1MDB's silence makes things worse, says MP

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1Malaysia Development Bhd (1MDB) has been criticised for refusing to respond to claims that it has trouble repaying a USD975 million (RM3.5 billion) loan to an international banking consortium.

Petaling Jaya Utara MP Tony Pua said 1MDB's CEO Arul Kanda Kandasamy was "hiding behind the skirt of banking confidentiality" to avoid accountability.

"Malaysians are not asking Arul Kanda to reveal the loan agreement.

"Malaysians are interested to know if 1MDB will be able to fulfil its financial obligations to repay the loan as demanded by the banks in a timely manner.

"It will also provide great comfort to Malaysians if 1MDB can prove its ability to repay the loan because the last time, it had to beg local billionaire Ananda Krishnan to arrange a group of private investors to help pay-off a RM2 billion local loan," said Pua in a press release.

Pua warned that uncertainty over 1MDB's ability to pay the Deutsche Bank-led consortium can lead to serious consequences, as other borrowers would worry about their loans to 1MDB - which is RM42 billion in debt - as well.

Bank Negara told to act

He added that the lack of assurance from Arul Kanda was fueling the financial market with more speculations.

"As a result, confidence in the financial markets has been shaken and the Malaysian ringgit has been adversely affected," said Pua.

According to The Star , Arul Kanda said the loan was taken by 1MDB on September 2014, but could not reveal further details as "this relates to a confidential banking matter".

"However, we intend to update the market as soon as we are in a position to do so."

In a related development, Transparency International-Malaysia (TI-M) has urged Bank Negara to investigate 1MDB's cross border transactions.

"RM42 billion is not a small sum and the possible financial collapse of 1MDB has great adverse impact on taxpayer's funds and Malaysia's financial wellbeing.

"TI-M expects Bank Negara to rise to the occasion and perform its role without fear and favour," said TI-M in a press release.

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