1Malaysia Development Bhd’s wholly-owned subsidiary, 1MDB Global Investment Limited raised US$3 billion via bonds issued in March 2013. The bonds were raised with the controversial “Letter of Support” from the Minister of Finance, which effectively guaranteed the loan from the bondholders.
Based on the offer circular for the US$3 billion bond issuance, all of the proceeds from the fund-raising exercise less “certain commissions, fees and expense” will go toward the joint venture.
Hence I had asked the Minister to state the state of the proposed joint venture with Aabar Investments PJS, to form Abu Dhabi Malaysia Investment Corporation (ADMIC). I also asked the status of the investments in the joint venture and where the funds are invested.
The Minister replied that ADMIC “has been set up” as a 50:50 joint venture. He further added that
…from the USD3 billion secured, USD1.5 billion is committed towards 1MDB Global Investment Limited for the joint venture company while the balance is for other purposes such as investment opportunities in various sectors.
The answer by the Minister is not only irresponsible, it is an outright lie to deceive the Parliament. Not only did the Minister fail to provide the answers sought, he contradicted the audited 1MDB Financial Statements for the year ending March 2014.
In the Financial Statements (pg 93), 1MDB said
The net proceeds from the said private debt securities are intended as seed capital for investment in ADMIC… to develop the Tun Razak Exchange.
While the terms and scope of the proposed joint venture are being finalised, a portion of the proceeds from the private debt securities amounting to US$1.56 billion have been placed in various investment portfolios under custody of a licensed financial institution with good credit ratings as rated by international credit rating agencies.
In 2014, the remaining net proceeds have been utilised by the Company for working capital and debt repayment purposes.
The triple lie by the Finance Minister are glaring.
Firstly, it is clear that the ADMIC has clearly not taken off and is possibly stillborn after 2 years. Yet, the Finance Minister has told the half-truth that it “has been set up” without any elaboration.
Secondly, the entire proceeds of the US$3 billion bond exercise was to go towards the joint venture. This was stated clearly in the offer circular or prospectus for the bonds. More specifically, the financial statements revealed that it was to develop Tun Razak Exchange (TRX).
However, the Finance Minister lied that only US$1.5 billion is committed towards the joint venture. Furthermore, the current reality tells us that even the halved US$1.5 billion of funds have not been invested in TRX. On the other hand, 1MDB is desperately seeking new funds to develop the project.
Thirdly, how can the Finance Minister deceive Malaysians that the balance of the funds from the bonds “is for other purposes such as investment opportunities in various sectors”, when the 1MDB Financial Statements clearly stated that the money has already been spent “working capital and debt repayment purposes”.
It now appears that all the answers by the Ministry of Finance, particularly with regards to 1MDB cannot be trusted. There is a concerted and insidious attempt to cover up the embezzlement of billions of ringgit in 1MDB which is laden with RM42 billion of debt. How can the Finance Minister get away with telling lies after lies in Parliament?
After all, why is 1MDB so cash-strapped and desperate for a massive bailout from the Government, when supposedly, it has billions of ringgit of unutilised funds or liquid investments sitting in some “licensed financial institution with good credit ratings” somewhere on this planet?
Again, just like the mysterious money that is now sitting in BSI Singapore which cannot be repatriated, 1MDB and the Government must explain how these government guaranteed funds have been utilised, abused or misappropriated.