For those who have been initially following the news on the 1MDB issue but have somehow over time found themselves all lost in translation and confused, allow me to put matters in perspective. This article is in relation to 1MDB’s obligations with Bank Negara Malaysia. It has nothing to do with Prime Minister Najib Abdul Razak.
1MDB is a strategic development company, wholly-owned by the government of Malaysia. Malaysia’s Prime Minister and Finance Minister is Najib. 1MDB’s mission is to drive sustainable economic development by forging strategic global partnerships and promoting foreign direct investments (FDI).
1MDB’s chairperson of the board of advisers is Prime Minister Najib.
1MDB makes investments abroad. In order to do that, 1MDB has to obtain permissions from Bank Negara Malaysia in accordance with the Exchange Control Act 1953 for every investment abroad. To obtain these permissions, accurate or complete disclosure of material information relevant to the Bank Negara’s assessment of 1MDB’s applications is required.
Bank Negara Malaysia, it would seem, had granted permissions to 1MDB to make investments abroad.
In October 2015, however, Bank Negara Malaysia revealed that it had revoked three permissions granted to 1MDB under the Exchange Control Act 1953 to make the investments abroad to the sum of US$1.83 billion.
Bank Negara Malaysia said: “On its part, the Bank concluded that permissions required under the ECA for 1MDB’s investments abroad were obtained based on inaccurate or without complete disclosure of material information relevant to the Bank’s assessment of 1MDB’s applications,”
Bank Negara Malaysia thereafter had issued a directive to 1MBD to repatriate its investments abroad totaling US$1.83 billion. Repatriate means to bring back, in this case monies, to the country where it came from. So, basically Bank Negara Malaysia had directed 1MDB to bring USD1.83 billion back to Malaysia. Bank Negara Malaysia had also ordered 1MDB to submit a plan on the repatriation of these funds.
All these events took place somewhere in October 2015.
Now, somewhere at the end of March 2016, it was reported that Bank Negara Malaysia will pursue administrative action against 1MDB for failure to comply with rules and regulations.
Bank Negara Malaysia’s governor Zeti Akhtar Aziz was reported to have said that 1MDB had failed to furnish documents to prove that the US$1.83 billion investment that was supposed to be brought back to Malaysia from abroad, had been used for its restructuring plans and to pay off debts.
Three permissions revoked
This is what I gather. Bank Negara Malaysia had initially given three permissions for investments abroad totaling US$1.83 billion. Then Bank Negara Malaysia revoked these three permissions for those investments and directed 1MDB to bring back the US$1.83 billion to Malaysia.
Then 1MDB, it would seem, must have notified Bank Negara Malaysia that repatriation of the USD1.83 billion is not possible as the monies had been used for its restructuring plans and to pay off debts. That is why Bank Negara Malaysia is now asking for evidence that 1MDB is unable to repatriate the US$1.83 billion. 1MDB, it would seem, is unable to furnish the required evidence. Hence, Bank Negara Malaysia’s recommendation to the attorney-general for action.
In response to this, 1MDB was reported to have claimed that it did not receive any official notification or confirmation from Bank Negara Malaysia on the request for documentation on its overseas investments of US$1.83 billion.
1MDB had said: “1MDB has not yet received any official correspondence or confirmation from BNM on the specific matters attributed to the governor today. We are, therefore, unable to comment further.”
Again, 1MDB is a strategic development company, wholly-owned by the government of Malaysia. Malaysia’s Prime Minister and Finance Minister is Najib. 1MDB’s chairperson of the board of advisers is Prime Minister Najib. This article is not about Prime Minister Najib.
PUTHAN PERUMAL is an advocate and solicitor of the High Court of Malaya.
