After 1Malaysia Development Berhad (1MDB)’s lengthy delay in submitting its financial statements, its subsidiaries are now in the spotlight for still failing to submit their own financial statements since 2012.

 

Petaling Jaya Utara MP Tony Pua said the two subsidiaries, 1MDB Real Estate Sdn Bhd and 1MDB (Energy) Langat Sdn Bhd, failed to submit their financial statements since Dec 28, 2012 and Sept 21, 2012 respectively.

 

Pua (below) told a press conference at the Parliament lobby today that the accounts are important as it will reveal controversial dealings by the two key subsidiaries of 1MDB.

 

"In the parent company's 1MDB's 2013 financial statements, it was disclosed that the group made a net profit of RM778 million on the back of a controversial RM2.7 billion revaluation in property assets.

 

"However, there is no way for Malaysians to discover the secret behind the 'magical' revaluation because the wholly-owned subsidiary holding these assets, 1MDB Real Estate Sdn Bhd, has not filed their accounts for the past 18 months," he said.

 

Pua said that if not for the upward revaluation of 77 percent in property value from RM3.5 billion the previous year, 1MDB would have booked a massive RM1.85 billion lost instead.

 

"The real estate arm is also heavily in debt. The last known debt amount was RM5.9 billion with collaterals pledged to Ambank and AmInvestment Bank Bhd.”

 

Likewise, in the case of 1MDB Energy (Langat) Sdn Bhd, its accounts are needed to scrutinise the energy assets it acquired RM10.9 billion, RM1.2 billion more than Pua said what it should have paid.

"However, without the subsidiary 1MDB Energy accounts, it would not be possible to identify the cause and source of these accumulated impairments," he said.

Systemic risk to Malaysia

 

Pua said he had posed a parliamentary question to Prime Minister Najib Abdul Razak (below) , who is also finance minister but merely received a reply that the accounts would be filed soon.

 

"It's the shortest parliamentary reply that I have ever received," he said.

 

He criticised the government for what he said was a sheer lack of governance, transparency and accountability for a wholly-owned government cooperation which has mustered a debt of up to RM36 billion.

 

"The size of the debt coupled with the lack of transparency and good governance points to an extremely high risk of financial collapse not only in 1MDB, but the entire Malaysian financial system," he said.

 

1MDB only submitted its financial statement in April 2014 after a seven month delay and a controversial move to replace its auditors from Ernst & Young to Deloitte Malaysia

Yesterday, Najib said that as at March 13, 1MDB’s assets amount to RM44.67 billion.

"1MDB, set up by the government in 2009, has secured loans guaranteed by the government amounting to RM5.8 million, but has not receive any government guarantee for bonds or other financing.

"It issued RM5 billion guaranteed Islamic medium-term notes (IMTNs) for a tenure of 30 years and borrowed RM800 million," he said in a written reply to Liew Chin Tong (DAP-Kluang) at the Dewan Rakyat yesterday.

This includes assets in the property development and energy industry, the latter of which to fulfill the government’s long-term sustainable energy security aspirations.

He added that 1MDB Real Estate has also signed an agreement with Australia-based property company Land Lease, which is expected to draw in USD$1 billion (RM3.2 billion) in foreign direct investments into Malaysia.

Related stories

PM says subsidy cuts and BR1M to stay

Pakatan proposes more taxes on the rich

'Penang's fed agencies planned affordable houses'

Anwar: Pay raise okay if kept 'low, reasonable'

Gov't turns PPR into young couples transit homes

CIMB, RHB, MBSB reach merger deal, says source

Roti prata, tax breaks lure skilled SE Asians home