1Malaysia Development Berhad (1MDB) used RM3.8 billion of the RM9.6 billion in bonds it raised in 2013 to repay and service its debts, which is a "clear breach" of its offering circular issued to investors about the bond raising exercise.

 

Petaling Jaya Utara MP Tony Pua said in a press conference today that according to the latest 1MDB financial statement, 1MDB Global Investments had used RM3.8 billion of the total bond amount to be channelled to the parent company, 1MDB, to pay "debts and operating expenses."

 

In the offering circular, it was stated that all net proceeds from the bonds raised will be used for the Abu Dhabi Malaysia Investment Company Ltd (ADMIC), which is yet to be established.

 

"The question is hence, have the investors of the 1MDB bond been duly informed of the change in use of proceeds?" Pua asked.

 

The raising of the bonds had already been mired in controversy, following the Malaysian government's controversial letter of support for them, and also 1MDB's above-market rate payments to Goldman Sachs International in raising the bonds.

"Such abuse will certainly harm the credibility of 1MDB," he said.

He also questioned 1MDB's decision to invest RM 5.22 billion in an unnamed private financial institution while waiting for ADMIC to be formed.

ADMIC is supposed to be a 50-50 joint venture between 1MDB Global Investments and Aabar Investments, in investment arm of the Emirates of Abu Dhabi.

"Will the expected RM 18 billion raised by 1MDB Energy from its initial public offering (IPO) be similarly diverted to bailout 1MDB's other debts or fund 1MDB's other operations?" he asked.

Pua said that Malaysians might be witnessing the biggest bailout in the nation's history.