Penang Chief Minister Lim Guan Eng said that 1Malaysia Development Bhd (1MDB) has to answer the people on the RM1.38 billion purchase of freehold land in Air Itam, Penang.
 
Lim said he wanted answers as to why the purchase price was RM1.38 billion - 95 percent higher than what some of the land was valued at just two years earlier in December 2011.
 
"What would the benefit be to 1MDB and finally to the people of Malaysia who owns 1MDB?
 
"What happened to the 2013 general election promise by BN to build 9,999 units of public and affordable housing via 1MDB, comprising 6,666 low-cost flats of 700 sq ft each and 3,333 affordable homes of 1,000 sq ft each?" Lim asked in a press conference today.
 
Lim said that based on the acreage of the land and the number of new homes that the federal government has promised to build, there is the worry of the possible loss of RM1.5 billion by 1MDB rises. 
 
“Who will ultimately bear the losses?" Lim further queried.
 
Lim was referring to the exposè in The Edge on Sept 21 which reported that the government's investment arm could lose more than RM1 billion due to its "hasty purchase of more than 234 acres of land in Penang" last year.
 
According to the report, 1MDB had paid RM1.38 billion for the various parcels in Air Itam town, a DAP stronghold.
 
The Edge report added that the deal was brokered by some businessmen reportedly close to BN, who had promised to build low-cost housing for Penangites during the general election campaign last year.
 
Days before the May 5 general elections, Prime Minister Najib Razak was in Rifle Range, Penang to announce the mega housing project at a dinner. 
 
The event was also attended by BN leaders and wealthy young businessman Low Taek Jho or Jho Low.
 
BN's hopes were dashed when Pakatan led by DAP won the polls with 66 percent of votes in Penang, rendering the former its biggest loss in the state with only 10 seats held by Umno.
 
The Edge said the land was transacted in two deals on April 29 – just six days before the May 5 general election with a third and final deal on Sept 23 last year.
 
"Even if 1MDB does not proceed with fulfilling BN’s promise to build 9,999 units of public and affordable housing, it will still incur financial losses.
 
"Assuming interest payment of four percent on the RM1.38 billion it spent on buying the land, it all works up to RM55 million interest cost a year,” said Lim.
 
He said 1MDB should give a full explanation, not only because public funds are involved, but because it affects the lives of about 3,000 families who have been residing on the 234 acres of freehold land for 50 years.