MP SPEAKS It has been reported in the newspapers this morning that 1Malaysia Development Bhd (1MDB) plans to sell RM2.4 billion worth of Islamic bonds to finance the relocation of defence units from the land marked for the Bandar Malaysia project. This project is sited at the current 196ha Sungai Besi Air Field.
Given that 1MDB is completely owned by the Malaysian government, the company must give a full explanation as to why it needs to raise so much money for the relocation of defence units, without even taking into account the cost of developing Bandar Malaysia?
1MDB already received a sweetheart deal from the Malaysian government when the former acquired the above super-prime land smack right in the middle of Kuala Lumpur at only RM1.6 billion or RM74.20 per square feet (psf). It was a deal struck without any form of tender. It should be noted that the Penang state government raised RM1.07 billion for a 41.5ha Bayan Mutiara land, or RM240 psf via an open tender exercise.
In addition to the sweetheart deal, the Malaysian government has also inexplicably agreed to finance the entire cost of relocating the existing defence units sited on the land to other sites in the country. The ‘relocation’ exercise was valued at a massive RM2.7 billion.
Hence as part of the deal, instead of 1MDB having to pay the government any money for the mouth-watering piece of land, the government has agreed to pay RM1.1 billion (RM2.7 billion less RM1.6 billion) to 1MDB. The amount of RM1.1 billion has been approved in the Budget for 2012, and RM800 million has since been disbursed to 1MDB based on the latest budget documents for 2014.
What is more intriguing is the fact that 1MDB has already awarded a RM2.1 billion turnkey contract in April 2013 to Lembaga Tabung Angkatan Tentera (LTAT) to provide the ‘relocation’ services to eight different sites throughout the country.
Hence looking at the simple mathematics, 1MDB is raising RM2.4 billion in sukuk for the relocation project even though it only needs an additional RM1 billion (RM2.1 billion less RM1.1 billion funded by the federal government).
Secondly, 1MDB appears to have made a tidy profit from the relocation exercise by charging RM2.7 billion, or RM600 million above the actual cost of RM2.1 billion, despite purchasing the land from the federal government at a ridiculously cheap price of RM74.20 psf.
'Provide full accountability'
1MDB must provide full accountability for the RM1.1 billion which has been allocated by the government for the relocation project, the amount which has been mostly, if not already fully disbursed to the company. There must not have been any abuse in the use of these funds for purposes other than that for the relocation project.
And if indeed the RM1.1 billion has been used for the relocation project, 1MDB must explain why it needs to raise a massive RM2.4 billion in debt for the relocation, when it only needs an additional RM1 billion, even after assuming zero self-financing capabilities.
As it stands, 1MDB is already creaking under a mountain of short and long-term debt estimated to be in excess of RM30 billion.
The question must be asked if Malaysians are witnessing the single biggest financial scandal in the making, aided and abetted by the Najib Abdul Razak administration. Is the government desperately finding ways to plug the massive holes in 1MDB finances with sweetheart deals e.g., cut-priced prime land and cleverly disguised bailout funding e.g., overpriced ‘relocation’ project.
The most worrying aspect is that 1MDB is obviously trying to buy time by accumulating even more debt to fund existing debt commitments, and hence digging a bigger hole for Malaysian tax-payers to plug in the future.
TONY PUA is member of Parliament for Petaling Jaya Utara and DAP national publicity secretary.