FREE DAP' Petaling Jaya MP Tony Pua has demanded 1Malaysia Development Berhad (1MDB) break its silence over its group chief executive officer (CEO) Arul Kanda's apparent conflict of interest in a RM3.6 billion loan by his former employer.
This comes as Singapore Straits Times reported on Wednesday that a consortium of banks led by Deutsch Bank is demanding an early repayment of the amount after finding out 1MDB's securitisation documents to be incomplete.
Pua ( right ) pointed out that it has been discovered that Abu Dhabi Commercial Bank (ADCB), in which Arul was working when the loan was granted to 1MDB on Sept 1, 2014, was one of the consortium of lenders.
"Given the above exposés, Arul Kanda would have no choice but to respond to the above claims to explain his degree of involvement in 1MDB’s fund-raising exercises prior to him joining the company.
"His silence on the matter will only strengthen the speculation that his interest may be conflicted, and 1MDB may have been compromised instead," said Pua in a statement today.
Pua cited The Edge Financial Daily's report that a substantial part of the loan was spent on buying back options granted to ADCB's sister company, Aabar Investments Limited to acquire 1MDB’s power assets.
The options were initially granted to Aabar as part of the terms for Aabar’s parent, International Petroleum Investment Corporation (IPIC) to provide a guarantee for two 1MDB bond issues amounting to US$3.5 billion (RM12.6 billion).
"Hence, the daily rightly reported that this begs the question whether Arul was involved in putting together the loan to 1MDB and whether he was involved in the dealings of IPIC and Aabar when he was working in Abu Dhabi.
"Given the fact that ADCB, IPIC and Aabar are all owned by the Abu Dhabi government, it makes Arul’s role as 1MDB president even more delicate and subject to scrutiny of possible conflict of interest," said Pua.
‘Disclose payment to Aabar’
Pua also called on Arul to disclose how much exactly 1MDB had paid to buy back the said options from Aabar Investments as the only amount cited in its March 2014 financial statement is US$250 million, but the amount was not finalised and was said to depend on "final valuation of the initial public offering".
"Therefore, the question is whether the US$975 million was also used to pay Aabar for the options.
“If it is indeed so, 1MDB would have paid an astronomical US$1.23 billion to the Abu Dhabi companies in order to secure a guarantee from IPIC for the US$3.5 billion loan.
"Under such circumstances, it would not be an exaggeration that 1MDB secured a guarantee from an international loan shark," he said.
Pua added that he was in "rare agreement" with Umno's Kepala Batas MP Reezal Merican Naina Merican ( left ) that 1MDB had left several issues unanswered for too long at the expense of the government's reputation.
"The Najib administration and BN government are indeed already tainted beyond repair by the negligent and incompetent 1MDB board of directors.
"However, if they continue to be evasive of pressing and pertinent questions raised about the wholly-owned Ministry of Finance subsidiary, the Malaysia’s economy, reputation and credibility will be severely damaged as a result," he said
