the BVI Registrar of Companies clearly stating that Aabar(BVI) was indeed a subsidiary of IPIC.

While the existence of such a presumably legitimate letter still does not in itself prove that Aabar(BVI) isn’t a fraudulent set up, it does highlight the fact that the Government’s decision defies all logic.  After all, why would the Government then under all rational circumstances, concede to the demands of IPIC if there was nothing incriminating on the part of 1MDB? As the Malay proverb goes, there must be “udang di sebalik batu”.

This was the reason for my call for the newly-appointed Auditor-General and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

I certainly wasn’t the only one asking for a review.  Even Barisan Nasional Members of Parliament in the PAC, Marcus Mojigoh of Putatan who asked for the above letter to be presented and Aziz Sheikh Fadzir of Kulim Bandar Baru who asked where the payments to Aabar(BVI) went, are keen to obtain answers.

However, instead of responding to requests by multiple parties to re-open the inquiry, the Public Accounts Committee Chairman, Datuk Hasan Arifin has remained as quite as a mouse.  In fact, not only has he not released any statement on an issue of such import, involving more than RM15 billion of tax-payers’ funds, he has been avoiding media enquiries like plague!

I have been informed that he has refused to pick up phone calls, text message or emails from journalists with regards to the above.

Datuk Hasan Arifin’s lack of action is certainly consistent with his track record of covering up for the Najib administration – when he refused to summon the Prime Minister to the PAC as a witness, saying that he has to “cari makan”, and when he secretly and unilaterally amended the finalised PAC Report which was tabled in Parliament.

However, the fact that the loss of US$3.51 billion is staring at Malaysian faces today deserves at the very least, an acknowledgement from the Chairman of the PAC, the very institution conceived to check and scrutinise Government-related expenditures.

If Datuk Hasan Arifin cannot bring himself to, or can’t be bothered to perform his parliamentary and constitutionally entrusted role, he should have the moral decency to resign from his position.  He should give way to someone who is at least somewhat serious about integrity, accountability and being answerable to Malaysians.

Friday, April 28, 2017

Perfect opportunity for Auditor-General and PAC to re-look into 1MDB scandal: review 1MDB-IPIC settlement which had Malaysians bearing US$7.01 bil. to resolve 1MDB’s US$3.5 bil. bond borrowing

Yesterday, the Second Finance Minister, Dato’ Seri Johari Abdul Ghani desperately tried to backtrack from his original assertion which tried to shift the blame for the 1MDB-IPIC “settlement” to the Prime Minister.

The glorified ‘settlement’ had in effect shifted the burden on repaying 1MDB’s US$3.5 billion bond to the Ministry of Finance, despite repeated assertions by 1MDB and Dato’ Seri Johari himself that 1MDB has already paid IPIC US$3.51 billion in the past.  This meant that Malaysians have to bear a whopping US$7.01 billion to resolve 1MDB’s US$3.5 billion bond borrowing before even taking into consideration the annual interest payments of approximately US$200 million!

“I don't report to him. I never contradicted the Prime Minister. Don't try to split me and the prime minister with this matter," the Second Finance Minister told Malaysiakini.

However, I never accused him of “contradicting” the Prime Minister.  I merely repeated what he had said earlier, which was “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.  His own statement clearly showed that while he had all along said that the dispute between 1MDB and IPIC should go to arbitration and that he was “very confident” of the Malaysian parties winning the case, he had to wash his hands off the matter as the matter has been decided by the Prime Minister.

I had then said that if the US$3.5 billion or RM15 billion matter is “beyond [him]” as a Finance Minister, then he might as well resign from his office.

However, Dato’ Seri Johari shot back, asking "Who is Pua to ask me to resign?”  “I don't report to him. I never contradicted the prime minister. Don't try to split me and the Prime Minister with this matter," he added.

Dato’ Seri Johari appears to have forgotten, while he reports to the Prime Minister in the Cabinet, he is there to serve the interest of Malaysians and not that of the Prime Minister.  If the decision of the Prime Minister is clearly detrimental to the interest of Malaysians, as the settlement showed, then it is certainly the duty of a Finance Minister to make things right.

However, the Second Finance Minister is clearly more interested in blindly supporting Dato’ Seri Najib Razak, by brushing off my allegation that Najib was conflicted in making the decision with regard to the settlement.

I call upon Dato’ Seri Johari to access his conscience and determine facts of the matter, something which is fully within the powers of a Finance Minister. Of the US$3.51 billion which 1MDB had purportedly paid to IPIC, Dato’ Seri Najib Razak has received US$30 million in in personal bank account in while his stepson, Riza Aziz received US$238 million via his company, Red Granite.

The above facts which were outlined in United States Department of Justice (US DOJ) suit to seize US$1 billion of laundered assets by funds originating from 1MDB has never been disputed by Dato’ Seri Najib Razak himself, and if indeed true, the clearly puts the Prime Minister in a position of conflict when deciding on the settlement terms with IPIC.

If the Second Finance Minister is genuine in his desire to “serve the nation” as professed in his March open letter to me, then I ask him to join me in calling for the Auditor-General (AG) and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

It should be noted that the PAC was told by 1MDB and its CEO, Arul Kanda that all payments which have been made to IPIC would be used to offset the US$3.5 billion 1MDB bonds which were guaranteed by IPIC.  The PAC also never made the recommendation for the Ministry of Finance to take over the liability for the bonds from IPIC – that would be just ridiculous.

Hence, it is crucial for both the AG and the PAC to re-visit the 1MDB scandal in the light of new evidence, including but not limited to the “settlement” agreement with IPIC as well as the new information contained in the US DOJ suit to seize the US$1 billion worth of laundered assets with funds originating from 1MDB.

Thursday, April 27, 2017

Did Dato’ Seri Johari Abdul Ghani just blame the Prime Minister for sacrificing US$3.5 billion in 1MDB’s “settlement” with IPIC for “the bigger picture”?

In an exclusive response to Malaysiakini yesterday, Dato’ Seri Johari Abdul Ghani insisted that he has proof that Aabar Investment PJS Limited (“Aabar(BVI)”), an entity incorporated in the British Virgin Islands which 1MDB has already paid US$3.51 billion was a genuine subsidiary of International Petroleum Investment Corporation (IPIC) of Abu Dhabi.

"As far as I am concerned, based on records provided by 1MDB to the Public Accounts Committee (PAC) prior to the settlement agreement, Aabar Investments PJS Ltd (BVI) is a subsidiary of IPIC.  A fact which was confirmed by the Registrar of Corporate Affairs of the British Virgin Islands by its letter dated Aug 11, 2016," he told Malaysiakini.

The question is, if the so-called “proof” is so incontrovertible, then it makes absolutely no sense to concede on a whopping US$3.5 billion or more than RM15 billion based on today’s exchange rates!

Instead of being all gung-ho in being able to win the IPIC-initiated arbitration, the Second Finance Minister said “the matter is beyond [him]” in a subsequent press conference yesterday.  He now made a complete U-turn claiming that the government decided to look after the “bigger picture”.

“At the end of the day, the government felt that they are looking at the bigger picture on this, in terms of the relationship between Malaysian and Abu Dhabi and so on… So I think that’s beyond me. I’m going for the facts, but this is a bigger thing.”

In fact, the Second Finance Minister shifted the blame to the Prime Minister. “The Prime Minister has made the decision for the country. That’s it,” he retorted.

But that’s exactly what Malaysians are worried about – that it’s the tainted Prime Minister who is making the decisions because he is conflicted!

Based on documents revealed by the United States Department of Justice (US DOJ), which were corroborated by the evidence produced by the Singapore prosecution against its rogue bankers, from the funds transferred to Aabar(BVI), Dato’ Seri Najib Razak personally received a sum of US$30 million in his personal bank account in Ambank in 2012.

Worse, his stepson, Riza Aziz received US$238 million via his Red Granite group of companies.  Some US$100 million of the sum was used to produce the Hollywood movie, The Wolf of Wall Street starring Leonardo Dicaprio.

In addition, isn’t Dato’ Seri Johari interested to find out if, despite the incontrovertible “proof” in his possession, that Aabar(BVI) had been fraudulently set up by the officers of IPIC – Khadem Al-Qubaishi and Mohamed Badawy Al-Husseiny, both of whom have been sacked by IPIC – in collusion with 1MDB officers to defraud both the Abu Dhabi and Malaysian governments?

Hence the question must be asked as to whether Dato’ Seri Najib Razak decided to ‘settle’ the IPIC dispute which resulted in US$3.5 billion of additional liability for Malaysians because it is really in the interest of the country or, to prevent IPIC from further exposing and confirming his complicity in the entire 1MDB misappropriation scandal.

Therefore, it is utterly irresponsible of Dato’ Seri Johari to wash his hands off the Ministry of Finance taking on the RM15 billion mega-liability.  Instead of acting ignorant, shouldn’t the Second Finance Minister satisfy himself that the Prime Minister has not made the decision out of self-interest? In reality, was the “bigger picture” a blatant attempt to save Najib and Barisan Nasional from losing in the next General Election?

If the matter is indeed “beyond” him as he pleads, then he might as well resign as the Second Finance Minister.

Wednesday, April 26, 2017

Dato’ Seri Johari Abdul Ghani must explain what happened to the US$3.51 billion he had previously insisted had already been paid to IPIC

Last August, Second Finance Minister Dato’ Seri Johari Abdul Ghani said he was very confident that 1Malaysia Development Bhd (1MDB) will win the arbitration in dispute with Abu Dhabi's International Petroleum Investment Company (IPIC), given the documents provided by 1MDB to the minister.

"As far as I'm concerned, I am very confident that we will win (the case), based on the documents that I have, supplied by 1MDB to me," he told reporters after a 2017 Budget focus group meeting.

IPIC had claimed up to US$6.5 billion from 1MDB, including 2 bonds amounting to US$3.5 billion issued by the latter and guaranteed by the former.

Dato’ Seri Johari had insisted that 1MDB has already paid US$3.51 billion to IPIC or its purported subsidiary, Aabar Investment PJS Limited (“Aabar(BVI)”), a company registered in the British Virgin Islands.  IPIC on the other hand, has publicly refuted that Aabar(BVI) is not its subsidiary even though it carries the same name as its own subsidiary, Aabar Investment PJS, a company registered in Abu Dhabi.

1MDB claimed it has already paid Aabar(BVI) the amounts of
(i) US$1.367 billion as a “security deposit” for the US$3.5 billion of bonds in 2012

(ii) US$993 billion for the termination of options granted to IPIC or Aabar in November 2014; and

(iii) Additional sums of US$855 million and US$295 million as “top-up security deposit” in September and December 2014 respectively.

"It's too bad for them not to acknowledge that (Aabar BVI), because as far as the record is concerned, the company belongs to them (IPIC).  Now they suddenly say that the company does not belong to them. So we want to see them in court and let the arbitration look at our document," the Second Finance Minister had insisted then.

Even in his open letter to me as recently as last month, Dato’ Seri Johari declared that “as for the dispute regarding the US$3.5 billion, which was paid to the IPIC group of companies by 1MDB, IPIC cannot continually deny that they have received the monies when 1MDB has already paid the same to them. I don't think Malaysians in their right mind will want to just give up on that issue of the payment.”

So the question is, Dato’ Seri Johari Abdul Ghani must now explain why the Malaysian negotiators have “given up” their case against IPIC in their “settlement” announced 2 days ago.

Under the terms of the settlement, despite 1MDB having purportedly paid the US$3.51 billion above to IPIC or its subsidiary, the Ministry of Finance Incorporated (MoF, Inc) has agreed to assume all liabilities arising from the US$3.5 billion of bonds which were previously guaranteed by IPIC.

Given that 1MDB is clearly in no position to pay the debts, Malaysian taxpayers will now have to fork out another US$3.5 billion to bailout 1MDB as part of the above settlement.  This means that we will ultimately pay a whopping total of US$7.01 billion, or more than double the US$3.5 billion of bond borrowings by 1MDB!

What has happened to Dato’ Seri Johari’s gung-ho statement that “we must fight and win this case”?  Why did we capitulate to IPIC’s demands before the fight even began?  Is it because 1MDB has finally conceded that Aabar(BVI) was clearly a fraudulent company to begin with and the US$3.51 billion originally paid has been clearly misappropriated and lost?

More interestingly, just two days before the settlement was announced, he suddenly washes his hands and said he wasn’t “involved in the negotiations. It (is) being done by (the) management and board of 1MDB with PMO’s (Prime Minister’s Office) officers.”

The Second Finance Minister had heroically claimed in his open letter to me that “it would be wholly irresponsible for [him] to shirk off this responsibility and opportunity to serve the nation.”  So may I ask, is agreeing to pay US$7.01 billion for a US$3.5 billion loan the “responsible” thing to do in “serving the nation”?

Tuesday, April 25, 2017

1MDB “Settlement” with IPIC an affirmation by 1MDB that they have lost US$3.51 billion purportedly paid to IPIC and its subsidiary, Aabar Investment PJS

1MDB and IPIC have finally announced the conclusion of the much awaited “settlement” to the London arbitration proceedings filed by IPIC against 1MDB.

What is most interesting, who the winner and loser are, can be clearly deduced by their respective statements.

1MDB’s statement was short and sweet, providing scant details other than the fact that “1MDB will, amongst others, make certain payments to IPIC and will assume responsibility for all future interest and principal payments for two bonds issued by 1MDB Group companies due in 2022”.  No figures are stated.

IPIC on the other hand made a detailed announcement to the London Stock Exchange clearly stating that
(i) IPIC will receive US$1.205 billion in 2 equal tranches on 31 July 2017 and 31 December 2017.

(ii) 1MDB and MoF Inc., will assume all responsibility of future interest and principal payments of US$3.5 billion worth of bonds, previously guaranteed by IPIC.

The implication between the 2 statements is staggering.

1MDB tried to paint a rosy picture of the settlement – that the dispute has been resolved with no hard details.  On the other hand, IPIC’s clearly showed that they got exactly what they wanted, the return of US$1.205 billion worth of cash advances to 1MDB since June 2015 and to discharge itself entirely as a guarantor for 1MDB’s US$3.5 billion worth of bonds.

However, of greater significance is the fact that 1MDB’s concession to the above settlement terms is a direct affirmation and confirmation that 1MDB have lost US$3.51 billion worth of payments which have purportedly been paid to IPIC and its subsidiary, Aabar Investments PJS.

Last year, 1MDB and its CEO, Arul Kanda, have informed the Auditor-General (AG) and the Public Accounts Committee (PAC) that the following payments were made to Aabar Investments PJS Limited, a separate company registered in the British Virgin Islands (“Aabar(BVI)”).  It has already been widely known, and confirmed by the United States Department of Justice (US DOJ) that Aabar (BVI) is a fraudulent impostor company.  However, 1MDB and Arul Kanda continued to insist that it is a wholly-owned subsidiary of the IPIC group.

As outlined on Page 92 of the PAC Report on 1MDB, 1MDB claimed it has paid Aabar (BVI) the amounts of

(i) US$1.367 billion as a “security deposit” for the US$3.5 billion of bonds in 2012 

(ii) US$993 billion for the termination of options granted to IPIC or Aabar in November 2014; and

(iii) Additional sums of US$855 million and US$295 million as “top-up security deposit” in September and December 2014 respectively.

These sums, as emphasized in the PAC Report, could not be verified by the AG as 1MDB has refused to provide the relevant proof and documentation of the transactions, despite repeated requests over months.

The question then is, if we have indeed paid the above sums, totalling US$3.51 billion to IPIC or its subsidiaries, why then are we allowing IPIC to relieve itself an ultimate guarantor for the bonds and why is MOF Inc, assuming the US$3.5 billion of liability?

Is 1MDB and Arul Kanda telling us that despite having paid US$3.51 billion to IPIC, we still owe the US$3.5 billion we borrowed?  Putting it simply, are Malaysians to fork out a whopping US$7.01 billion to settle 1MDB’s US$3.5 billion of bonds?!

The only explanation for the incredulous situation is that the US$3.51 billion was never paid to IPIC as claimed.  Instead, the funds were misappropriated or laundered as documented widely in the US DOJ charges against Jho Low and company, and Singapore prosecution its local banking officers.

Therefore, we call upon the Prime Minister, who is also the Minister of Finance, Dato’ Seri Najib Razak to come clean on the discrepancy resulting from the “settlement” with IPIC, since Malaysians have now to pay more than double what was actually borrowed by 1MDB.

Saturday, April 22, 2017

1MDB new auditor’s biggest challenge now is to audit and verify the purported sale of 1MDB’s Brazen Sky or its assets to a “undisclosed third party”

The Singapore Straits Times reported that 1MDB is expected to ink an agreement with Abu Dhabi's International Petroleum Investment Co (IPIC) to settle a dispute involving billions of dollars very soon.

In its report, the Singapore daily cited sources as saying the agreement would see 1MDB pay IPIC US$1.2 billion by year end, to settle a loan and accumulated interest from a bailout the IPIC gave 1MDB in July 2015.

It said most of the money would come from the sale of "fund units" from 1MDB subsidiary Brazen Sky to an undisclosed buyer.  Brazen Sky is of particular interest to 1MDB watchers because its account in Singapore's BSI Bank was supposed to be the account used to receive funds from 1MDB's Cayman Islands account.

If the Singapore Straits Times report is to be believed, then 1MDB’s newly appointed auditor, Parker Randall will now be faced with their biggest test to date.  Parker Randall, represented locally by the Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) must carry out the necessary due diligence and audit to ensure that the transactions taking place are bona fide and above board.

Of interest is the fact that until today, 1MDB has failed to provide any form of clarity of these “fund units” worth US$940 million purported redeemed from a Cayman Island investment fund.

1MDB has refused, despite repeated demands from the Public Accounts Committee and the Auditor-General to provide financial statements and documents of 1MDB’s overseas bank accounts and assets, including that of Brazen Sky Limited.

Worse, these assets were purportedly parked in BSI Bank, Singapore which have already had its merchant banking license withdrawn by Monetary Authority of Singapore.  When questioned in Parliament, the Minister of Finance responded that these units were not managed by any fund manager or investment bank, while also refusing to where the “units” have been moved to.

Hence it is critical for Parker Randall or aftaas to confirm the existence and authenticity of the US$940 million worth of “units”.  Most interestingly, despite the fluctuating value of investment assets over time, these fund units appeared to have a frozen value of US$940 million since its redemption in January 2015.

In addition, should Brazen Sky or its assets be sold, Parker Randall must verify that the sale and purchase transaction is a genuine transaction and not another case of paper shuffling which have taken place earlier in 1MDB’s US$1.8 billion investment in Petrosaudi.

It is also important for Parker Randall to confirm and satisfy itself on the identity of the mysterious “undisclosed buyer” of these mysterious Brazen Sky assets as part of its audit verification. The auditors must also trace the money trail of the fund transfers from the mysterious undisclosed buyer into 1MDB before being transferred to IPIC.

The audit is all the more important given the spotlight 1MDB has, which has caused some half a dozen of banks around the world to be shutdown or penalised for facilitating money laundering transactions.

Surely, after Deloitte Malaysia disgracefully resigned from 1MDB for failing to detect any of the above illicit and money laundering activities, Parker Randall do not want to follow the same footsteps and sully its international reputation.

Tuesday, April 11, 2017

I stand by the video comments I have made which have purportedly defamed the honourable Prime Minister

I have received a letter of demand from the Prime Minister, Dato’ Seri Najib Razak, served by his lawyers from Hafarizam Wan & Aisha Mubarak who brought along TV3 to my office in Petaling Jaya yesterday evening.

The letter demanded that I retract the statement, remove the video, publicly apologise to the Prime Minister and pay an amount of compensation to be agreed upon within 7 days.

I have reviewed the 5-minute video published on 6 April 2017 and I hereby state that I will standby the comments I have made.  Hence I will neither retract the statement, remove the video, publicly apologise to the Prime Minister nor offer to pay any amount of compensation to Dato’ Seri Najib Razak.

This is simply because the statements which I have made are grounded on established facts which have not been disputed.

The Sarawak Report and the Wall Street Journal first made the allegation that US$681 million originating from 1MDB, a wholly-owned subsidiary of the Ministry of Finance found its way into Dato’ Seri Najib Razak’s personal bank account with Ambank Malaysia.  This was subsequently confirmed in evidential documents produced by the United States Department of Justice (US DOJ).  In fact, the US DOJ pointed out in their legal filings that the total amount originating from 1MDB and surfaced in the Prime Minister’s bank account was US$731 million.

It should be noted that Dato’ Seri Najib Razak has never publicly disputed or denied the facts presented by the US DOJ since July 2016.

In addition, the US DOJ has labelled Malaysia as a kleptocracy.  The Dictionary.com definition of “kleptocracy” is “a government or state in which those in power exploit national resources and steal; rule by a thief or thieves”.

Despite the reputational damage inflicted on Malaysia as a result of US DOJ’s suit to seize assets worth approximately US$1 billion acquired with laundered funds originating from 1MDB, the Prime Minister and his Government has refused respond to the highly detrimental allegations.

In fact, the Prime Minister has steadfastly refused to clarify and respond to the matter in Parliament, despite repeated request by Members of Parliament to do so.

What’s more, I have also outlined all the facts and evidence of the above misconduct and more, in my civil suit against the Prime Minister for public misfeasance filed in January this year.  Dato’ Seri Najib Razak doesn’t even have to sue me a second time, he just needs to answer to the charges I have made in my suit to debunk any “fake news” which have purportedly damaged his reputation.  Instead, he has chosen to try to strike out my suit with a mind-boggling defense that he “is not a public officer” and hence cannot be subjected to a public misfeasance suit.

Hence, I can only interpret the Prime Minister’s latest letter of demand, the second I have received from him, is an attempt not to right a wrong, but to silence the truth.

Just as I never stopped exposing, highlighting and questioning the RM50 billion ringgit 1MDB scandal despite being sued for defamation the first time round in March 2015, I will not be intimidated or frightened from continuing to do the same.

It is my fervent believe that not only my voters who voted me into office, but an overwhelming majority of Malaysians cannot accept a kleptocratic administration or a Prime Minister who stole billions from the rakyat.  Therefore, I will doggedly persist and persevere in fighting the democratic cause to free Malaysia from such evils and disease.

Monday, April 10, 2017

There is no need for Senior State Executive Councillor, Teng Chang Khim to resign as to err is only human, and the errors upon discovery are rectified

The DAP Selangor State Committee met in an emergency meeting this afternoon to discuss the public concerns over the guidelines and planning restrictions over non-Muslim places of worship.

The DAP Selangor State Committee unanimously agreed that the recommendation that non-Muslim places of worship should not be built within 50m of a home owned by Muslims, as well as several other guidelines are not appropriate for a multi-racial, multi-religious society which encourages mutual respect and tolerance.

It should be noted that such guidelines are the status quo for other BN-led states like Johor and Negeri Sembilan.  

The State Committee heard the explanation provided by Selangor Vice-Chairman and Senior State Executive Councillor, Teng Chang Khim, that despite having requested state government officials to make the necessary changes, the changes were not incorporated into the final version of the guidelines. 

As reported during his press conference in the morning, Teng has apologised for the unintended error and even offered to resign from his position.

The State Committee found that the question of Teng resigning from his government office does not even arise as he has committed no crime.  He has neither stolen money from the state government coffers, nor abused his powers to benefit vested interest parties like developers.

Instead, DAP Selangor would like to commend Teng for stepping forward to take full responsibility over the unintended error and omission, despite the fact that the guidelines manual was approved by the Selangor State Planning Committee.

To err is certainly human, but what is most important is the fact that immediate steps are being taken to ensure that these errors are corrected upon discovery.  No one has yet suffered or been penalised by the guidelines for new non-Muslims places of worship.  

Hence, DAP Selangor state committee supports Teng’s decision to seek the State Executive Council’s (Exco) approval on Wednesday for immediate suspension of the guidelines implementation pending revision.

At the same time, in the light of the gravity and sensitivity of the matter, the Selangor State Committee also resolved to set up a special sub-committee to assist Teng.  This will ensure that no stones are left unturned in the revision process.  The sub-committee will be led by Vice-Chairperson, Hannah Yeoh and four other members, Rajiv Rishyakaran, Dr Abdul Aziz Bari, Yeo Bee Yin and Ng Sze Han.

DAP Selangor would like to reiterate that the constitutional provisions providing for Islam as the religion of the Federation and guaranteeing the freedom of religion would be defended at all cost.  We firmly believe that such provisions can only be achieved with tolerance, respect and acceptance of such freedoms by all Malaysians.

Monday, April 03, 2017

Dato’ Seri Nazri Aziz must prove that Malaysia is not a Police State

After great expectations were set for the Tun Dr Mahathir Mohamad and Datuk Seri Nazri Aziz debate on 1MDB, for the second time, the Police stepped in to stop the debate by refusing to grant a “permit”.

The original intent was for the debate to be held in a townhall in the Tourism Minister’s own constituency, Padang Rengas.  The Police put a stop to that, forcing a change in venue to the premises of Karangkraf Media Group, the publisher for local daily, Sinar Harian in Shah Alam.

Despite an earlier approval by the Selangor police with conditions which were accepted by the organisers, the Police has now rescinded the approval.

Apparently, “the Shah Alam district police headquarters had received objections from residents in the surrounding area”.  Hence, “after studying and considering the matter based on public order, the peaceful assembly permit reference 4/17 dated March 31 is cancelled,” the Police said.

The denial of a permit for a political debate or dialogue is ridiculous at so many levels.

For one, Karangkraf is located at an industrial area, a good distance from the nearest residential zones.

Secondly, it is the role of the Police to facilitate and ensure that the dialogue or debate takes place in a peaceful manner by providing the necessary support and security.  The constitutionally-guaranteed rights to freedom of assembly and speech should not be denied by those who are threatening those very freedoms.

However, most importantly, it is not at all within the powers of the Police to deny approval for the event to take place.  Based on the Peaceful Assembly Act (PAA) 2012, all the organisers are required to do under the law is to give a 10-day “notice”.  The Act does not provide for the police to say yay or nay to an assembly, what more an indoor function at private premises.  A police permit is no longer required.

The clear cut abuse of power by the Police in this case shows without a doubt, the fear by the Najib administration for the debate on 1MDB to take place. The debate will only serve to confirm in the minds of Malaysians – the fact that billions of ringgit of 1MDB funds surfaced in the personal bank accounts of the Prime Minister.

It would have been a debate so lopsided that even Dato’ Seri Nazri Aziz, arguably one of the sharpest debaters on the frontbench, could not possibly win.  However, with the Tourism Minister demonstrating unbounded bravado, the Police was called to step in to stop the debate to save Dato’ Seri Najib Razak the blushes.

Dato’ Seri Nazri has previously told reporters that “Malaysia is not a Police State”, after the original debate was denied by the Police, hence the subsequent alternative arrangement was made.

Hence, we call upon the Senior UMNO Minister to prove that Malaysia is indeed “not a Police State” by insisting and proceeding with the debate with Tun Dr Mahathir, regardless of the ruling made by the Police.

The Minister’s failure to do so will not only confirm, by his own benchmark, that Malaysia has indeed degenerated into a Police State. It will also confirm that he is not a man of his words and has conveniently found a face-saving way out of proceeding with the much anticipated debate.

Friday, March 31, 2017

Dato’ Seri Najib Razak undisputed King of Obfuscation, carefully wording parliamentary replies with selected choice facts

Meanwhile, crucial details are deliberately omitted, calculated to present an alternate reality for the media and the rakyat.

At first, I was both amused and bemused by yesterday’s headline on Malaysiakini story, “PM: 1MDB has cleared its bank debts, short-term debts”.  The headline is factually correct, although it needs an alert and informed reader to read between the lines.

Later however, I was stumped and stupefied by the headlines of The Star and The New Straits Times (NST), screaming “Najib: 1MDB is now debt free” and “1MDB now debt free: Finance Ministry”.

I immediately sought out my colleague, Member of Parliament for Bakri, Er Teck Hwa for a copy of Dato’ Seri Najib Razak’s parliamentary reply to his question, which was the basis for the above news stories.

He had asked the Finance Minister to state, among other things, “debts and assets of 1MDB in and out of Malaysia for the years, 2015 and 2016”.

Dato’ Seri Najib Razak responded that 1MDB made full settlement amounting to RM229.5mil for a revolving credit facility to Affin Bank in November, 2015.

Last year, 1MDB has also successfully repaid a RM950mil in a standby credit facility from the Federal Government, a RM2bil term-loan facility from Marstan Investments N.V and a US$150mil term financing facility from Exim Bank.

With the RM3.8 billion worth of debts repaid, the Finance Minister further added that 1MDB no longer have any borrowings with banks, nor any other short-term debts.

As if on cue, knowingly or unknowingly, The Star and The NST fell for it hook, line and sinker by declaring that “1MDB is now debt free”, painting most beautiful alternate reality which the Prime Minister would like you to believe.

Except the reality is so exceedingly different, that you can only conclude that Dato’ Seri Najib Razak’s reply was deliberately designed to obfuscate the truth to achieve the effect convincing Malaysians of the biggest lie of them all, that “1MDB is debt free”.

Dato’ Seri Najib has conveniently and mischievously failed to disclose the multiple elephants squeezed into the room -  that 1MDB still have outstanding

(i)             a 30-year RM5 billion bond which is guaranteed by the Federal Government

(ii)           two 10-year US$1.75 billion bonds which was guaranteed by Abu Dhabi’s International Petroleum Investment Corporation (IPIC) but have since been indemnified by the Ministry of Finance, Incorporated (MoF Inc)

(iii)          a 10-year US$3.0 billion bond, guaranteed with a “Letter of Support” issued by the Minister of Finance

(iv)          a US$1.0 billion advance by IPIC, indemnified by MOF Inc

(v)            at least US$230 million worth of interest payments by IPIC on behalf of 1MDB, indemnified by MOF Inc.

Hence, the total amount of 1MDB debt still outstanding, and directly or indirectly guaranteed by the Federal Government are RM5.0 billion and at least US$7.73 billion, or a total of more than RM39 billion!

This is despite the fact that the Federal Government has already bailed out 1MDB’s real estate division by assuming 1MDB’s RM2.4 billion worth of sukuk and another RM800 million borrowed from SOCSO.

In addition, the RM39 billion is still outstanding despite the fact that 1MDB has already disposed of its power plant assets for a total of RM9.83 billion.

Hence it complete defies belief that Dato’ Seri Najib Razak was less than truthful with the material omission of more than RM39 billion worth debt in his reply to my Bakri colleague.  Instead, the Prime Minister chose to extol 1MDB’s RM3.8 billion repayments, barely a-tenth of the scandal-ridden fund’s total debts.

He even carefully worded his happy conclusion, that 1MDB no longer owes any bank any money or any other short term debts, to skew the impression and perception of those who are not alert or informed.  If this does not crown Dato’ Seri Najib the devious King of Obfuscation in Malaysia, then I certainly don’t know what would.

Thursday, March 30, 2017

Is our national interest now subjected to foreign terms and conditions?

Last week, I had asked the Finance Minister to justify the award of the RM55 billion East Coast Rail Link project to China Communications and Construction Company (CCCC) and why Malaysian companies were not given the opportunity to tender for the project.

In the Finance Ministry’s reply, it said "to qualify for this financing offered by China Exim Bank, the project had to be executed by CCCC".

The Minister said that the Export Import Bank of China (China Exim Bank) offered a soft loan to Malaysia for the project at low interest rates.  He added that the loan, for a period of 20 years, also allows for a grace period of seven years where the government does not need to repay the principal.

In addition, "the government has, in principle, agreed at least 30 percent of the infrastructure work will involve local companies and contractors".

If studied carefully, the reply carried very sinister undertones.

Malaysia now appears so desperate for foreign financing for its so-called national interest projects that it is willing to subject itself to terms and conditions of foreign powers.

Just because somebody is willing to lend you the money at seemingly favourable terms does not mean that you should accept the condition to select the product that will cost nearly double the estimated price.

This is no different from unscrupulous retailers to duped Malaysian shoppers into “zero-interest” financing schemes on products costing significantly higher than if you have paid for it in cash.  Any financial consultant will educate you that the real cost of financing is already built into the jacked-up price of the product.

Worse, the real cost of funds for the project is now opaque because we do not know the real cost of the project as it was awarded without any open and competitive tender.  We do know however, that the Government’s own appointed consultants, HSS Integrated has estimated that the cost of the 600km railway project will cost less than RM30 billion.

Therefore, to pay for the project at RM55 billion just because China Exim Bank offered an “attractive financing package” is absolutely scandalous!

Worse, only 30% of the project will involve local companies and contractors, despite an abundance of experience and expertise which are already widely available in Malaysia.  We have now got many companies who have built double tracking railway projects, dug award-winning tunnels systems and constructed the MRT.  And yet, the Government is awarding a standard rail link project at substantially higher cost to a foreign company with minimal local participation.

The irony is, the Finance Ministry has advised or even instructed our Government-Link Companies to halt their investments abroad and repartriate its foreign funds from overseas to check the drastic decline of the ringgit.  Bank Negara even put in harsh measures to force private companies to convert their foreign currency receipts into ringgit.  However, the Government clearly doesn’t practise what it preaches because the overwhelming bulk of the inflated RM55 billion cost will be paid to China despite available local options.

There can be no better example of the English saying, “penny wise but pound foolish”.  What boggles the mind is, the Finance Ministry doesn’t comprise of idiots – they should know that we are paying well above what is a fair price for the project.  What is the ‘real’ reason why the project has been awarded to CCCC – is the real ‘quid pro quo’ the fact that CCCC will help launder part of the astronomical profits to pay off 1MDB debts as widely speculated?