KINIBIZ A legal expert has refuted a claim made by Deputy Finance Minister Ahmad Maslan that a government letter of support used to back US$3 billion (RM10 billion) in 1Malaysia Development Bhd (1MDB) loans is “not an explicit guarantee”.
Tommy Thomas, a prominent lawyer in corporate litigation and public law, yesterday said in a statement to KiniBiz that the letter of support in question obliges the Malaysian government to step in should 1MDB default on its loans.
1MDB is a self-styled strategic investment fund under the Finance Ministry tasked with enabling “new ideas and sources of growth”. As of March 2014, the fund has borrowings in excess of RM40 billion.
“I disagree with the views expressed by the deputy finance minister,” Thomas said.
“There is no doubt that both English and Malaysian law treats Malaysia’s obligation under the letter of support dated March 14, 2013 as a ‘contract to perform the promise or discharge the liability’ of 1MDB in the event of default of 1MDB.”
Ahmad Maslan, the deputy finance minister, on Wednesday told reporters outside parliament that the letter of support was “not an explicit guarantee” and therefore not legally binding under the Loans Guarantee (Bodies Corporate) Act of 1965.
Earlier in parliamentary proceedings last Thursday, he categorically stated that the letter of support “doesn’t exist.”
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