A support letter by the Malaysian government revealed today contradicted the Finance Ministry's claim that Putrajaya is only guaranteeing RM5.8 billion of 1Malaysia Development Berhad's (1MDB) total RM38 billion debt.

 

The letter, published in The Edge Malaysia , showed the government had guaranteed to step in if 1MDB cannot cover a USD3 billion debt by its wholly-owned subsidiary 1MDB Global Investment Limited (Issuer).

 

"In the event 1MDB, as shareholder of the Issuer, fails to provide the required funds... Malaysia shall then step in to inject the necessary capital into the Issuer, or make payments to ensure the Issuer's obligation in respect of the debt are fully met," read the letter.

 

When the support letter was issued on March 14 last year, the USD3 billion debt had a converted value of RM9.6 billion. That amount stands at RM10 billion today.

 

Both amounts – when the support letter was issued, and its value today – far exceeded the RM5.8 billion claimed by the government, which was reiterated by Deputy Finance Minister Ahmad Maslan ( right ) on Thursday.

 

The government's guarantee of the massive debt is valid for ten years, until March 19, 2023.

'Half-truths' on debt

 

On Wednesday, Petaling Jaya Utara MP Tony Pua had accused the government of telling " half-truths " about the debts it is guaranteeing for 1MDB.

 

This is after the Finance Ministry, in a parliamentary written reply to Bagan MP Lim Guan Eng, claimed it only guaranteed RM5.8 billion of 1MDB's debt.

 

Pua ( left ) said the government had made the claim on the basis that a support letter was not an official guarantee.

 

"The letter of support has effectively guaranteed a debt. The difference between a guarantee and a support letter is purely semantics," he had said.

 

1MDB has raised concern as its ballooning debt may impact ordinary taxpayers.

 

The company is wholly owned by the government through the Finance Ministry.

 

According to The Edge Malaysia , 1MDB's debt stood at RM41.9 billion as of March this year.

Gov't insists no guarantee for 1MDB