1MDB Expresses Disappointment After Zeti Says The State Fund Scandal Is Hurting Ringgit

“Right now, we know the public want answers to these questions and they deserve to get the answers.”

Cover image via SAYS

Zeti has once again spoken about 1MDB. This time, the Bank Negara Malaysia Governor said that Ringgit will perform better when the controversies surrounding the troubled state investment fund are resolved.

Bank Negara Malaysia (BNM) governor Tan Sri Zeti Akhtar Aziz

Image via WSJ

Bank Negara Malaysia (BNM) governor Tan Sri Zeti Akhtar Aziz said that the ringgit – Asia's worst performing currency of the year so far – is expected to start recovering once issues surrounding troubled state fund 1Malaysia Development Bhd (1MDB) are resolved.

1MDB has been the subject of multiple investigations, amid allegations of financial mismanagement and graft.

Prime Minister Datuk Seri Najib Razak, who also chairs the fund's advisory board, has resisted calls for him to step down from government, but controversies continue to rage. 1MDB is seeking to reduce its $11 billion debt by selling power and property assets.

She added that there is "no place to hide" for the guilty

In reassuring the public on concerns over 1Malaysia Development Bhd (1MDB), she said that any irregularities would eventually be uncovered, as the issues are being scrutinised not only by local investigators but also the international community.

“In this day and age, it must be known that there is no place on this planet that anyone can actually hide because the world has come together. They will come together to track down any irregular type of activities. So, that is where we are now,” she said.

Zeti was speaking at a panel discussion at the Economic Update forum organised by the Performance Management and Delivery Unit (Pemandu).

She echoed the sentiments of general public that Malaysians deserve to know the answers on the controversy surrounding 1MDB and PM Najib's RM2.6 billion donation

She also said that there must also be clarity on which authorities are probing both issues, especially with the police, Malaysian Anti Corruption Commission (MACC) and the central bank all having launched separate investigations.

“Right now, we know the public want answers to these questions and they deserve to get the answers,” Zeti told.

"There are three agencies involved, comprising the police which deal with cheating, criminal breach of trust and so on. The MACC (Malaysian Anti-Corruption Commission), which deals with corruption, and the central bank, BNM, that deals with aspects relating to our financial system and what contravention there has been to our rules and regulations and our laws."

"All these investigations are ongoing and they're going to yield an outcome," she said.

"On BNM's part, we've looked at the contraventions to the approvals that we gave specifically to 1MDB. These investigations are now completed and we've handed it over to the AG's Chambers. We are in discussions with them. That is all I can say for the time being," she added.

Besides 1MDB, there are other reasons why Ringgit is sliding

Image via iMoney

Besides a resolution of domestic issues, Zeti said other factors which could prompt a recovery in the ringgit included an eventual decision by the US Federal Reserve to raise interest rates, a recovery in global commodity and energy prices and an improvement in China's economy.

The ringgit came under further pressure after The Wall Street Journal reported that the US Federal Bureau of Investigation (FBI) launched an investigation into allegations of money-laundering at 1MDB.

It slid 1.3% to 4.26 per dollar as of 3.25pm (Malaysian time) from the previous close of 4.2070. It has now lost nearly 18% of its value against the dollar so far this year.

Meanwhile, 1MDB has expressed its disappointment with Zeti's statements

“1MDB is disappointed that Tan Sri Zeti appears to single out 1MDB for the current weakness of the Ringgit. This is despite the well-known fact that the Malaysian Ringgit is one of many currencies including the Norwegian Kroner, the Australian Dollar, the Russian Rouble and the Brazillian Real, for example, that have dropped in value mainly due to the abrupt fall in oil prices, expectations of rising US interest rates and concerns of economic slowdown in emerging markets.”

“We take this opportunity to highlight that the value of 1MDB’s assets exceeds its debt."

“Furthermore, Zeti will be aware that 1MDB has consistently met, with no default, its interest service and principal repayment obligations, to both foreign and domestic lenders."

“Historically, never once has one company been linked in such a way to the value of the Ringgit. We trust that the facts shared by 1MDB and the immediate clarifications issued to date, will provide clarity and assurance to all concerned parties.”

On Sunday, 20 September, WSJ reported that FBI has launched an investigation on 1MDB:

Last month, Zeti broke her silence and dismissed speculations that she has been under pressure to resign due to her and BNM's part in investigating 1MDB:

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