Speaking on TV3’s “Soal Jawab” programme yesterday, Dato’ Seri Najib Razak claimed that many people do not realise that the government’s commitment for its wholly-owned strategic development company, 1Malaysia Development Bhd (1MDB) was only RM1 million in terms of shares, but today it has assets worth RM50 billion.
Nothing can be more incredulous than the Prime Minister’s attempt at grossly inflating and dishonestly representing the dire state of affairs in wholly-owed Ministry of Finance subsidiary.
While it is technically true that the Government only invested RM1 million in cash to the company, Dato’ Seri Najib Razak who is also the Finance Minister failed to highlight that it also explicitly guaranteed RM5.8 billion of loans as well as issued another “letter of support” which for all intents an purposes guaranteed another US$3 billion (RM10.8 billion) of borrowings. Hence at the very least, the Federal Government’s commitment to 1MDB is RM16.6 billion, and not the miserly RM1 million claimed by Dato’ Seri Najib.
Yesterday, Fitch Ratings specifically warned that “the financial position of 1MDB has become a source of uncertainty”. Fitch viewed “1MDB as a close contingent liability of the sovereign because of the nature of its operations and leadership, as well as explicit sovereign guarantees of some RM5.8 billion of the entity’s RM41.9 billion debt”.
What’s more, despite the fact that the balance of 1MDB’s debts are not explicitly guaranteed, the Government would still be obliged to repay these debts to avoid a total collapse of Malaysia’s credit ratings.
Dato’ Seri Najib also tried to allay public concerns by claiming that funds from the initial public offering (IPO) of 1MDB’s power plant assets will help reduce its debts.
However, he failed to highlight the fact that the IPO has already been postponed at least thrice due to its inability to attract investors at the proposed valuations. This is despite the Federal Government awarding 1MDB with multiple independent power producer contracts worth tens of billions of ringgit via direct negotiations.
If not for the “generosity” of Najib’s administration in abandoning open tenders for the power concessions, 1MDB’s proposed IPO would never even have a chance of seeing the light of day. This is because of the inflated prices 1MDB paid to acquire the power plants from Genting Sanyen and Tanjong Power, resulting in very low returns to its investment.
What was most dishonest was the Finance Minister’s boast that 1MDB also has a landbank of 222.58 hectares within Kuala Lumpur and “the value was huge”. He failed to inform the TV3 audience that these super-prime pieces of land were sold without any form of tender to 1MDB at bargain basement prices.
The 495 acres Sg Besi airbase was so to 1MDB for only RM1.6 billion in 2013 but was immediately revalued to RM4.3 billion as reflected in the March 2014 financial statements. At the same time the land for Tun Razak Exchange was sold to 1MDB for RM194 million in 2010 has since been revalued multiple times to RM2.7 billion in the latest available published accounts. In effect, Dato’ Seri Najib award RM7 billion worth of land to 1MDB for only RM1.8 billion, shortchanging the Government by a staggering RM5.2 billion.
How is it that the Prime Minister has the cheek to justify that the Government only committed RM1 million to 1MDB is beyond belief.
Did Dato’ Seri Najib Razak seriously believe that he could take Malaysians for fools by making such incredulous justifications of the dire performance and imminent debt crisis of 1MDB?
Najib said Malaysia would receive huge returns if the assets were fully utilised by 1MDB. He cannot be more wrong. Malaysian tax-payers would have received huge returns if the country’s assets were not used to bailout 1MDB and wasted on the company’s gross mismanagement and excesses.