Friday, June 23, 2017

Why disparage the US DOJ's US$1.7 billion asset seizure suit if Dato’ Seri Abdul Rahman Dahlan is not prepared to categorically deny on behalf of Dato’ Seri Najib Razak and Datin Seri Rosmah Mansor that they have received US$732 million in cash and a US$27.3 million pink diamond pendant respectively?

Minsiter in the Prime Minister’s Department, Dato’ Seri Abdul Rahman Dahlan continued his tirade against the US DOJ again yesterday, accusing the DOJ of publishing a “half-cooked report”.

He even insinuated that the United States of attempting to influence the results of the impending Malaysian election.  "Is it because the election is around the corner and some desperate quarters need a leg-up?" he tweeted.

This is on top of the Minister in-charge of the Economic Planning Unit berating the US DOJ the previous day, “you (DOJ) mock, you gave the impression that Rosmah and the diamond did something wrong.  But in the document you submitted, you didn't include the diamond as one of the items that you want to seize. It was unnecessary to put the name there.”

The Minister is saying that since election is around the corner, the US DOJ should not have filed the updated suit last week as it might influence the results of the election, since it implicates both the Prime Minister and his wife of misappropriating state funds for their own personal benefit?

Is the Minister trying to tell the US that they should have waited until the election is over and the Najib administration has won a new mandate, before publishing such scandalous allegations against those who have misappropriated more than US$5.6 billion of funds from 1MDB?

Does the Minister realise how ridiculous he sounds?  Is he really that half-witted, or is he only pretending to be so?

In responding to Dato’ Seri Abdul Rahman Dahlan’s criticism, the US DOJ said that they “have to allege enough facts to show a reasonable belief that United States money laundering and other criminal laws were violated and that the subject assets were involved in or traceable to these illegal transactions.”

Surely Dato’ Seri Rahman Dahlan would know that the way to fight a factual allegation is to provide factual evidence which destroys the allegations.  The daily repetitive attempts by the Minister and his colleagues to taint the US investigations with insinuations of political and other motives not only does not help the cause of the Prime Minister and his wife, they actually worsen the negative perception because the alleged facts have not been challenged.

Malaysians are asking, if the US DOJ is indeed concocting malicious allegations against the Prime Minsiter and his wife as the Cabinet Ministers continue to insist, why haven’t the allegations been denied?

In fact, why hasn't Dato’ Seri Najib Razak produced proof that this bank account(s) never received the purported US$732 million which had originated from 1MDB?  Why hasn't Datin Seri Rosmah Mansor come out to publicly deny that she had indeed acquired, or received as a gift, the alleged US$27.3 million pink diamond pendant?

Their silence speaks a thousand words, while the aimless barking by the Prime Minister’s lieutanants only served to confirm without a doubt in the minds of the people, the truth of the US DOJ scandalous allegations.

Perhaps in his eagerness to castigate the US DOJ, Dato’ Seri Rahman Dahlan has merely forgotten to establish the facts.

Let me challenge Dato’ Seri Rahman Dahlan once again, did or did not the Prime Minister, referred to as MO1 in the US DOJ suit, receive more than US$732 million in his personal bank account in Malaysia while his wife, Mrs MO1 acquired a US$27.3 million diamond pendant after trips to Monaco and New York in 2013?

If the EPU Minister can’t answer the above questions, then he should stop making a complete fool of himself and further destroy whatever is left of the good name of Malaysia to a watching international audience.

Wednesday, June 21, 2017

Why is Minister Dato’ Seri Abdul Rahman Dahlan more interested in asking why Datin Seri Rosmah Mansor was implicated in the US DOJ suit and not outraged by the allegation that US$27.3 million of funds originating from 1MDB has been used to acquire a 22-carat pink diamond pendant necklace for her?

Malaysians are amused by the sardonic entertainment the Barisan Nasional (BN) Ministers are putting up for us on a daily basis in response to the recently updated US DOJ suit to seize an additional US$540 million worth of assets laundered with funds from 1MDB.  This sum is on to of nearly US$1.2 billion in the suits filed since July last year.

At the heart of the scandal is the involvement of a “Malaysian Official 1” (MO1) who received more than US$732 million of the laundered funds in his personal bank account in Malaysia.  What further stunned the nation was when “MO1’s wife” was mentioned in the updated kleptocracy suit, when DOJ alleged that she spent US$27.3 million on a 22-carat pink diamond pendant necklace with that money.

Dato’ Seri Hishamuddin Hussein would put up a blank face feigning ignorance and asked “for all we know it could be anyone. ‘MO1’ could be (Second Finance Minister) Johari (Abdul) Ghani.”

This of course runs contrary to Economic Planning Unit (EPU) Minister, Dato’ Seri Abdul Rahman Dahlan’s public admission on BBC in September 2016 that “obviously, if you read the documents, it is the prime minister…”

This confirmation is on top of the Minister’s earlier contemptuous remark made in August 2016 that “only an idiot doesn’t know who MO1 is”.

The question as to whether Dato’ Seri Rahman Dahlan would tell Dato’ Seri Hishamuddin Hussein that the latter is “an idiot” is perhaps best left for the former to answer.  What is perhaps comically incongruent is how two senior Ministers in the Prime Minister’s office held 2 contradictory positions over the simple poser.

They were both however consistent in ignoring the elephant(s) in the room pointed out by the DOJ – that MO1 received more than US$732 million in his personal bank account while Mrs MO1 got her US$27.3 million necklace with money borrowed by the Government’s wholly-owned subsidiary.

Yesterday again, the EPU Minister, who is also BN Strategic Communications Director, confirmed that MO1 is Dato’ Seri Najib Razak, and MO1’s wife would be Datin Seri Rosmah Mansor.

However, Dato’ Seri Rahman Dahlan took pains to lament that “you (DOJ) mock, you gave the impression that Rosmah and the diamond did something wrong.  But in the document you submitted, you didn't include the diamond as one of the items that you want to seize. It was unnecessary to put the name there."

The Minister clearly and intentionally missed the woods for the trees.  Instead of asking why “implicate” Datin Seri Rosmah Mansor, should the Minister, whose primary responsibility is not to protect the Prime Minister’s wife but the interest of the Rakyat, confirm if the US$27.3 million diamond necklace was indeed purchased with money laundered from 1MDB?

It is worth noting that the EPU Minister did not deny these facts.  He is merely making a hue and cry of the exposure of these “facts”.

Before Dato’ Seri Rahman Dahlan decides to speak to the press again regarding this issue, let me challenge him to confirm these simple facts exposed by the DOJ with Mrs MO1:

1.     On or about July 5, 2013, Datin Seri Rosmah Mansor met New York jeweller, Lorraine Schwartz together with Low Taek Jho and others aboard the 147 meter Topaz, one of the largest private yachts in the world in Monaco.  There group discussed the design of the necklace to hold the 22-carat pink diamond, which itself would be made of smaller diamonds.

2.     On or about September 28, 2013, Datin Seri Rosmah Mansor again met Schwartz with Low in a hotel suite in the Mandarin Time Warner in New York in order to show them the layout of the necklace that Schwartz had designed.

3.     The finished 22-carat pink diamond necklace, which included the 22-carat pink diamond as a pendant, was delivered to a friend of Datin Seri Rosmah Mansor in Hong Kong on or about March 7, 2014, for delivery to the wife of the Prime Minister in Kuala Lumpur.

If Dato’ Seri Rahman Dahlan can provide evidence, on behalf of Mrs MO1 that the above allegations are brazenly untrue, then let me assure the Minister and everyone else in the Cabinet that I will be the first from the opposition bench to sit with him in a press conference to publicly denounce the DOJ allegations.

If not, then let me remind Dato’ Seri Rahman Dahlan, that as a responsible Minister and citizen, he must report the above transgression to both the Police and the Malaysian Anti-Corruption Commission (MACC) for their respective investigations.

Tuesday, June 20, 2017

All Malaysians should heed the call by the MACC Chief Commissioner to be “brave” and file reports on the corruption, abuse of power and money laundering in 1MDB as exposed by the US DOJ

We wholly support MACC Chief Commissioner, Dato’ Dzulkifli Ahmad’s call for Malaysians to be “brave” to report all cases of corruption to the agency.

"Concerned Malaysians need not fear the MACC. We are friendly, so join us and report corruption and abuse of power.  Together we will bring up a society that is brave and will say 'no' to corruption and the corrupt," Dzulkifli told reporters in Kuala Lumpur on 17 June 2017.

He assured that those who want to remain anonymous will have their identities protected and launched the new anti-corruption hotline number 1800-88-6000.

Dato’ Dzulkifli’s call and toll-free number could not have come at a more opportune time.

Malaysians have been outraged and flabbergasted by the latest suit filed two days earlier by the US DOJ under the Kleptocracy Asset Recovery Initiative for multi-billion ringgit worth of assets for funds laundered from 1MDB.

Not only did Malaysians discover that funds exceeding USD5.6 billion have been laundered by 1MDB officials, Jho Low and his associates, we discovered that more than US$200 million or approximately RM880 million have been used to purchase precious designer jewelry for their family and friends.

This included a US$27.3 million 22 carat pink diamond pendant necklace which was acquired by the wife of Malaysian Official 1 (MO1).  The Minister in Prime Minister’s office, Dato’ Seri Abdul Rahman Dahlan has publicly stated that MO1 is none other than Dato’ Seri Najib Razak, and anyone who doesn’t know who MO1 is, is an “idiot”.

The DOJ also detailed how 1MDB forged financial statements, falsified audited financial statements, created multiple version of agreements for the very same transactions, colluded with foreign companies, lied to financial officers and authorities and outrageously pledged worthless securities as collateral to secure its US$975 million loan from the Deutsche Bank-led consortium.

The DOJ have included all these evidential details – telephone conversations, email correspondences, financial statements, transaction documents – were clearly painstakingly gathered by the DOJ from all international banking institutions involved with 1MDB as well as other relevant witnesses around the world.

Hence with the wealth of information and evidence contained in the 251-page suit, all Malaysians can now be “brave” and ring the toll-free 1800-88-6000 number to file a complaint against corruption, abuse of power and money laundering by 1MDB as well as against both MO1 and his wife.  After all, there is no bigger case of corruption plaguing the country today than the RM42 billion 1MDB scandal.

This will answer the Chief Commissioner's honourable plea for the public to “help [MACC] realise the anti-corruption revolution to ensure that our country is free from corruption and abuse of power within the next three years when we hit the year 2020".

However, the bigger question is, will MACC be equally “brave” as ordinary Malaysians to investigate MO1, his wife, 1MDB officers as well as Jho Low and his associates for their crimes against the nation?

Dato’ Dzulkifli Ahmad shall not be so cowardly as to abdicate from its constitutionally enshrined responsibilities by passing the buck to the Royal Malaysian Police, as he so-declared at the same press conference.

Sunday, June 18, 2017

Malaysians shamed as Attorney-General Tan Sri Apandi Ali gets schooled by the United States Department of Justice

The updated second asset seizure suit filed by the United States Department of Justice (US DOJ) under the Kleptocracy Asset Recovery Initiative contained even more outrageous exposés on how 1MDB funds have been misappropriated to those who are in power as well as their associates.

Besides some of the juiciest scandalous details befitting tabloid headlines around the world, the DOJ also took pains to elaborate how the funds exceeding USD5.6 billion have been laundered by 1MDB officials, Jho Low and his associates.

The DOJ detailed how 1MDB forged financial statements, falsified audited financial statements, created multiple version of agreements for the very same transactions, colluded with foreign companies, lied to financial officers and authorities and outrageously pledged worthless securities as collateral to secure its US$975 million loan from the Deutsche Bank-led consortium.

All these evidential details – telephone conversations, email correspondences, financial statements, transaction documents – were clearly painstakingly gathered by the DOJ from all international banking institutions involved with 1MDB as well as other relevant witnesses around the world.

And yet, the first and only response from our Attorney-General, Tan Sri Apandi Ali to date has been to rue DOJ’s “insinuations that have been made against the prime minister of criminal wrongdoing”.

You are wrong, Mr Attorney-General.  The US DOJ suit did not mention or even highlight any specific wrongdoing by Dato’ Seri Najib Razak.  The US DOJ merely detailed how more than US$5 billion from 1MDB, an entity owned by the Malaysian government have been laundered around the world by a Low Taek Jho and his associates.

In the process, the US DOJ merely mentioned that some of the ultimate beneficiaries of the laundering exercise were Dato’ Seri Najib Razak, to the tune of US$732 million and his wife, who received a gift of a pink diamond necklace worth more than US$30 million.

Like Jho’s girlfriend, Miranda Kerr who received multi-million dollar diamond studded jewelry, or “friend”, Leonardo DiCaprio who received multi-million dollar worth of rare movie memorabilia and paintings, they may be oblivious to the fact that the items were purchased with laundered funds.

Perhaps the Prime Minister and his wife are equally innocent and all they need to do is to return the money or surrender the jewelry, just as Leonardo have done.  Hence, it is misguided for Tan Sri Apandi Ali to conclude the DOJ case as one against the Prime Minister.

The real question then is for Tan Sri Apandi Ali to investigate the money laundering exercise carried out by mastermind Jho Low and the abetting 1MDB officials.  The Attorney-General cannot deny the overwhelming prima facie evidence presented by the DOJ on the above.

In fact, the DOJ even presented how the above crimes have broken Malaysian laws:


942. Misappropriating public funds by a public official is a criminal offense under Malaysian law, as enumerated by the Penal Code of Malaysia, including but not limited to sections 403 (dishonest misappropriation of property), 405 (criminal breach of trust), 409 (criminal breach of trust by public servant or agent), 166 (Public servant disobeying a direction of the law, with intent to cause injury to any person (including a company)), 415 (cheating), 418 (cheating with knowledge that wrongful loss may be thereby caused to a person whose interest the offender is bound to protect), and 420 (cheating and dishonestly inducing delivery of property); and the Malaysian Anti- Corruption Act 2009, including sections 16, 17, and 23. Copies of these laws are set forth in Attachment B.

943. Bank fraud is a criminal offense under Malaysian law, as enumerated by the Penal Code of Malaysia, including but not limited to section 415 (cheating), 418 (cheating with knowledge that wrongful loss may be thereby caused to a person whose interest the offender is bound to protect), and 420 (cheating and dishonestly inducing delivery of property).

Malaysians are embarrassed by the fact that our top prosecuting officer had to be schooled by foreign jurisdictions on the laws of this country.

Instead of crying “frustration” that “the AG's Chambers was not informed or alerted by DOJ of this action”, Malaysians would like to know if the AG has bothered to even initiate requests for evidence from the US authorities since the DOJ filed their first asset seizure suit nearly a year ago?

Or is it a case for the AG to see no evil, hear no evil and hence speak no evil?

Saturday, June 17, 2017

Tan Sri Irwan Serigar, as both the Treasurer-General and 1-year old Chairman of 1MDB must investigate and explain the scandalous misappropriations exposed by the US DOJ

The updated second asset seizure suit filed by the United States Department of Justice (US DOJ) under the Kleptocracy Asset Recovery Initiative contained even more outrageous exposés on how 1MDB funds have been misappropriated to those who are in power as well as their associates.

Besides hundreds of millions more in the acquisition of luxury properties around the world and prized art masterpieces, the US DOJ is seizing The Equanimity, one of the most luxurious ships in the world costing more than USD250 million belonging to Jho Low.

Even more scandalous was more than USD200 million spent on precious jewelry including more than USD30 million for a rare pink diamond necklace for Datin Seri Rosmah Mansor.

Besides some of the juiciest scandalous details befitting tabloid headlines around the world, the DOJ also took pains to elaborate how the funds exceeding USD5.6 billion have been laundered by 1MDB officials, Jho Low and his associates.

The previous DOJ suit in July last year has already outlined how USD1.83 billion invested with Petrosaudi International, USD1.367 billion paid to a fraudulent British Virgin Islands incorporated Aabar Investments and US$1.56 billion from 1MDB Global Investment Limited transferred to bogus investment funds, were laundered.

The updated suit published for the first time how an additional USD855 million borrowed from Deutsche Bank was raised and laundered in 2014 via another fraudulent Aabar Investments incorporated in Seychelles.

The exposé which reads like a Robert Ludlum political thriller, detailed how 1MDB managed forged documents including audited financial statements, created multiple version of agreements for the very same transactions, lied to financial officers and authorities and outrageously pledged worthless securities as collateral to secure its US$975 million loan from the Deutsche Bank-led consortium.

Tan Sri Irwan Serigar was only appointed as the Chairman of 1MDB last year to replace disgraced Board of Directors who resigned en-mass. He was not involved with any of the above shenanigans. He, who is also the Treasurer-General, the most senior Finance Ministry official in the country, must take the bull by the horns and uncover all the skeletons in the closet.

The 1MDB management was quick to dismiss the US DOJ allegations as “not backed by evidence”.  Surely, as a most experience civil servant, Tan Sri Irwan Serigar would not take the management denials at face value, especially in the face of such a detailed exposé of how the 1MDB funds were siphoned.

All it takes is for Tan Sri Irwan Serigar to call for an emergency 1MDB board meeting and demand for the relevant bank statements to be presented to discover if the US DOJ was only exposing the truth or they have been misled by all the international banks in the world who cooperated with the investigations.

Will Tan Sri Irwan Serigar do the right and honourable thing for the sake of Malaysian tax-payers, whose money he has been entrusted to manage?  Or will he succumb to the very reason why the previous Chairman and Board had to resign in disgrace, the failure to perform their fiduciary duties to keep a rogue management in check, to prevent fraud and abuse, especially to the scale of tens of billions of ringgit.

Saturday, June 10, 2017

The Government must move to suspend Tan Sri Isa Samad to investigate scandalous approval of RM850mil of “ridiculous deals”, just as the FGVH Board has suspended the CEO for the purported RM46mil worth of irregular transactions

Suspended Felda Global Ventures (FGVH) Chief Executive Officer, Dato’ Zakaria Arshad made very serious allegations that the Board of Directors approved “ridiculous deals”, despite the objections of the management executive committee.

The “ridiculous deals” included a GBP100 million (RM550 million) additional investment in Felda Cambridge Nanosystems Ltd which had already lost RM117 million in the past few years and another RM300 million to acquire a 30% stake in a creamer factory, which is not part of Felda’s core business.

More frighteningly, Zakaria also revealed direct interference by the Board in FGVH to award directly negotiated contracts without tender which he had wanted to stamp out since he was appointed just over a year ago in April 2016.

After nearly a week of the scandalous exposé, the Chairman of the Board of Directors, Tan Sri Mohd Isa Samad has refused to shed light on the above damaging allegations.

Yesterday, the Edge Financial Daily reported that Tan Sri Isa Samad claimed that Zakaria’s allegations weren’t the issue, and the only matter of concern was the purported irregular transactions between FGVH subsidiary, Delima Oil Sdn Bhd and Dubai-based Afgan company, Safitex Trading LLC.

When asked, Tan Sri Isa said, “I don’t want to make any statement on that one… Don’t divert the issue… we are talking about this (Safitex).  Other topics will be discussed another day, after this has been resolved.  For us, the focus now is the actions Zakaria has taken.”

Yes, Malaysians are indeed interested to get to the bottom of Safitex’s US$11.7 million (RM46 million) outstanding debt to FGVH.  However, Malaysians are also equally, if not more interested in discovering the truth behind the RM550 million and RM300 million investments in the above-mentioned “ridiculous deals”.

These explosive exposés involving RM850 million and dodgy contract awards are no less serious than the RM46 million purported transgression by Dato’ Zakaria.

Tan Sri Isa has publicly dismissed calls for him to resign as the Chairman of the Board, claiming that there was no reason for him to do so.  However, if the “ridiculous deals” allegations are indeed true, then the circumstances would certainly warrant his immediate resignation or sacking.

Tan Sri Isa’s refusal to explain or even deny the investments lends credence to the veracity that the Board has indeed approved these “ridiculous deals”.

On that basis alone, just as the Board has suspended the CEO and four others in the company’s management pending internal audit investigations, we call upon the Government, who is the controlling shareholder of FGVH, to immediately suspend Tan Sri Isa as the Chairman, pending investigations.

There is absolutely no reason for the double-standards in treatment where Dato’ Zakaria and four others are suspended for a RM46 million transgression, but Tan Sri Isa Samad gets away scot-free for violating corporate governance ethics by pushing through the approval of RM850 million of “ridiculous deals” despite being merely a non-executive Chairman.

Friday, June 09, 2017

It is time for the Auditor-General and Public Accounts Committee to investigate the shenanigans which has taken place in Felda Global Ventures Holdings Bhd

Both the FGVH Chairman, Tan Sri Mohd Isa Samad and the Chief Executive Officer (CEO), Dato’ Zakaria Arshad have traded barbs and accusations against each other on irregular transactions and activities which have taken place in the struggling plantation company.

The CEO has accused the Board of Directors of approving “ridiculous deals”, despite the objections of the management executive committee.  The “ridiculous deals” included a GBP100 million additional investment in Felda Cambridge Nanosystems Ltd which had already lost RM117 million in the past few years and another RM300 to acquire a 30% stake in a creamer factory, which is not part of Felda’s core business.

Tan Sri Isa and the Board of Directors have to date failed to provide any clarity or rebuttal against the CEO allegations, lending credence to the veracity that the Board has indeed approved these “ridiculous deals”.

On the other hand, Tan Sri Isa has led the Board to suspend the CEO and four other members of the Management, including the Chief Financial Officer for alleged irregularities in payments from a Dubai-based Afgan company, Safitex Trading LLC to a FGVH subsidiary, Delima Oil Sdn Bhd.

According to the Board, Safitex’s debt to FGVH increased from US$8.3 million in 2015 to US$11.7 million in 2016.

Dato’ Zakaria has publicly denied any wrongdoing or “violation of the corporate governance code”.  Initially, in a letter to the Chairman dated 5 June 2017, Reuters reported that he claimed “The payment process... was approved and implemented by the previous chief executive...”

He has also insisted that the amount involved was only US$11.7 million, barely 0.2% of FGVH’s total revenue which did not justify the gravity of the actions taken by Tan Sri Isa.

Yesterday, in a Edge Financial Daily report, Dato’ Zakaria further insisted that the Safitex debt is “100% recoverable”.

However, despite the denial and the attempt to make light of any possible transgression in the above payment, Dato’ Zakaria did not sound convincing in the reasons for the delay of payment by the Afgan company.

No tangible reasons have been given as to why the sum has been outstanding since 2015, or why it would be recoverable. It further begs the question as to why the Afgan company has been given such special leeway in payment terms, particularly since the sums involved were so small in the first place.

Juxtaposed against the company’s performance where its profits plunged dramatically from RM982 million in 2013 to RM325 million, RM182 million and RM31 million in 2014, 2015 and 2016 respectively, the exposes by both the Board and the Management raises major questions on the scale of shenanigans taking place in FGVH over the past few years.

Therefore, the dire situation in FGVH demands more than merely the appointment of Dato’ Seri Idris Jala to be an “independent party” to establish the facts of the case and recommend the way forward.  The former Minister’s appointment and any outcomes arising from his appointment will smell of a political compromise and smack of opaque cover ups.

The gravity of the failure and imbroglio in FGVH demands a thorough investigative audit by both the Auditor-General (AG) as well as the parliamentary Public Accounts Committee (PAC).  This will not be the first time an audit is carried out in a public-listed company substantially owned and controlled by the Government.  Previously, the PAC has also carried out a thorough investigations of the construction of KLIA2 by Malaysia Airports Holdings Berhad.

Both the AG and the PAC have previously refused to re-open investigations into the 1MDB scandal despite new incriminating evidence from the United States Department of Justice, as well as to initiate investigations into SRC International for transferring tens of millions of ringgit into the personal bank account of the Prime Minister.

However, Malaysians hope that both the AG and the PAC will still carry out part of their responsibility to investigate major shenanigans in government-linked companies to protect the interest of the nation’s taxpayers.  The failure by the AG and the PAC to do so would only go to prove that these vital institutions have been severely compromised to ensure that only minor infractions in the civil service will be investigated.

Thursday, June 08, 2017

Did FGVH "Non-Executive Chairman" Tan Sri Mohd Isa Samad over-extend his role to become the de facto CEO and an executive director?

We welcome the Government’s appointment of Dato’ Seri Idris Jala as an “independent party” to establish the facts of the case and recommend the way forward following FGV board’s decision to suspend its chief executive officer, chief financial officer and two other senior members of the management team.

In his investigation process, Dato’ Seri Idris Jala must not only look into the truth behind the purported trangressions by the suspended management team, he must also review the corporate governance practice within FGVH, particularly the role of the Board of Directors.

The current board of directors comprise of a Non-Executive Chairman, Tan Sri Isa Samad; 3 Non-Executive Directors - Dato’ Dr Omar Salim, Dato’ Yahya Abd Jabar and Dato’ Siti Zauyah Mohd Desa who represents the Ministry of Finance; 4 Independent Directors - Datuk Noor Ehsanuddin Mohd Harun Narrashid, Tan Sri Dr Sulaiman Mahbob, Dato’ Mohd Suffian Awang and Dato’ Zafer Hashim as well as the suspended CEO, Dato’ Zakaria Arshad, who was also the sole Executive Director on the Board.

When Dato’ Zakaria publicly alleged that the FGV Board authorised “ridiculous deals” against the opposition of the executive committee, it raised the question of who is ‘running’ FGVH.

The “ridiculous deals” included a GBP100 million additional investment in Felda Cambridge Nanosystems Ltd which had already lost RM117 million in the past few years and another RM300 to acquire a 30% stake in a creamer factory, which is not part of Felda’s core business.

The problem is none of the Board of Directors, other than the CEO have ‘executive’ functions.  This means that they cannot be bringing “deals” directly to the Board for its approval.

Excluding the Independent Directors, Tan Sri Isa and the 3 Non-Executive Directors must explain what powers do they have in FGVH to direct transactions which were specifically rejected by the management executive committee (Exco)?

The proper process should be any proposed transactions must be studied by the Exco and put forward to the Board of Directors for approval.  The Board, after deliberation, could then decide to agree or reject the proposed deal.  It is not be any Board member, even a non-executive chairman, to propose a transaction directly to the Board for approval, especially if it has been specifically rejected by the Exco.

If the non-executive directors of FGVH have failed in carrying out their grave responsibilities and fiduciary duties, then it should be recommended that they be sacked from their positions.

What’s more, Dato’ Zakaria had further revealed direct interference by the Board in FGVH to award directly negotiated contracts without tender which he had wanted to stamp out since he was appointed just over a year ago in April 2016.

As a former Cabinet Minister who preached accountability in our GLCs, Dato’ Seri Idris Jala must verify the very serious allegations above and take action against those who broke the codes of corporate governance in FGVH.

Finally, Malaysian call upon Dato’ Seri Idris Jala to complete his investigations within two weeks so as to ensure the uncertainty within FGVH which is listed on Bursa Malaysia can be resolved the soonest possible.

Wednesday, June 07, 2017

Felda Global Ventures Holdings Chairman must explain suspended CEO’s allegations of “ridiculous deals” steamrolled by the FGVH Board of Directors

The Board of Directors of FGVH has suspended both the Chief Executive Officer (CEO), Dato’ Zakaria Arshad and the Chief Financial Officer (CFO), Ahmad Tilfi Mohd Talha pending internal audit investigations over purported irregularities in payments made by a subsidiary company.

Until such a time where there is greater clarity on what the purported irregularities are, Malaysians can give the Board of Directors the initial benefit of the doubt as we are sick of hearing cases of misappropriation and corruption in government-linked companies (GLCs) which never get investigated or the perpetrators never getting prosecuted.

However, what is most shocking is the revelation by the suspended CEO that he was being punished for attempting to block “ridiculous deals” from being approved by the Board of Directors.

Amongst the investments, he said, was plans for a GBP100 million (RM551 million) expansion of Felda Cambridge Nanosystems Ltd, a nano carbon company, which had already lost RM117 million in the last three to four years.  "Now they (the FGV board) want to expand, they need another 100 million pounds. To me this is ridiculous, we're a plantation company," he was quoted as saying by The Star.

Another investment, Zakaria said, was the plan to spend RM300 million to acquire a 30 percent stake in a creamer factory, owned by a company primarily involved in making cans.  "Why do I want to put RM300 million for a non-core business? They also overruled, even though exco already said no-go but the investment was given the go-ahead," he said.

More frighteningly, Zakaria also revealed direct interference by the Board in FGVH to award directly negotiated contracts without tender which he had wanted to stamp out since he was appointed just over a year ago in April 2016.

These are shocking revelations, which to a certain extent explains how purportedly the largest plantation company in the world saw its profits plunged dramatically from RM982 million in 2013 to RM325 million, RM182 million and RM31 million in 2014, 2015 and 2016 respectively.

The above doesn’t yet take into account the botched US$680 million (RM2.9 billion) acquisition of a 37% stake in Eagle High Plantations at an astronomical price which FGVH could in no way afford.

Based on the latest financial statement in March 2017, FGVH has only RM1.8 billion in cash left while it has to service loans and borrowings exceeding RM4 billion.

Tan Sri Isa must immediately confirm if what Dato’ Zakaria said is true and provide the valid reasons why the Board of Directors are making executive decisions which overruled the company’s top management team and executive committee.

The failure of FGVH Non-Executive Chairman to explain the above scandalous allegations will expose himself to the “violation of corporate governance code”, the very wrongdoing which the FGVH CEO and CFO are purported guilty of.

Saturday, June 03, 2017

PM Dato’ Seri Najib Razak must ensure that proceeds of assets stripped from Proton must be used to repay the Government’s RM1.5bn soft loan and not siphoned by shareholder, DRB-Hicom

Yesterday, the Prime Minister, Dato’ Seri Najib Razak was absolutely right to ask the question, “will you retain a loss-making company?”, in a pointed justification for the sale of Proton. It is a rhetorical question of course, as no one wants and should retain the company if it is in this case, almost forever making losses.

However, aside from the fact that the Prime Minister sets double-standards by not asking the same question to other bleeding companies such as Malaysia Airlines (MAS) which received a RM6 billion bailout package in 2014, Dato’ Seri Najib Razak must ensure that the sale of 49.9% of Proton to Geely by DRB-Hicom does not become a cover for a multi-billion ringgit bailout of the latter.

DRB-Hicom, a conglomerate owned by Tan Sri Syed Mokhtar Al-Bukhary, who has received billions of ringgit in preferential contracts and concessions from the Government in the past, has been making hundreds of millions of losses over the past 2 financial years.

For the years ending 31 March 2017 and 2016, DRB-Hicom recorded losses of RM260.4 million and RM871.6 million respectively. The share price of DRB Hicom has declined by 56% from RM2.60 as at the end of 2012 to RM1.15 as at the end of 2016.

As Second Finance Minister, Dato’ Seri Johari Abdul Ghani announced, as part of the Geely acquisition, the Government will still pay RM1.1 billion in R&D grant to Proton, which will be “refunded” to DRB-Hicom.

In addition, the Government is disbursing another RM250 million, on top of the existing RM1.25 billion in soft loans for the beleagured company.

Proton will also be stripped of its assets in the process, with the Lotus car company being sold to a Geely-led joint venture for GBP100 million (RM556 million) and real estate properties worth at least RM540 million transferred to DRB-Hicom.

The Edge Weekly also reported last week that the bulk of the proceeds from the Lotus sale will find its way back to DRB-Hicom.

Hence the question, Dato’ Seri Najib Razak, is not whether we should dispose of “a loss-making company”. We have already disposed 100% of Proton to DRB-Hicom in 2012 and hence no longer owns loss-making ‘national car-maker’.

The question Malaysians are asking the Prime Minister is why are we allowing DRB-Hicom to benefit billions of ringgit by helping them dispose half of their loss-making company, Proton?

Two days ago, I’ve already issued a statement seeking the Ministry of Finance to elicit a shareholders’ joint and several guarantee on the Government’s RM1.5 billion soft loan to Proton if the Government refuses to recall the loan in the light of the Geely acquisition.

On top of that, given the factors above, the Government must block the transfer of cash and assets to DRB-Hicom unless the Government’s soft loan is repaid first. In other words, the proceeds from the GBP100 million Lotus sale and the RM540 million property transfer to DRB-Hicom must not be allowed to take place, until and unless the Government is paid first.

Otherwise, the 49.9% stake sale of Proton to Geely has only become just a façade not only for Proton’s assets to be stripped, but for Tan Sri Syed Mokhtar and DRB-Hicom to benefit billions of ringgit in the process at the expense of the Malaysian tax-payers.

Thursday, June 01, 2017

Government soft loan to Proton must be recalled with immediate effect unless the “new” Proton shareholders jointly and severally guarantee the RM1.5bn loan

Two days ago I had raised the concern that despite Geely’s acquisition of 49.9% of Proton from DRB-Hicom, the Government may ultimately end up with more than 65% of the shares in Proton, should Proton fail to repay the RM1.5 billion soft loan provided by the Government.

This is because the terms of the soft loan in the form of “Redeemable Convertible Cumulative Preference Shares” (RCCPS) are such that Proton has the rights to convert the loan into its shares at any point of time.  If the loan is still unpaid as at maturity, then the entire sum, including any outstanding interest in the form of dividends, will be converted into shares in Proton.

Hence the fear for Malaysian tax-payers is, if Proton’s purported turnaround plan is successful, DRB-Hicom and Geely will share all the profit, but if the plan fails, we have to be left carrying the baby once again.

In a response to Malaysiakini yesterday, the Second Finance Minister, Dato’ Seri Johari Abdul Ghani tried to assure Malaysians that “we will make sure that the RM1.5 billion will be fully secured.”

Dato’ Seri Johari further revealed that based on the deal between Geely and Proton, the option of a conversion is no longer available.  He even confirmed that there is a clause in the agreement stating so.

"We will secure the assets instead and will continue to receive the coupon rate. We will treat this as a strictly private deal.  Whatever we have promised and committed before Geely came in, we will fulfil them," he added.

Therein lies the confusion and contradiction.  First the Second Finance Minister says that the terms of the RCCPS is no longer valid post-Geely acquisition.  Then he says that whatever the government “have promised and committed before Geely came in, [the Government] will fulfil them”.

So which is which?

If the deal is now “strictly private”, then why does the Government need to continue with the soft loan to Proton which have a tenure of up to 15 years.  Why should a new repayment time-table be set?  On the contrary, the Government is proceeding to disburse the final instalment of RM250 million from the RCCPS to Proton.

Even if we were to agree to continue to lend Proton the sum of RM1.5 billion, which we should not, what is this new “security” for the loan Dato’ Seri Johari is talking about?

Let us not forget that Geely is acquiring 49.9% of Proton for a mere RM170 million, providing an indication of the worth of the company.  So what assets could possibly be left in Proton that is worth RM1.5 billion which could “secure” the borrowings from the Government?  Worse, Proton’s key assets – the Lotus car company and brand and its real estate properties would all have already been disposed under the current Geely deal.

Hence even if the RCCPS “conversion to shares” terms are modified, ultimately the failure of Proton to produce the necessary assets valued at RM1.5 billion to repay the loan would still mean the Government taking possession of Proton once again.

Therefore, the only way to ensure that the Government is “protected” and Malaysians can be assured that Proton does not end up in our unwittingly hands again is to elicit a joint and several guarantee from both shareholders of Proton – DRB Hicom and Geely.  This will be nothing less that what any commercial bank would demand from Proton.

We hope that the Ministry of Finance can provide an official undertaking to concerned Malaysians that such a shareholders guarantee for the RM1.5 billion soft loan, or whatever outstanding amounts, will be secured before the Geely’s 49.9% acquisition of Proton can be officially completed.

Tuesday, May 30, 2017

Will we be left with a skeletal Proton, stripped of its assets?

The Second Finance Minister, Dato’ Seri Johari Abdul Ghani announced that the Ministry of Finance (MoF) agreed to pay RM1.1 billion in “research grant” and drawdown the final instalment of RM250 million of its RM1.5 billion soft loan to Proton.

However, as I wrote yesterday, I found it inexplicable that Geely needed only to pay RM170 million for a 49.9% stake in Proton which is about to receive the above RM1.35 billion in cash from the MoF.

Worse, despite the high profile acquisition signing by the respective parties, Geely makes no mention at all on its future plans for Proton, particularly if it plans to invest more funds into Proton to, in the words of Dato’ Seri Johari, “bring back the glory days”.

In fact, when you study the transaction in detail, Malaysians are concerned that the deal is essentially an asset stripping exercise with Proton’s skeletal remains to be returned to the Malaysian government in time to come.

Under the deal, Proton will dispose of it’s entire stake in UK-based Lotus car manufacturer to a Geely-led joint venture company for GBP100 million or approximately RM556 million.  It should be remembered that Proton had paid RM1.96 billion to acquire Lotus in 1996.  From the above transaction details, it is obvious that Geely is more interested in Lotus which it will become the majority shareholder, as opposed to Proton.

In addition, we have also discovered that as part of the disposal exercise, the valuable landbank previously held by Proton worth an estimated RM540 million in book value will also be fully-transferred to DRB-Hicom, who acquired Proton from Khazanah Nasional in 2012.  Property analysts interviewed by the Edge Weekly suggested that the market value for these assets are significantly higher.

The problem is, despite the above assets being stripped from Proton, the Government’s RM1.5 billion soft loan to Proton will remain outstanding.

Under all sensible circumstances, with Geely’s acquisition of Lotus and the transfer of property assets to DRB-Hicom, the Government’s soft loan must be repaid in full.  At the very least, the “new” joint-shareholders of Proton – DRB Hicom and Geely must provide full corporate guarantees for the loan in the event of default by Proton.

However, we have since discovered that in the event of default, the soft loan will be converted into 2.1 billion new shares in Proton, which constitutes at least 65% of the company!

In other words, if Geely and DRB-Hicom chooses not to continue investing and sustaining Proton, and as a result, the latter fails to repay the Government’s RM1.5 billion soft loan, then the bleeding company will once again be owned by the Government!

The clear winners in this outcome are Geely which got what it wanted out of the transaction – the Lotus car and brand; and DRB-Hicom which got all the valuable property assets.  In the event that Proton fails to recover, then the loss-making baby will be inevitably returned to the unwitting arms of the Malaysian tax-payers.

If Proton for whatever reason becomes very profitable, the private companies will keep all the profit. However, if Proton, in the plausible scenario of continuing to make hundreds of millions of losses annually, the losses will be ultimately be “socialised” by the Malaysian Government.

The Ministry of Finance must answer as to why the Government has provided two private companies – one local and one foreign, such a fantastic financial failsafe.  Its heads, Geely and DRB-Hicom wins; and tails, the rakyat loses.

Monday, May 29, 2017

Did the Malaysian Government effectively pay Geely to acquire Proton?

After more than a decade of tie-up talks with car manufacturers around the world, including repeated on-off talks with Volkswagen, Proton finally tied the knot with China’s rising upstart Geely, which took over the Swedish Volvo in 2010.

The debate since has focused on two issues – first, the “loss” of a “national car” and second, the Government relieved of all future obligations to finance the company which has bled tax-payers for more than 20 years.

The issue of a “national” car has always been one of misplaced ego and pride.  A "national" car doesn't add value to the country's economy if it doesn't create sufficient jobs and a competitive industry.

On the other hand, if every foreign vehicle manufacturer wants to set up factory in Malaysia, it'll create thousands of jobs, facilitate knowledge and technology transfer, create a highly competitive industry and ultimately provide a big boost to our wealth and economy, even if the so-called brands are not "national".

Hence the yardstick by which we must measure the Geely acquisition must be by it’s plans for Proton.  The markets are still clueless as to how much investment Geely will bring into Proton other than the meagre cost of acquiring DRB-Hicom’s 49.9% stake in Proton for RM170 million.

If Geely has no plans to further invest in strengthening Proton’s technical capacity, then the latter will pretty much fade into the oblivion.  We are not even sure if Geely intends to fully utilise the oft-cited “excess capacity” in Proton to produce more cars, regardless of whether they are branded Proton, Geely or Volvo.

The Second Finance Minister, Datuk Seri Johari Abdul Ghani who boasted that the Geely acquisition will bring back Proton’s “glory days”, further adding that there will be no more subsidies for Proton after the final payment of RM1.1 billion.

In addition, the Ministry of Finance will disburse the final RM250 million from the RM1.5 billion soft loan provided to Proton last year.

For those that did the simple mathematics, effectively, Geely is paying only RM170 million to acquire a 49% stake in a company which the Government is about to inject RM1.35 billion (RM1.1bn + RM250mil) of cash!

As highlighted above, to date, there has been no mention at all of any commitment or additional investment by Geely into Proton in order to turn around the beleagured “national” car maker.

Hence, despite the fact that Proton is already a private company sold to DRB-Hicom in 2012, it looks like the Government is effectively bailing out DRB-Hicom, a company owned by Syed Mokhtar Al-Bukhari, by indirectly “paying” Geely to make it worthwhile for the latter to acquire 49% of Proton.

The action by the Ministry of Finance is completely inexplicable, making absolutely no financial sense.  What is the point of privatising Proton by selling its entire stake to DRB Hicom when at the end of the day, the Government continues to “finance” the company’s sustenance?

This further raises the question – if Geely fails to resuscitate Proton and gives up on the company, will the Government step in again to keep Proton on life support?

Friday, May 26, 2017

The MACC will never shake its politically tainted image unless it starts taking action against power abuse and corruption in relation to 1MDB and SRC International

The Malaysian Anti-Corruption Commission (MACC) has been putting up a brave front in making dozens of arrests of corrupt government officials from state utilities and zakat officials to senior police officers around the country.

While none of the key arrests to date have resulted in convictions in the court of law, the relatively aggressive effort in fighting corruption is to be applauded.

However, all its efforts have failed to redeem the commission’s tarnished and tainted image of being a political tool of the Najib administration, and for its failure in touching anything remotely connected to the two largest scandals afflicting Malaysia today – 1MDB and SRC International.

In comparison, over the period of a year, the Singapore authorities have prosecuted and secured guilty verdicts against various parties involved in facilitating the laundering of illegally sourced funds passing through the Singapore banking system.

The most recent conviction was against a remisier who provided a S$3,000 inducement to a financial analyst to produce a favourable valuation report for a then proposed US$2.4 billion acquisition of Petrosaudi Oil Services Limited (PSOSL) by 1MDB.

In Malaysia, the Auditor-General and Public Accounts Committee (PAC) have already flagged the transaction as highly irregular and failed all tests of corporate goverance and due diligence – with the management both misleading the 1MDB Board of Directors, as well as ignoring the instructions of the latter.

Why is it that while the Singapore authorities have not only completed the prosecution and conviction of those found guilty of being involved in the above fraudulent transaction, but in Malaysia, the MACC isn’t even remotely close to completing its investigations.  In fact, the MACC Chief Commissioner has consistently refused to confirm if there are any investigations on the parties involved in the 1MDB scandal which have burdened the Malaysian tax-payers with RM42 billion of financial liabilities.

As a result, regardless of how many other arrests the MACC made against police officers and other agencies, the rakyat will forever view MACC as a biased agency which will only take action against the fish fries and not the monster sharks.  This is especially since it is now public knowledge, undenied by the Prime Minister, Dato’ Seri Najib Razak himself, that at least US$731 million originating from 1MDB and RM69 million from SRC International Sdn Bhd found its way to his personal bank account with Ambank Bhd.

The Chief Commissioner, Datuk Dzulkifli Ahmad had tried to brush off criticisms of MACC’s tardiness by claiming that actions against politicians are delayed because they didn’t want the issue to be made used of by politicians for the purposes of campaigning.

"There is no issue of 'pilih kasih' (favouritism), it's about timing. If we take action straightaway, then that's favouritism," he told reporters in Kuala Lumpur today.

Datuk Dzulkifli could not be more misguided in his rational for not completing its investigations on 1MDB and SRC International, or prosecuting the politicians involved.  In fact, his failure to take action against corrupt politicians on a timely basis is itself an act of ‘favouritism’.

It is not the business of MACC to interfere with politics or political campaigning. The business of MACC is to prosecute the corrupt, regardless of whether the person is the Prime Minister or a lowly civil servant.  The constitution provides for the fact that all Malaysians are equal under the eyes of the law.

Secondly, Datuk Dzulkifli appears to insinuate that political campaigning against corrupt officials is a despicable and dishonourable activity.  The MACC Chief could not be more wrong. Campaigning against the politically corrupt officials is central and integral to the concept of electoral democracy.

The rakyat must have the opportunity to hear and understand all the relevant facts, so that they are able to make informed choices during the General Election.

So, Datuk Dzulkifli, we call upon you to use the powers vested upon MACC to take immediate and uncompromised actions against political figures who are involved in abuse of power, the misappropriation of state funds as well as corruption.  It will go a long way towards redeeming the severely damaged image of MACC and demonstrating that you really act without fear or favour.

Thursday, May 18, 2017

Did Proton just get asset-stripped with the tax-payers ultimately carrying the overgrown baby once again?

Over the past 2 weeks, the Prime Minister and the Ministry of Finance have been making a whole series of announcements, varying them along the way.

First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion.  According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.

However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.

Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign and agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia.  The expected agreement was purportedly worth more than US$8 billion.

However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia.  The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.

Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”

It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone.  “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.

However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.

"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.

It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along.  And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.

Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project.  Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.

We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements.  Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.

The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table.  Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.

Why is Dato’ Seri Najib Razak making up the plans for Bandar Malaysia as he goes along?

Over the past 2 weeks, the Prime Minister and the Ministry of Finance have been making a whole series of announcements, varying them along the way.

First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion.  According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.

However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.

Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign an agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia.  The expected agreement was purportedly worth more than US$8 billion.

However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia.  The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.

Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”

It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone.  “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.

However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.

"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.

It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along.  And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.

Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project.  Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.

We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements.  Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.

The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table.  Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.

Monday, May 15, 2017

Malaysia has some of the top property development companies in the world – why is Dato’ Seri Najib Razak practically begging for Chinese developers to develop Bandar Malaysia?

The failure by Dato’ Seri Najib Razak to secure even any form of non-binding commitment from Dalian Wanda to acquire Bandar Malaysia brings the Ministry of Finance plans for the 495 acres of prime land back to square one.

The Prime Minister needs perhaps a lesson in sales strategy.  An evidently desperate salesman trying to sell his family heirlooms is never going to succeed in closing a deal at inflated prices.  While these Chinese developers may be cash rich, they are not stupid.

They know that the previous buyer – the Iskandar Waterfront Holdings (IWH) Consortium who had put it the purportedly best bid in December 2015 could not pay up the full RM7.41 billion it agreed to pay for a 60% stake in Bandar Malaysia.

And if Wanda knew that, why would they be so silly as to offer more than what was previously already the best bid Bandar Malaysia could solicit?  What can Bandar Malaysia offer – other than being a sizeable piece of prime land in the middle of Kuala Lumpur, that would make it such an ‘irresistable buy’ for a foreign Chinese developer?

The answer which isn’t music to Dato’ Seri Najib Razak’s ears, is really “not much”.  Hence the only reason why these Chinese developers would acquire Bandar Malaysia is if, they got a bargain price or if they are able to extract all sorts of financial incentives and tax exemptions from the Malaysian government to make their venture worth the while.

This then begs the question – what makes these Chinese developers so special that we should bend over backwards to grant them exclusive financial incentives and generous tax exemptions?

We are not talking about Huawei setting up a reseach and design centre in Malaysia. Or for that matter setting up a manufacturing plant to produce world-class electronic gadgets.  We would bend over backwards for Huawei in this case because we have no expertise in the sector.

On the other hand, our experience with Chinese developers have left a bad taste in the mouth.  They have not only single-handedly placed the Johor property development industry on life-support, they have brought with them their entire supply chain of contractors and sub-contractors from China.

Worse, investigations by Malaysiakini recently have proven the Chinese construction projects to have engaged thousands of illegal workers from China.  They have demonstrated utter contempt for our laws.

Therefore, as the Ministry of Finance re-think the entire Bandar Malaysia development – the most important question to ask is, “why can’t Malaysian developers do the job?”

For example, a consortium comprising of SP Setia, Sime Darby and EPF stunned the global property markets with a winning bid for the London icon, Battersea Power Station in 2012.  It is now a project with gross development value in excess of GBP8 billion and have won the prestigious London “Developer of the Year Award” in 2015.  Last year, the development also won the London “Deal of the Year Award” after successfully snagging Apple as the largest office tenant which will take up 5,000 sq ft of space.

Malaysian developers are also regular winners at the International Real Estate Federation (FIABCI) World Prix D’Excellence Awards.  They have included Sunway, IJM, YTL, UEM-Sunrise and many more.  These developers are now expanding their portfolios not only in the regional countries such as Vietnam, China and Indonesia, but also to developed cities such London and Melbourne.

Why are our own developers not given a chance?  Even if in the event that there is no one developer who is able to digest the entire 495 acres of land in Bandar Malaysia – the Ministry of Finance could always parcel out the development into multiple parts and phases. This will provide the perfect opportunity for the local players to compete to create the best value and designs for the respective carved segments.

The projects will be a massive boost to our local property development industry, stimulate demand for local construction and related-services and most importantly provide thousands of new job opportunities for ordinary Malaysians.

Sometimes we think too hard, travel far and wide in the pursuit for solutions, when really, the
answer is right in front of our very eyes.

Sunday, May 14, 2017

After more than a week of hyped-up brouhaha, Dato’ Seri Najib Razak’s magic Wanda failed to cast its spell

For more than a week after the Ministry of Finance the sale of a 60% Bandar Malaysia interest to a consortium led by Iskandar Waterfront Holdings (IWH) collapsed, the Prime Minister’s Department media strategists worked overtime to limit the damage caused by the negative publicity.

They fed unnamed and uncorroborated stories to key correspondents with news leaks that the real reason why the IWH deal will terminated was because a much bigger deal was to be signed.

It was The Star who first picked up the “rumour” quoting “some sources” saying “that entity could be Dalian Wanda Group Co Ltd, a Chinese multinational conglomerate corporation and the world’s biggest private property developer” on 6 May 2017.

But it was The Singapore Straits Times who was the first to flesh out the story on 9 May 2017 and created an unreal buzz that Dato’ Seri Najib Razak has all but tied up the deal with Dalian Wanda, hence the urgency to dump IWH.

The Singapore Straits Times wrote that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”

“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project.  According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.

All media outlets, online and print, including The Star, quoted the Singapore report with expectations of an agreement to be signed with Wanda in Beijing this week hitting a feverish pitch.

However, with expectations set so high, the stage was set for a spectacular flop.  The press conference announcement yesterday afternoon between Dato’ Seri Najib Razak and Wanda’s Chairman Wang Jianlin in Beijing turned up a damp squib.

Despite the Prime Minister’s over-the-top praise for Wanda, Wang’s brief response was measured in pure diplomatic speak.

"Today, I also talked to the Prime Minister about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet.  We are very optimistic about Malaysia's investment and commercial climate.  We are willing and ready to contribute our share to Malaysia's economic development and to create the one and only unique commercial centre in Malaysia," he said.

Not even a face-saving, typically broadly-worded, non-committal Memorandum of Understanding was signed.

The reason is likely quite simple. Dalian Wanda might be one of the richest private companies in China, making them an attractive target to sell perhaps, a grossly overpriced piece of real estate. But in all likelihood, Dalian Wanda became one of the most profitable companies in the world precisely because it doesn’t pay over-the-top prices of real estate – even if it is indeed prime real estate, especially if the seller is way more desperate than Wanda is interested.

With the IWH deal dead and no super-wealthy knight-in-shining-armour in sight, the Ministry of Finance needs to go back to the drawing board on its plans for Bandar Malaysia.  The priority must not be to sell the land at the highest possible price with the intended purpose for the funds to bailout 1MDB.  The priority to the land must be a economically sustainable development which will not only empower the Malaysian business community, but also in turn create meaningful job opportunities for ordinary Malaysians.

Friday, May 12, 2017

The Ministry of Finance confirmed our worst fears – that tax-payers continue to bear the cost of 1MDB’s multi-billion ringgit losses

Both The Malaysian Insight yesterday and the Edge Financial Daily today confirmed that the Ministry of Finance (MoF) has fully refunded the RM741 million deposit paid by the Iskandar Waterfront Holdings (IWH) consortium for the latter’s 60% acquisition of Bandar Malaysia.

This follows the official announcement last week by TRX City Sdn Bhd, now a wholly-owned subsidiary of MoF, that the above sale was been terminated due to the failure of the consortium to meet their financial obligations despite a dozen extensions having been granted.

Malaysians can only weep in despair as the refund marks another milestone in the continued bailout of the debt-stricken scandal-ridden 1MDB.

When the above acquisition agreement was first signed in December 2015, it was the ‘final’ chapter of the proposed 1MDB rationalisation exercise. The sale of Bandar Malaysia, then a wholly-owned subsidiary of 1MDB, was crucial to ease 1MDB’s immediate debt problems.

Hence the 10% deposit or RM741 million paid by the IWH consortium went a long way towards paying down 1MDB’s debt service obligations.

Interestingly, and most coincidentally from a timing perspective, 1MDB transferred the ownership of TRX City, which in turn owns Bandar Malaysia, to the MoF on 31 March 2017.  This was barely 5 weeks before the above ‘surprise’ termination was announced and deposit refunded.

The question now isn’t only why the MoF refunded the deposit, at the further expense of the tax-payers, instead of 1MDB who were the recipients of the RM741 million.

The more important question now is whether the entire takeover of TRX City and Bandar Malaysia by the MoF was a pre-meditated exercise designed to relieve 1MDB of any financial obligations with respect to the then impending termination.

In other words, the timing of the transactions raises the suspicion that MoF took over Bandar Malaysia with a specific intent to bailout 1MDB with tax-payers’ funds.

The re-payment of the deposit is on top of the RM2.4 billion of 1MDB sukuk secured with the Bandar Malaysia land which the MoF has unconditionally assumed.  This was despite, as verified by the Auditor-General, not a single sen of the above sukuk borrowing was utilised for the Bandar Malaysia project.  The funds were instead siphoned for 1MDB’s “other corporate purposes”.

In addition, the MoF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.

When the 495 acres of prime land was given to 1MDB in 2012, the MoF received nothing in return.  However, when it was ultimately returned to MoF, Malaysians are now burdened with combined liabilities of approximately RM5.1 billion.

Hence, Dato’ Seri Najib Razak must explain why even more billions of tax-payers’ funds are being used to bailout his brainchild, 1MDB. More importantly, the Finance and Prime Minister must abide by his brother’s advice, Dato’ Seri Nazir Razak, that the Government must be more honest and transparent with 1MDB, particularly in letting Malaysians know how many more billions are being earmarked to bailout the 1MDB disaster in the months and years to come.

Thursday, May 11, 2017

Who made the decision to terminate the agreement for the sale of Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings?

The new season of the blockbuster 1MDB political drama thriller could not have kicked off on a more suspenseful note. Just when everyone thought (and some were hoping) that the show has run its course and the audience have lost interest, the producers of the show have returned with some impeccable scriptwriting to keep Malaysians glued to the ever-evolving scandal.

Soon after the IPIC-1MDB debt “settlement” agreement where the Ministry of Finance (MoF) agreed to assume the guarantee provided by IPIC for 1MDB’s US$3.5 billion worth of bonds, MoF announced that the agreement to sell a 60% interest in Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH) has been terminated.

The world was stunned when MoF’s wholly-owned subsidiary, TRX City Sdn Bhd, which owns Bandar Malaysia announced that the deal with the IWH consortium had collapsed because the latter did not meet payment obligations for its 60 percent stake. The consortium had disputed this claim.

While clarity on the above dispute remains unclear – with neither TRX City or IWH providing any evidence to substantiate their claims, there is now a new mystery as to who authorised the decision to terminate the agreement.

Based on Malaysiakini’s report entitled “Arul is against termination of Bandar M'sia deal”, government sources told the news portal that the RM7.41 billion deal was terminated without notifying Arul Kanda, the President and CEO of 1MDB.

However, at the material times, Arul Kanda was also the Chairman of Bandar Malaysia Sdn Bhd as well as a Board of Director of TRX City, before he was unceremoniously dumped by MoF four days after the termination announcement.  The Malaysian Insight had reported sources from MoF citing a “conflict of interest” on the part of Arul Kanda.

While we are keen to find out what exactly is the “conflict of interest” which necessitated Arul’s immediate sacking, we are even more interested to know who actually made the decision to terminate the agreement.

Since Arul Kanda was oblivious to the entire termination exercise, it meant that the Board of Directors of both TRX City and Bandar Malaysia never deliberated and made a decision on the matter involving a whopping RM7.41 billion transaction.

The Malaysian Insight reported that the decision to remove Arul was made by Finance Minister Dato’ Seri Najib Razak and Treasury Secretary-General Tan Sri Irwan Serigar Abdullah.  The question then arises as to whether Dato’ Seri Najib Razak made the unilateral decision to terminate the agreement.

If so, it should be clarified as to what powers does the Finance Minister have to make material and critical decisions of Government companies unilaterally, by-passing the companies’ board of directors?  Did Dato’ Seri Najib Razak abused his powers as the Finance and Prime Minister to terminate the IWH agreement?


It should be recalled that one of the biggest controversies over the 1MDB scandal was the powers granted to the Prime Minister to make all final key decisions in the investment company.  Clause 117 of 1MDB’s Memorandum of Articles and Association dictates that the Prime Minister must give his “written approval” for any of 1MDB’s deals, including the firm’s investments or any bid for restructuring.

It was Dato’ Seri Najib Razak who gave the ultimate approval for all the billions of ringgit of lost investments carried out by 1MDB with Petrosaudi International Limited and Aabar Investment PJS Limited.

The controversial clause has since been deleted upon recommendation by the Public Accounts Committee.  However, it appears that Dato’ Seri Najib Razak is still calling the shots behind the scene, bypassing key Treasury guidelines, as well as all forms of corporate governance and accountability which we have demanded to avoid a repeat of the 1MDB imbroglio.

We await the next episode with bated breath.

Tuesday, May 09, 2017

The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia

Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.

Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.

Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.

Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.

Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.

In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.

The Malaysian Insight quoted sources that “there are potential conflicts of interest”.  This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia.  What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?

Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards.  He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017.  Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.

Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another.  If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour?  Why didn’t the switch take place in March itself, when the transfer was executed?

Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.

The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?

Friday, May 05, 2017

Iskandar Waterfront Holdings Consortium should be forthcoming with the facts and figures in TRX City dispute instead of being cryptic and wishy-washy in statements

The conflicting statements issued by TRX City, a wholly owned subsidiary of the Ministry of Finance, and the consortium led by Iskandar Waterfront Holdings (IWH) have become a complete farce.

In December 2015, 1MDB had announced that it has sold 60 per cent of its Bandar Malaysia interest to the consortium's vehicle, IWH CREC Sdn Bhd (ICSB) for RM7.41 billion.

TRX City Sdn Bhd, which owns Bandar Malaysia and has been taken over by the Ministry of Finance, claimed the agreement had lapsed because the consortium failed to make the necessary payments despite repeated extensions.

In disputing TRX, ICSB said it has made all necessary payments thus far, as outlined in the share sale agreement (SSA), and is also capable of meeting future payments.

"To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX. ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia," it said in a statement yesterday.

So who is telling the truth?  To quote the cryptic ICSB, whose “factual matrix does not fully and accurately reflect the circumstances and conduct of the parties in the matter”?

Thankfully, the matter should be easily clarified resolved. TRX claimed money isn't paid, while ICSB claimed it has, despite providing no evidence of payment.

Therefore, to put the matter to rest, instead of a verbal spat, all ICSB has to do is to provide specific details of (i) what they have paid, (ii) when they made the payments and (iii) what were the agreed payment terms.

Otherwise, there will be no credibility to the counter-claims made by ICSB.  On the other hand, if ICSB is able to provide proof of payment in accordance with the agreed terms of the Bandar Malaysia sale, proving unreasonable termination by TRX, I will certainly be demanding a response by TRX.

However, if ICSB fails to substantiate its claims, then Malaysians can see clearly that ICSB is only trying to desperately salvage the broken deal and its heavily damaged reputation, which have caused heavy losses to the share price of all companies related to IWH.

Incoming RM42 billion taxpayers' bailout: Bandar Malaysia deal collapse, sale of Edra Energy at a loss and 1MDB-IPIC “settlement” mark total failure of 1MDB “rationalisation exercise”

The entire 1MDB “rationalisation exercise” announced as “completed” by the Prime Minister on 2016 New Year’s Day has been completely unravelled with the latest announcement that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed.

The Government of Malaysia, together with its debt-stricken wholly-owned subsidiary, 1MDB has embarked on the above exercise to shed itself of its mountain of borrowings, which at its peak, exceeded RM50 billion.

The rationalisation exercise commenced with the sale of 1MDB’s wholly-owned subsidiary, Edra Energy Sdn Bhd, which held all of 1MDB’s energy assets.  Edra Energy had acquired the power plants for a total of RM12.1 billion.  In addition, the Government of Malaysia had subsequently extended of concession period of the above plants, as well as awarded several new power plant concessions to 1MDB.

However, despite a global open tender, 1MDB could only secure the best bid of RM9.83 billion which resulted in a direct loss of RM2.27 billion.  The losses did not yet include the interest cost of funds borrowed to finance the above acquisitions which amounted to more than RM3 billion over the period.

Worse, the proceeds of the above sale of Edra Energy did not go towards the repayment of the US$3.5 billion worth of bonds which were raised for the power plant acquistion in 2012.

As a result, in a recently announced “settlement” agreement with International Petroleum Investment Corporation (IPIC), who guaranteed the US$3.5 billion worth of bonds, the Ministry of Finance (MOF) had agreed to assume the liability of the US$3.5 billion bonds and relieve IPIC of their obligations.

This had come as a complete shock to Malaysians as 1MDB and the Finance Ministers had previously insisted that 1MDB had already made payments amounting to US$3.51 billion to IPIC and/or its subsidiaries between 2012 and 2014.

Hence the outcome of the “settlement agreement” was that Malaysians will have to foot US$7.01 billion to discharge ourselves from the US$3.5 billion of 1MDB borrowings which 1MDB took to acquire the above power plants.  The power plants, in turn have already been disposed of, but without the proceeds from the sale being used to settle the US$3.5 billion bonds.

Now with the latest collapse of the proposed sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings Bhd (IWH), the entire “rationalisation” exercise architected by Arul Kanda and hailed by the Prime Minister and Cabinet has been completely unravelled.

The devastating implication of the rationalisation failure staring at our faces is staggering.  Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians tax-payer will have to pay for most of 1MDB’s still-outstanding debts including:

(i)             RM5 billion 30-year bond guaranteed by the Federal Government issued in 2009;
(ii)           US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc.;
(iii)          US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by the Minister of Finance, Dato’ Seri Najib Razak;
(iv)          US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc,;
(v)            RM800 million loan from SOCSO in 2010, guaranteed by the Federal Government; and
(vi)          RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF

The above sums up to RM8.2 billion and US$7.73 billion, or a combined total of RM41.7 billion

While I have called for Arul Kanda, the 1MDB President and CEO to resign or be sacked yesterday, it is the Prime Minister, Dato’ Seri Najib Razak who must be ultimately accountable.

He is not only the official with the ultimate decision-making authority in 1MDB as specified in the company’s Memorandum and Articles of Association, his promises of resolution of the above scandal without a bailout by the Malaysian Government have been irredeemably broken.

What’s more, banking documents exposed by the United States Department of Justice (US DOJ) have shown Dato’ Seri Najib Razak to have received in his personal bank account in Malaysia, the sums of US$731 million originating from 1MDB.  He has never denied the US DOJ allegations and steadfastly refused to provide any explanations to the Parliament or the Malaysian public.

With Dato’ Seri Najib Razak’s iron-grip control over UMNO and Barisan Nasional, the country’s legislative, enforcement and prosecution institutions, it is now up to Malaysians to sack the Prime Minister in the coming general elections to ensure that he is made accountable for the single biggest financial scandal in the history of Malaysia.

Thursday, May 04, 2017

Who will refund the RM741 million deposit paid by Iskandar Waterfront Holdings to acquire the now aborted Bandar Malaysia equity interest – 1MDB or the Ministry of Finance?

The announcement by TRX City Sdn Bhd, now a wholly-owned subsidiary of the Ministry of Finance (MOF), that the RM7.41 billion sale of 60% equity interest in Bandar Malaysia has collapsed did not come as a surprise at all.

I have previously questioned 1MDB and the MOF as to why the prized asset was sold to a consortium, led by Iskandar Waterfront Holdings Bhd (IWH), whose total net assets is worth barely RM3.8 billion, less than half the above transaction value.  For the financial year ending 31 December 2015, the company’s net profit was before tax was only RM170.4 million.

Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on 31 December 2015 that IWH-Bandar Malaysia sale agreement “marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on 29 May 2015”.

1MDB President and CEO, Arul Kanda had boasted that “the [IWH] Consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.”

The deal was expected to be completed by June 2016 but was delayed clearly by IWH’s inability of meet the agreed payment terms and schedules.  My questions in Parliament on the project status in November 2016 and April 2017 were met with cryptic replies from the Minister Finance, which revealed that the IWH consortium will pay a 6% interest on outstanding payments until the sums are fully-paid in 2023.

With the deal termination, the MOF have now got to independently service the RM2.4 billion of sukuk which 1MDB took for the purposes of the Bandar Malaysia project, but of which not a single sen was utilised for the property development.

MOF will also have to bear the burden of the making payments to Perbadanan Pewira Hartanah Malaysia, a wholly-owned subsidiary of the Armed Forces Fund (LTAT) which received a RM2.7 billion contract to relocate the Air Force Military Base, of which nearly RM2 billion was still outstanding.

Then there is now the all-important question as to who will refund the RM741 million deposit paid to 1MDB vby the IWH Consortium?

Will 1MDB now refund the deposit, or will MOF have to once again bailout 1MDB by forking out the RM741 million as a result of the 1MDB real estate fiasco?

Arul Kanda must now resign as the President and CEO of 1MDB to take responsibility for the disastrous fiasco and embarrassment caused to the Government of Malaysia.  If Arul Kanda does not take responsibility for his failure, then we call on the Ministry of Finance, whose Treasurer-General Tan Sri Irwan Serigar is also the Chairman of 1MDB to terminate Arul Kanda’s contract.

Arul Kanda has clearly failed to deliver on his promise and has displayed more hype than substance.  His severe error of judgement, choosing the IWH Consortium for the purported “certainty of transaction execution” have now caused massive losses for the MOF.

Tuesday, May 02, 2017

Why is the PAC Chairman, Datuk Hasan Arifin as quiet as a mouse over the 1MDB-IPIC “settlement” where the Finance Ministry agreed to assume US$3.5 bil. of 1MDB liabilities from IPIC?

Malaysians are still up in arms over the 1MDB-IPIC “settlement” which was announced less than two weeks ago where the Ministry of Finance has agreed to assume US$3.5 billion of 1MDB bond liabilities which were previously bourne by the International Petroleum Investment Corporation (IPIC) of Abu Dhabi.

The Malaysian Government had agreed to do so despite the fact that both 1MDB and the Cabinet Ministers had in the past insisted that 1MDB had already paid to IPIC’s subsidiary, British Virgin Island-registered Aabar Investment PJS Limited (“Aabar(BVI)”) a total of RM3.51 billion between 2012 and 2014.

The Second Finance Minister, Dato’ Seri Johari Abdul Ghani had previously said he was “very confident” of 1MDB winning the arbitration fight against IPIC.  Despite the bravado displayed, it was 1MDB which capitulated before the arbitration proceedings commenced in full, with the Malaysian parties conceding pretty much to all substantive demands from IPIC.

However, the Second Finance Minister denied any responsibility for the outrageous settlement terms.  Instead, he shifted the blame to Dato’ Seri Najib Razak by pointing out that “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.

Dato’ Seri Johari Abdul Ghani even defended himself by revealing that there was a letter from the BVI Registrar of Companies clearly stating that Aabar(BVI) was indeed a subsidiary of IPIC.

While the existence of such a presumably legitimate letter still does not in itself prove that Aabar(BVI) isn’t a fraudulent set up, it does highlight the fact that the Government’s decision defies all logic.  After all, why would the Government then under all rational circumstances, concede to the demands of IPIC if there was nothing incriminating on the part of 1MDB? As the Malay proverb goes, there must be “udang di sebalik batu”.

This was the reason for my call for the newly-appointed Auditor-General and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

I certainly wasn’t the only one asking for a review.  Even Barisan Nasional Members of Parliament in the PAC, Marcus Mojigoh of Putatan who asked for the above letter to be presented and Aziz Sheikh Fadzir of Kulim Bandar Baru who asked where the payments to Aabar(BVI) went, are keen to obtain answers.

However, instead of responding to requests by multiple parties to re-open the inquiry, the Public Accounts Committee Chairman, Datuk Hasan Arifin has remained as quite as a mouse.  In fact, not only has he not released any statement on an issue of such import, involving more than RM15 billion of tax-payers’ funds, he has been avoiding media enquiries like plague!

I have been informed that he has refused to pick up phone calls, text message or emails from journalists with regards to the above.

Datuk Hasan Arifin’s lack of action is certainly consistent with his track record of covering up for the Najib administration – when he refused to summon the Prime Minister to the PAC as a witness, saying that he has to “cari makan”, and when he secretly and unilaterally amended the finalised PAC Report which was tabled in Parliament.

However, the fact that the loss of US$3.51 billion is staring at Malaysian faces today deserves at the very least, an acknowledgement from the Chairman of the PAC, the very institution conceived to check and scrutinise Government-related expenditures.

If Datuk Hasan Arifin cannot bring himself to, or can’t be bothered to perform his parliamentary and constitutionally entrusted role, he should have the moral decency to resign from his position.  He should give way to someone who is at least somewhat serious about integrity, accountability and being answerable to Malaysians.

Friday, April 28, 2017

Perfect opportunity for Auditor-General and PAC to re-look into 1MDB scandal: review 1MDB-IPIC settlement which had Malaysians bearing US$7.01 bil. to resolve 1MDB’s US$3.5 bil. bond borrowing

Yesterday, the Second Finance Minister, Dato’ Seri Johari Abdul Ghani desperately tried to backtrack from his original assertion which tried to shift the blame for the 1MDB-IPIC “settlement” to the Prime Minister.

The glorified ‘settlement’ had in effect shifted the burden on repaying 1MDB’s US$3.5 billion bond to the Ministry of Finance, despite repeated assertions by 1MDB and Dato’ Seri Johari himself that 1MDB has already paid IPIC US$3.51 billion in the past.  This meant that Malaysians have to bear a whopping US$7.01 billion to resolve 1MDB’s US$3.5 billion bond borrowing before even taking into consideration the annual interest payments of approximately US$200 million!

“I don't report to him. I never contradicted the Prime Minister. Don't try to split me and the prime minister with this matter," the Second Finance Minister told Malaysiakini.

However, I never accused him of “contradicting” the Prime Minister.  I merely repeated what he had said earlier, which was “the Prime Minister has made the decision for the country. That’s it,” and that the matter is now “beyond [him]”.  His own statement clearly showed that while he had all along said that the dispute between 1MDB and IPIC should go to arbitration and that he was “very confident” of the Malaysian parties winning the case, he had to wash his hands off the matter as the matter has been decided by the Prime Minister.

I had then said that if the US$3.5 billion or RM15 billion matter is “beyond [him]” as a Finance Minister, then he might as well resign from his office.

However, Dato’ Seri Johari shot back, asking "Who is Pua to ask me to resign?”  “I don't report to him. I never contradicted the prime minister. Don't try to split me and the Prime Minister with this matter," he added.

Dato’ Seri Johari appears to have forgotten, while he reports to the Prime Minister in the Cabinet, he is there to serve the interest of Malaysians and not that of the Prime Minister.  If the decision of the Prime Minister is clearly detrimental to the interest of Malaysians, as the settlement showed, then it is certainly the duty of a Finance Minister to make things right.

However, the Second Finance Minister is clearly more interested in blindly supporting Dato’ Seri Najib Razak, by brushing off my allegation that Najib was conflicted in making the decision with regard to the settlement.

I call upon Dato’ Seri Johari to access his conscience and determine facts of the matter, something which is fully within the powers of a Finance Minister. Of the US$3.51 billion which 1MDB had purportedly paid to IPIC, Dato’ Seri Najib Razak has received US$30 million in in personal bank account in while his stepson, Riza Aziz received US$238 million via his company, Red Granite.

The above facts which were outlined in United States Department of Justice (US DOJ) suit to seize US$1 billion of laundered assets by funds originating from 1MDB has never been disputed by Dato’ Seri Najib Razak himself, and if indeed true, the clearly puts the Prime Minister in a position of conflict when deciding on the settlement terms with IPIC.

If the Second Finance Minister is genuine in his desire to “serve the nation” as professed in his March open letter to me, then I ask him to join me in calling for the Auditor-General (AG) and the Public Accounts Committee (PAC) to re-look into the 1MDB scandal in the light of the latest developments.

It should be noted that the PAC was told by 1MDB and its CEO, Arul Kanda that all payments which have been made to IPIC would be used to offset the US$3.5 billion 1MDB bonds which were guaranteed by IPIC.  The PAC also never made the recommendation for the Ministry of Finance to take over the liability for the bonds from IPIC – that would be just ridiculous.

Hence, it is crucial for both the AG and the PAC to re-visit the 1MDB scandal in the light of new evidence, including but not limited to the “settlement” agreement with IPIC as well as the new information contained in the US DOJ suit to seize the US$1 billion worth of laundered assets with funds originating from 1MDB.