1MDB loans to PetroSaudi put nearly RM6bil at risk

comments     P Gunasegaram, KiniBiz     Published     Updated

DAP MP Tony Pua says 1Malaysia Development Bhd (1MDB) is a giant ponzi scheme, whereas 1MDB describes itself as a strategic development company.

NONE “As a strategic enabler for new ideas and new sources of growth, 1MDB leads in market-driven initiatives to help transform Malaysia into a thriving economy,” its website says.

Pretty lofty words, but the problem is that 1MDB has not been very articulate about how it wants to achieve its aims. Since setting up in 2009, it has not publicly reported its results.

Its accounts since setting up in late February 2009 to the year ended March 31, 2011, show a different picture to what the website paints.

Thus indicating that the profits made to date are largely paper gains which have no impact on cash flow, raising serious questions over the utilisation of large funds raised.

A ponzi scheme?

If not for some paper transactions and revaluations, 1MDB would not have reported any profits, which no doubt led to Pua’s ( below ) assertion that it was a ponzi scheme.

NONE In May 2009, 1MDB issued bonds of RM5 billion via an Islamic facility at such favourable rates to those who took them up, that it raised many questions among those in the finance industry at the time.

Because these bonds were issued at a discount to the par or nominal value, 1MDB actually raised RM4.40 billion and not RM5 billion.

The first investment that it made was in September 2009 when it put in US$1 billion for a 40 percent stake in a US$2.5 billion joint-venture with PetroSaudi International Ltd.

Go to KiniBiz for more .

 

Keep Malaysiakini independent!

Malaysiakini will be 18 this year. That we’ve survived this long is because of you.

Your support matters. A lot. Especially those who pay RM150 annually, RM288 biennially or RM388 triennially to keep Malaysiakini independent from government/opposition influence and corporate interests. Advertising alone will not keep Malaysiakini afloat.

Together, we’ve gone far. We’ve covered three prime ministers, four general elections, five Bersih rallies, and countless scandals. But the journey continues.

Help us deliver news and views that matter to Malaysians. Help us make a difference for Malaysia.

Support Malaysiakini



Malaysiakini
news and views that matter


Sign In