On Thursday, Finance Minister Lim Guan Eng announced that the Federal Government was forced to extend up to RM2.8 billion of funds to ensure TRX City Sdn Bhd (TRXC) was able to fulfil its obligations to complete the required infrastructure works for the 70-acre Tun Razak Exchange (TRX) project. This was because we have discovered and confirmed that RM3,067 million worth of funds which were meant for TRXC to develop its property development projects were siphoned by its parent company, 1Malaysia Development Bhd (1MDB) for other purposes.
For example, when TRXC collateralised its Bandar Malaysia land to raise a RM2,400 billion sukuk to fulfil its obligations in the project, the entire drawn down amount of RM1,497 million was siphoned by 1MDB between 2014 and 2015. Or when TRXC managed to complete land sales in TRX amounting to RM1,754 million in 2015, RM1,370 million was again siphoned by the parent company instead of being used to develop TRX.
The siphoned funds were used mainly to service the interest payments for the billions of dollars of 1MDB borrowings which 1MDB was unable to repay on its own. Today, we already know the reason why 1MDB is unable to repay its borrowings, or even service the interest payments, is because billions of dollars were spent investing in fictitious projects and scams designed to steal from 1MDB.
However, former Prime Minister Dato’ Seri Najib Razak insisted that “no monies from TRXC were misappropriated by 1MDB”.
He took the trouble to elaborate that “all these inter-company loans were repaid by 1MDB effective 31 March 2017, through a combination of cash repayments and a set-off against dividends paid by TRXC to 1MDB. These repayments were carried out with the approval of MOF Inc and were properly reviewed and signed off by the auditors of TRXC in the 31 March 2017 financial statements.”
For Dato’ Seri Najib who had claimed in his earlier interview with Reuters last week that he was pretty much unaware the shenanigans which actually took place in 1MDB which resulted in billions of ringgit being siphoned and stolen, he was contradictorily and intimately knowledgeable on the trasactions which took place between 1MDB and its wholly-owned subsidiary, TRXC. One is left to wonder if the above statement published on his Facebook, was really written by he himself, or by 1MDB’s disgraced CEO, Arul Kanda.
What is important however, is not the the accounting gobbledygook used to confound Malaysians into confusion and submission. What Dato’ Seri Najib Razak explained is merely how 1MDB and TRXC justified and ratified the accounting irregularities between the two companies.
The heart of the matter is:
(i) more than RM3 billion was taken 1MDB from TRXC to cover up the shenanigans of the former, a fact that is not denied;
(ii) that the RM3 billion was intended for the development of the TRX and Bandar Malaysia projects; and
(iii) that as a result of the misappropriation, TRXC is severely short of funds to fulfil its obligations in TRX.
Dato’ Seri Najib even tried to deny that the extension of RM2.8 billion in funds to TRXC was not a ‘bailout’ because the TRX project can still eke out a profit upon completion. It is no wonder that the former Prime Minister was named the worse Finance Minister in Asia by FinanceAsia in 2016.
Had the funds in TRXC been utilised for its projects in a transparent and accountable manner, the company would not have needed to seek the RM2.8 billion aditional funding from the Finance Ministry for TRX in the first place. It is precisely because of the misappropriation by 1MDB that the Ministry is now forced to step in to rescue the project.
The fact that TRX might still be able to eke out a profit does not invalidate the fact that it is a bailout. This is because if not for the misappropriation, it would have meant that TRX could have made an additional RM3 billion in profits!
Dato’ Seri Najib Razak must decide between claiming that it is “inappropriate” for him to answer 1MDB questions, as he did on 28 May 2018, or constantly attempting to defend the dodgy transactions which have taken place in the 1MDB group. He cannot on the one hand feign ignorance and blame the directors or management of the company, but at the same time, demonstrating detailed knowledge of the transactions which have taken place in 1MDB to justify, albeit misleadingly, the shenanigans which have taken place.
If Dato’ Seri Najib Razak feels strongly that he has been maligned with wrongful facts, we will be more than happy to welcome him back to the Ministry of Finance to explain where the RM3 billion misappropriated from TRXC have gone to, and if there’s any chance at all how 1MDB will be able to recover this money.