mk-logo
Columns
Here’s what one can do with 1MDB’s RM40b losses

A QUESTION OF BUSINESS | Even as 1MDB CEO Arul Kanda Kandasamy scurries around the country to assure voters that 1MDB is not missing money, everything is hunky-dory and boasting he has reduced debt from RM50 billion to about RM30 billion, it is still very clear that all is not well and 1MDB may have lost as much as RM40 billion already.

While Arul may think that he is gaining major traction with would-be voters through what he thinks is his bold, ballsy electioneering, he may be lulled into thinking that by the audience he preaches to, who are mostly BN supporters, and therefore are already converted and deliberately quite blind.

Despite all that bravado in front of friendly audiences, he has shown himself to be lacking “scrotal gumption”, to use Justice Mahadev Shankar’s wonderful choice of language, when he turned down my offer to have a public discussion on 1MDB after he called me a coward.

So how did Arul bring down the debt from RM50 billion to RM30 billion?

By selling power assets at a loss which was bought with bank loans in the first place of around RM10 billion. The sale extinguished that borrowing and further borrowings of about RM10 billion in the books of the power companies, all of whom took substantial loans to build their power stations. And he goes around boasting about this, the sale of the only solid assets 1MDB acquired and that too at an inflated price. Most of the rest of the assets cannot even be found.

First, some US$7 billion of 1MDB assets cannot be accounted for or verified. In other words, it has gone missing. Now who says this? Our own auditor-general in a report which has been classified as secret under the Official Secrets Act. Numerous press reports, one of which is here, quote this figure and this has not been denied or refuted to date.

Meantime, the US Department of Justice (DOJ), in an updated report, said that 1MDB officials and their associates had embezzled US$4.5 billion between 2009 and 2014, which it added further was laundered through the global financial systems, including in the US. That explains part of the missing money. It is the most extensive action brought under its Kleptocracy Asset Recovery Initiative.

The department said that the money was used for personal gain. They include purchasing luxury properties, artworks, a private jet, jewellery, funding a movie production company which produced movies like ‘The Wolf of Wall Street’. The luxury yacht, ‘The Equanimity’, which is said to belong to Malaysian businessperson Jho Low, was one of the assets on the list.

Jho Low, whose full name is Low Taek Jho, was portrayed as the mastermind of the money-laundering scheme in the DOJ lawsuit. Several other persons were named in the lawsuits, including Jho Low’s friend Riza Aziz, who is also the stepson of caretaker prime minister Najib Abdul Razak, several 1MDB officers, and an unnamed "Malaysian Official 1", who everyone but Arul knows is Najib himself.

Add to this figure of US$7 billion, or about RM28 billion, a sum of about RM12 billion which includes items such as bond mispricing of RM6 billion, overpayment for assets by RM3-4 billion and overpayment to financial advisers of about RM2 billion. A detailed explanation of how this was obtained is in this report, the first part of which I wrote. That makes a total of around RM40 billion...

Unlocking Article

Show your support for robust journalism

Millions depend on Malaysiakini for the truth. Millions depend on Malaysiakini for quality journalism. Millions depend on Malaysiakini to stand in honour of integrity and justice.

Without a mafia owner to dictate our journalism; free from political or commercial influence, Malaysiakini has only one boss - you, the rakyat.

We take this opportunity to thank you for your love for our country, your trust and respect in us to do our job in holding the powerful to account. We depend on your subscription to protect the sanctity of our journalism. Thank you.

Malaysiakini Team

Read more from this author :
Read more like this :
View Comments
Most Read
Most Commented
Most Recent