PARLIAMENT The government issued a letter of support for the Finance Ministry’s wholly-owned 1Malaysia Development Bhd (1MDB) to secure a RM540 million loan from the Export-Import Bank of Malaysia Bhd (Exim Bank), which is also owned by the ministry.

The loan was then used for 1MDB’s purchase of a piece of land in Pulau Indah, Selangor, Deputy Finance Minister Chua Tee Yong told Parliament last night.

With this, Chua has confirmed a claim by whistleblower Sarawak Report , which stated that 1MDB has received the loan in March this year.

"The government issued a letter of support to Exim Bank for the loan taken by 1MDB," Chua told Tony Pua (DAP-Petaling Jaya Utara).

The terms and conditions of the loan were ironed out between the government and Exim Bank, he said.

Exim Bank, a financial agency incorporated in 1995, is tasked to provide credit facilities to finance, support exports and imports of goods.

All the loans given by Exim Bank to its clients have fulfilled the mandate of Exim Bank in supporting local companies involved in investment markets abroad, Chua said.

The companies have also fulfilled the criteria, such as risk acceptance as fixed by Exim Bank, he said.

Chua ( photo ) also denied that 1MDB overpaid Tadmex Resources Bhd by paying RM20.80 per square foot (psf) to purchase the land.

"The valuation of the land was done by an independant company. (Other buyers) bought the land surrounding Pulau Indah at between RM55psf and RM66psf," he said.

"The deal was struck on Feb 20, 2014. The contract was inked prior to 1MDB announcing its rationalisation strategic review in February 2015," he added.

Citing the Banking and Financial Institutions Act, Chua said Exim Bank was not able to reveal more information from documents related to the loan.

Will the government pay if 1MDB defaults?

In his parliamentary adjournment speech earlier, Pua asked if the government provided a support letter to secure the loan from Exim Bank, as stated by Sarawak Report .

"Is the government obliged to pay the debt in case 1MDB defaults in its payment?" asked Pua.

However, Chua made no mention of the government's obligation in case of default by 1MDB.

Pua also claimed that the Pulau Indah land that was purchased was only worth RM262 million. The loan given was RM540 million and he asked whether the loan was to garner cash flow for 1MDB after the land purchase.

"The support letter was meant to bail out Tadmax, which was headed by Abdul Azim Zabidi, who was the former Umno treasurer, and CEO Faizal Abdullah, the deputy chief of Kapar Umno division," Pua said.

He said the deal was arranged because Tadmax was not able to repay its debts to Exim Bank, and asked how much further was the 1MDB debt burdened by this.

Another 1MDB subsidiary, 1MDB Global Investment Ltd, had previously received RM11 billion of bonds guanranteed by the government.

This was on top of an RM5.8 billion loan to this company that was explicitly guanranteed by the government.

With this, the loan and bond guaranteed by government has increased to RM 17.3 billion.