Did PM Najib Mislead The Dewan Rakyat About 1MDB Being "Debt-Free"?
On Thursday, 30 March, Prime Minister cum Finance Minister Najib Razak told the Dewan Rakyat that the 1MDB fund is now debt-free
The Prime Minister claimed that the sovereign wealth fund has repaid in full all its bank loans amounting to RM3.8 billion, adding that the debts, including an RM950 million standby credit facility from the federal government, were fully paid in March 2016.
"As of now, 1MDB does not owe anything to banks, nor has short-term debts," PM cum FM Najib was reported as saying by NST in a written reply to a question from Er Teck Hwa (DAP-Bakri) who had asked the Finance Ministry to state the number of workers, cash, debts and assets of 1MDB in Malaysia and overseas in 2015 and 2016.
According to FM Najib, this is the breakdown of all 1MDB's debts:
. Full settlement of RM229.5 million for a revolving credit facility to Affin Bank.
. RM950 million standby credit facility from the Federal government paid in full.
. Paid a total of RM2 billion to Marstan Investments N.V. for a term loan facility.
. Fully paid a total of RM662.85 million for a term financing facility from EXIM Bank.
The Finance Minister's written reply also added that 1MDB had raised cash in 2015 and 2016 amounting to RM10.97 billion through the sale of assets from Edra Global Energy, equities in Bandar Malaysia and sale of land in the Tun Razak Exchange project
However, it appears that PM Najib could have mislead the Dewan Rakyat
While it's true that 1MDB has cleared its bank debts and short-term debts, it still has huge sums owed in bonds and loans from statutory bodies.
And the Prime Minister, according to Petaling Jaya Utara MP Tony Pua, deliberately omitted crucial facts to present an alternate reality to the media and the rakyat.
Calling him the "undisputed King of Obfuscation", DAP's Tony Pua says that, "Najib Razak's reply was deliberately designed to obfuscate the truth to achieve the effect convincing Malaysians of the biggest lie of them all, that '1MDB is debt free'."
According to Pua, PM Najib has conveniently failed to disclose that the state-owned investment firm still has RM39 billion outstanding
In a piece published on Malaysiakini, the DAP MP elaborated on the various debts or guarantees by Putrajaya in relation to 1MDB, listing them as follows:
. A 30-year RM5 billion bond which is guaranteed by the federal government.
. Two 10-year USD1.75 billion bonds which were guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC) but have since been indemnified by the Ministry of Finance, Incorporated (MOF Inc).
. A USD1.0 billion advance by IPIC, indemnified by MOF Inc.
. At least USD230 million worth of interest payments by IPIC on behalf of 1MDB, indemnified by MOF Inc.
. A 10-year USD3.0 billion bond, guaranteed with a "letter of support" issued by the Minister of Finance.
"The total amount of 1MDB debt still outstanding, and directly or indirectly guaranteed by the Federal government," Tony Pua wrote, "are RM5.0 billion and at least USD7.73 billion, or a total of more than RM39 billion."
It's not just the DAP MP who is pointing out how PM Najib was less than truthful with his answer in the Dewan Rakyat, even the former Prime Minister Dr Mahathir Mohamad has asked PM Najib to explain how 1MDB intends to pay the rest of its huge RM39 billion debt
The payment of RM3.9 billion debt, Dr M said, was likely done using the RM10.97 billion 1MDB raised from selling various assets, which means 1MDB is left with RM7.07 billion. However, the total debt incurred by 1MDB is RM50 billion as of January 2016.
"It would be interesting to know whether 1MDB has other assets to sell to pay the balance of the RM50 billion debts amounting to RM40 billion. If there are no more assets, how does 1MDB propose to raise this RM40 billion?," Dr M asked.
Saying that PM Najib's current explanation only raised more questions than answers, Dr Mahathir Mohamad added that perhaps the PM can explain.
As it is the people's money and they are entitled to know, because, in the end, they will have to pay, "one way or another", he said.
Do you think PM Najib presented an alternate reality about 1MDB in the Dewan Rakyat? Do comment to share your thoughts with us.