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Cabinet Clears 1MDB Free Of Any Wrongdoing Despite Sarawak Report's Shocking Exposé

The Cabinet has decided that 1Malaysia Development Berhad did not do anything wrong after listening to a brief from both 1MDB management and its auditors.

Cover image via themalaysianinsider.com

Putrajaya admits to RM11.1 billion liability if 1MDB can't pay up

Finance Minister Datuk Seri Najib Razak confirms in a letter to the Parliament that Putrajaya will be liable only if 1MDB fails to pay debts.

Image via ABN News

Putrajaya has admitted that the letter of support it issued to 1MDB Global Investment Limited, a subsidiary of debt-laden 1Malaysia Development Berhad (1MDB), will be effective if the company failed to repay a US$3 billion (RM11.1 billion) loan it took last year.

themalaysianinsider.com

The strategic investors wholly-owned subsidiary, 1MDB Global Investment Limited, had issued a bond to raise US$3 billion in March last year, for which Najib’s government had provided a “letter of support”.

Of the US$3 billion bond, US$283 million was paid to global investment bank Goldman Sachs International for certain commissions, fees and expenses while US$1.56 billion is invested with a licensed financial institution.

themalaysianinsider.com

In a written reply to Petaling Jaya Utara MP Tony Pua, Prime Minister and Finance Minister Datuk Seri Najib Razak stressed, however, that Putrajaya will only be liable if the firm cannot repay the loan. ‘‘1MDB Global Investment Limited has to use its internal funds including all of its assets. If all the steps have been taken and the company still lacks the fund to pay off the loan, then the support letter from the government goes into effect,’’ he said.

themalaymailonline.com

Over-concentration of power, muzzled media, and lack of transparency among reasons for 1MDB's disaster

The press release announcing that Sarawak Report’s chief investigative journalist, Clare Rewcastle joining the forum “1MDB: The Ultimate Low Down” via video conference.

Image via Sarawak Report

In Malaysia, power was too concentrated, she said, pointing to the fact that Najib controlled two of the most important portfolios in the government. "The checks and balances are eroded to the extent that the prime minister is the finance minister. "I mean, why do you think there are two positions? Why is it a good idea that the same person should occupy both?" said Clare Rewcastle Brown, editor of the Sarawak Report said at the forum titled "1MDB: The Ultimate LOW Down".

themalaysianinsider.com

The over-concentration of power, agreed Rewcastle, allowed Penangite Jho Low to not only siphon out monies from 1MDB, it prevented more information from being made public.

freemalaysiatoday.com

"The other thing that struck me is the lack of transparency. Politicians like Tony Pua, Rafizi Ramli and Umno's Tun Dr Mahathir Mohamad have asked valid questions and those answers should be available in public paperwork." Instead, she said, the questions remained unanswered and anyone who digs deeper were treated as traitors.

themalaysianinsider.com

Referring to the mainstream media in Malaysia, she said that the "muzzled media" was overly obedient and Malaysians could only rely on blogs and online news portals to objectively discuss politicians' actions, added Rewcastle Brown.

themalaysianinsider.com

"But I think it's a recipe for disaster. And that's what 1MDB is, a very big disaster for Malaysia," said Rewcastle Brown.

themalaysianinsider.com

Clare Rewcastle Brown, whistleblower of the Sarawak Report addressing the audience at the '1MDB: The Ultimate LOW Down' forum at the Crystal Crown Hotel in Oetaling Jaya, 15 March via video-conference.

Image via themalaysianinsider

13 March: Second Finance Minister Admits That 1MDB's Financial Is Not Sustainable

For the first time, a Cabinet minister has admitted that 1Malaysia Development Bhd’s (1MDB) financial position is not sustainable because its debts are too high.

Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said that 1MDB’s gearing ratio, which is a measure of debt against capital, was 17 times and unsustainable at its present form. The higher the gearing ratio, the worst off the company.

thestar.com.my

“The financial experts have said that the gearing was not sustainable. This is why 1MDB has embarked on an exercise to rationalise and consolidate its assets,” he said in reply to a question from Mohd Fasiah Mohd Fakeh (BN-Sabak Bernam) in Parliament yesterday.

In an effort to consolidate its assets, Ahmad Husni said that 1MDB was in negotiations to transfer a power plant project that would cost RM8bil to construct.

thestar.com.my

Putrajaya today confirmed injecting RM950 million into 1Malaysia Development Bhd (1MDB) as standby credit for the government-owned strategic investor that has to service its RM42 billion debt. Standby credit is an arrangement with the lender where a fixed amount of credit is made available to the borrower as and when it is required, for a given period.

themalaysianinsider.com

12 March: 1MDB Transfers RM4bil From Cayman Islands To Singapore, Kadir Jasin Says That's "Stupid"

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A sum of US$1.103bil (RM4.08bil) that was previously parked in the Cayman Islands by 1Malaysia Development Bhd (1MDB) has been transferred to Singapore, said Finance Minister Datuk Seri Najib Tun Razak.

“The remaining US$1.103bil in 1MDB’s investment funds managed by Cayman (Islands) Monetary Authority has been redeemed and is kept in US currency at BSI Bank Ltd Singapore (BSI Singapore),” he said in a written reply to the Dewan Rakyat in response to a question raised by Petaling Jaya North MP Tony Pua.

“The decision to use a bank in Singapore is to facilitate transactions as Bank Negara Malaysia (BNM) regulations require approval by the bank for each transaction exceeding RM50mil,” wrote Najib, who is also the Prime Minister.

thestar.com.my

Veteran journalist Datuk A. Kadir Jasin has questioned Putrajaya's decision to park US$1.103 billion of 1Malaysia Development Bhd's (1MDB) funds in Singapore, asking if Bank Negara was "stupid" enough to make it difficult to bring the money back directly from the Cayman Islands.

"My question is, do we have to bring back our own money from abroad through a bank in Singapore and not directly to our own banks?" "Is Bank Negara that stupid to make capital flow into the country difficult or somebody is using Bank Negara as a punching bag?" he asked.

themalaysianinsider.com

9 March: A task force has been set up to investigate debt-ridden 1MDB

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Inspector-General of Police (IGP) Tan Sri Khalid Abu Bakar today confirmed that police are investigating the debt-ridden 1Malaysia Development Berhad (1MDB), with a new task force formed to probe the strategic investment company.

He said the task force set up several days ago by the Attorney General (A-G), which included the Malaysian Anti-Corruption Commission (MACC), the A-G Chambers and the police.

themalaysianinsider.com

"The task force was set up three or four days ago and investigations are on going.

"We will investigate any allegation of misconduct which has been reported to the authorities," he told reporters after signing the letter of acceptance between the Malaysian government and University of Derby at the Cheras police academy.

thestar.com.my

When asked whether Prime Minister Datuk Seri Najib Razak is among those being investigated, Khalid said, “Yes”.

"Every report lodged, we will open investigation. When there is an offence committed, we will proceed with an investigation. “But when there is no offence, we will refer to A-G to close investigation. "In this case, we are cooperating with MACC and A-G Chambers, but no decision has been made so far."

He added the matter was being investigated for cheating and criminal breach of trust.

themalaysianinsider.com

5 March: Secret sources reveal 1MDB's plans to be dismantled, but 1MDB says otherwise

Malaysia's indebted and controversy-ridden state investor 1MDB will be left as a skeletal structure and possibly dissolved under a debt repayment plan in which most of its assets will be sold, sources with direct knowledge of the matter said.

Under the aggressive restructuring plan, crafted by new boss Arul Kanda Kandasamy and blessed by the government, the fund will sell 80% of its power unit Edra Energy via a stock market listing, three sources with direct knowledge of the situation told Reuters.

More than RM18 billion of 1MDB's debt linked to its power assets would go under Edra Energy ahead of the listing, which is due to be kickstarted in 6-9 months time, the sources said. 1MDB said in an email that Edra Energy would be "monetised" in 2015 and the TRX and Bandar Malaysia projects would be ultimately owned by the finance ministry.

This process would turn 1MDB into a skeletal structure that could eventually be dissolved completely, said one person, who spoke on condition of anonymity because of the sensitivity of the issue.

reuters.com

Amidst a Reuters report that 1Malaysia Development Berhad (1MDB) is set to be dismantled, opposition lawmakers are not expected to spare the state investment arm the “bashing” they have promised when Parliament sits for its first session of the year on March 9.

theantdaily.com

1Malaysia Development Bhd (1MDB) has no plans of liquidating its assets, a spokesman for the company told news portal Kinibiz today, denying a Reuters report that it would soon be dismantled under a debt repayment plan.

"In our strategic review, we stated our intention for TRX (Tun Razak Exchange) and Bandar Malaysia to be run as standalone entities with independent governance structures and responsibility for their own operations and finances, as is presently the case with Edra Energy.

malaysia-chronicle.com

4 March: The Sarawak Report's 1MDB-PetroSaudi exposé accusing tycoon Jho Low of siphoning US$700 million from the company did not go unheard

Image via mkini.net

The exposés have prompted opposition politicians, former Umno leaders and anti-graft bodies to demand a thorough investigation into 1MDB, and piled pressure on Najib, who is also the finance minister and chairs the 1MDB advisory board.

themalaysianinsider.com

Yesterday, Prime Minister and Finance Minister Najib Razak summoned the 1MDB management and its auditor Deloitte to explain the shocking allegations to the Cabinet

According to a statement from the Prime Minister's Office (PMO), 1MDB provided a briefing on its current situation and responded to questions raised by the Cabinet including Najib and his deputy Tan Sri Muhyiddin Yassin.

Meanwhile, Deloitte provided the Cabinet an overview of its engagement with 1MDB and confirmed that the firm had audited and verified the company's accounts.

thesundaily.my

After listening to the brief, the Cabinet decided that 1MDB, which is RM42 billion in debt, has done nothing wrong

"Cabinet expressed confidence that no wrongdoing has been committed within 1MDB, and their desire for the company to be allowed to implement the proposed outcomes of its strategic review," said the Prime Minister's Office in a statement.

"Cabinet was told that the recent allegations directed at 1MDB relate to transactions undertaken by third parties such as Petrosaudi, not 1MDB.

"The relevant investments of 1MDB have been returned in full with significant audited profit," said the PMO.

malaysiakini.com

Najib also ordered the Auditor-General to vet through 1MDB's account and forward it to the Public Account Committee (PAC)

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Prime Minister Datuk Seri Najib Tun Razak has instructed the Auditor-General to verify 1Malaysia Development Berhad's (1MDB) accounts and forward the findings to the Public Accounts Committee (PAC).

In a statement on Wednesday, the Prime Minister said that the A-G’s report would be passed for transparent inspection to the PAC, which is bi-partisan.

“If any wrongdoing is proven, the law will be enforced without exception,” Najib said.

thestar.com.my

The Cabinet's move to absolve 1MDB of any wrongdoing comes as a bittersweet surprise. While the PM's orders to audit the company is welcomed, many exclaimed that it is too premature to discharge 1MDB.

In this Malaysiakini article, founding editor of Kinibiz P Gunasegaram explains why it's simply too early to exonerate 1MDB.

"It appears that the cabinet maintaining that there is no wrongdoing at 1MDB comes following briefings by 1MDB officials and its auditor Deloitte. That in itself is not sufficient to clear 1MDB of wrongdoing because that can take place even with accounts that have not been qualified."

"Good account keeping - if indeed that is good at 1MDB - does not necessarily indicate that there are no wrongdoings. If you price your bonds wrongly for instance, nothing will show up as wrong in your accounts...There is considerable scope for wrongdoing here."

He proceeds to list 10 questions that the Cabinet should ask 1MDB to explain.

malaysiakini.com

"How can 1MDB be cleared even before the AG starts his investigation?" asks Tony Pua

Image via kinibiz.com

In his statement, Pua slammed the prime minister and his Cabinet for assuming that Malaysians would be taken in by the explanation that the state-owned investment fund had done nothing wrong despite amassing massive debts.

"This half-past six Cabinet must think Malaysians are complete fools, for how can 1MDB be cleared before even the Auditor-General starts his investigations?" the Petaling Jaya Utara MP said.

"How can the Cabinet listen to 1MDB and its external auditors for less than 2 hours, without listening to any other parties, and immediately accept all the explanations without question?

"After all, if 1MDB was managed so well, why has the company accumulated more than RM42 billion in debt and had to beg local tycoon Tan Sri Ananda Krishnan for an RM2 billion emergency loan? Subsequently, 1MDB had to further appeal for another RM3 billion bailout by Putrajaya."

themalaysianinsider.com

Veteran journalist Datuk A. Kadir Kasin says this signifies that Najib is shifting part of the responsibility for 1MDB to the Cabinet

Datuk A. Kadir Jasin said this also showed that power over 1MDB, which is Najib's brainchild, is no longer the exclusive domain of the prime minister.

"This could be useful for the prime minister. He now shifts part of the responsibility for 1MDB to the Cabinet. What started off as his one-man show is now the collective burden of the Cabinet," he said in a blog posting last night.

themalaysianinsider.com

Meanwhile, PAC chairman hopes the AG will look into issues pertaining to the source of RM2 billion for loan settlement, its dealings with PetroSaudi, and the money in the Cayman Island

PAC chairman, Datuk Nur Jazlan Mohamed said he hoped the Auditor-General's Department will start work soon, and would look into the issues raised by the committee last week concerning the company.

Among them were
- the source of the RM2 billion used to settle 1MDB's loans with local banks,
- the RM3 billion injection of government funds into the debt-ridden firm,
- its dealings with PetroSaudi International (PSI),
- and whether the money parked in Cayman Islands has been brought back.

themalaysianinsider.com

1MDB president Arul Kanda Kandasamy also says the company is ready to cooperate as the recent attacks against them were "clearly" politically motivated

In an immediate response, 1MDB president and group executive director Arul Kanda Kandasamy said the company welcomed the prime minister’s request for the Auditor-General to verify 1MDB accounts.

“We will cooperate fully with the Auditor-General and hope that the outcome of his findings (will) put to rest recent speculation,” he said.

Arul said it was clear that the attacks being directed at 1MDB were politically motivated.

“These are deliberately coordinated attempts to undermine the company by spreading unsubstantiated allegations and speculation, which in turn could potentially harm the economy,” he added.

freemalaysiatoday.com

To help you understand this complicated financial scandal that revolves around 1MDB, Jho Low, and Najib, SAYS answers 11 questions here:

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