MP SPEAKS Second Finance Minister Ahmad Husni Hanadzlah announced on Friday that Tun Razak Exchange (TRX) and Bandar Malaysia will be "established as standalone companies, with full autonomy and accountability for their operational and financial performance".
However he emphasised that "the Ministry of Finance (MOF) will remain a key shareholder in TRX and Bandar Malaysia".
While the statement sounds rather innocuous as we see the disastrous 1MDB suffering from RM42 billion of debt being wound down, what does establishing these two properties as "standalone companies" under the MOF actually imply?
By the natural logic of the statement, it would mean that the MOF would acquire the shares of the companies owning these assets - KLIFD Sdn Bhd and Bandar Malaysia Sdn Bhd respectively.
On top of that, we are made to understand that the motive behind the action is to relieve 1MDB of its overwhelming debt burden.
If we were to put two and two together, we can only deduce that the government will assume the debts arising from these two assets, and perhaps even pay 1MDB more based on their revalued and inflated asset prices.
Hence the plan to make TRX and Bandar Malaysia independent entities is in actual fact nothing innocuous at all. Instead it is a blatant attempt to bailout 1MDB with billions of ringgit of taxpayers funds!
Paying revalued prices?
As at 31 March 2014, the 70 acres Tun Razak Exchange land belonging to KLIFD Sdn Bhd has been revalued to RM2.7 billion. [1] It is uncertain if the land has been pledged as a collateral for any loans taken by its parent companies.
At the same time, the 495 acres Sg Besi military airbase land ( right ) sold to Bandar Malaysia Sdn Bhd has been revalued to RM4.29 billion [2] while the property has been collateralised for a RM2.4 billion loan [3].
In addition, the federal government has also given a guarantee to 1MDB Real Estate Sdn Bhd to raise a RM800 million [4] bond to fund the airbase relocation.
If the government is to assume all the liabilities of the 2 companies, it would cost us RM3.2 billion, before even taking into consideration other contingent liabilities such as payments to Lembaga Tabung Angkatan Tentera (LTAT) for the RM2.1 billion relocation contract.
However, if the government is even more generous, the taxpayers might have to fork out a whopping RM7 billion based on the "revalued" asset prices of these properties.
If however the government decided to acquire TRX and Bandar Malaysia at their revalued asset prices of RM7 billion and still relieve 1MDB of their associated loans of RM3.2 billion, then Malaysians will be forking out a total of RM10.2 billion just for these transactions alone.
Pay them cost only
Such a move will be a massive travesty because the federal government sold these 2 properties to 1MDB for only RM194 million and RM1.69 billion respectively, totalling less than RM1.9 billion.
If we were to pay the inflated RM7 billion or worse, RM10.2 billion to buy back these properties from 1MDB after only selling these land to the company at bargain basement prices less than 4 years ago, it would be nothing short of a daylight robbery.
It would only be fair for MOF to reimburse 1MDB only for the cost which have been incurred for the development of the land, amounting to less than RM200 million to date as well as the cost of the land - RM1.9 billion.
Any amounts in excess of the above would mean Malaysians have been cheated into financing and bailing out the misadventures of 1MDB.
We call upon Ahmad Husni Hanadzlah to explain transparently how the government intends to make TRX and Bandar Malaysia separate independent entities owned by the MOF.
[1] KLIFD Sdn Bhd financial statements 31 Mar 2014 p23
[2] Bandar Malaysia Sdn Bhd financial statements 31 Mar 2014 p24
[3] Bandar Malaysia Sdn Bhd financial statements 31 Mar 2014 p26-27
[4] 1MDB Real Estate Sdn Bhd financial statements 31 Mar 2014 p33-34
TONY PUA is DAP national publicity secretary and Petaling Jaya Utara MP.
