RM185m went up in smoke, in Mongolia

Modified 26 May 2015, 1:26 pm

Petaling Jaya Utara MP Tony Pua today claimed that finance ministry-owned company SRC International had lost RM185 million after investing in Mongolia-based company Gobi Coal & Energy Limited (GCE).

Pua ( photo ) said the investment made in GCE, was partly from borrowings granted by the Retirement Fund Incorporated (KWAP), amounting to RM4 billion.

Zooming in on the GCE deal, Pua noted that the Finance Ministry, in a written reply to him last Wednesday, said SRC International had invested US$60 million (RM216 million) in GCE which represents a nine percent stake in the Mongolian company.

However, Pua pointed out that Origo Partners Limited, a company listed on the London Stock Exchange, which also holds shares in the Mongolian company, valued its 14 percent stake in GCE to be only worth US$13.4 million (RM48 million).

"This means that SRC International’s nine percent stake in GCE would be worth only US$8.6 million (RM31 million) today or a 85.6 percent drop in the value of investment.  

"This represents a loss of US$51.4 million (RM185 million) to the company," he said in a statement today.

Pua had since October 2014 demanded Putrajaya to explain where did SRC International spend its RM4 billion borrowings from KWAP, RM3.81 billion of which was invested overseas.

However, Pua said the Finance Ministry's latest reply still does not account for the missing money.

"The finance ministry’s reply debunked the impression given earlier that the bulk of SRC investments were placed in GCE.

'After 1MDB, more billions unaccounted for?'

"The reply by the ministry raises another crucial question as the GCE investment valued at RM31 million today represents only 0.8 percent of the RM3.81 billion of SRC International’s investment portfolio outside Malaysia.

"The question hence arises, where did the rest of SRC International’s RM3.81 billion go to?" asked Pua.

In March, Pua had also  called on  the Public Accounts Committee (PAC) - which is now probing the debt-ridden 1Malaysia Development Berhad (1MDB) - to investigate  SRC International on the whereabouts of the RM3.81 billion.

SRC International was formerly a subsidiary of 1MDB but was later placed directly under the finance ministry.

1MDB, which has accumulated a massive debt of RM42 billion, is also owned by the finance ministry.

"In light of the questionable 'Level 3 assets' of RM13.4 billion in SRC International’s former parent 1MDB, which now appears to have gone missing, Malaysians are also interested to know if the RM3.81 billion, most of which are also classified as 'Level 3 assets' are also missing," said Pua.

In accounting terms, 'Level 3 assets' are the least secure as their exact value cannot be clearly ascertained and are often worth much less than their paper value.

"The finance ministry must immediately disclose what are these RM3.81 billion in 'investments' to prove that they are not trying to hide another multi-billion ringgit scandal.  

"The failure to be fully transparent will only further erode the confidence of ordinary Malaysians in our public institutions and the Najib administration," added Pua.

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