Malaysiakini News

Najib had control of TIA, but what about 1MDB?

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EXCLUSIVE Did Prime Minister Najib Abdul Razak, who is chairperson of 1Malaysia Development Bhd’s (1MDB) advisory board, have complete control of the controversial government-owned investment fund?

If this was the case, then many of 1MDB's controversial deals, which have now come under public scrutinity, would have been done with the premier's consent.

 

What is clear however is that Najib did have full control of the embryonic 1MDB, when it was still the Terengganu Investment Authority (TIA).

 

According to TIA's memorandum and articles of association (M&A), dated Sept 2, 2009, the prime minister's written approval was required for any of TIA's financial commitment, including investments, restructuring or any matters concerning federal government policy, national interest and national security.

 

Clause 117 of the M&A also states that the premier's written approval was required to amend the company's M&A and appointment of company directors and senior management members.

 

A copy of this M&A has been sighted by Malaysiakini .

Malaysiakini contacted 1MDB to ask if the M&A has been amended since Sept 2, 2009.

However, 1MDB merely responded that the document is a public document.

"Any suggestion that these documents were leaked, or that the details contained within them have not been previously disclosed, are false and we regret that insinuations are being made to this effect," 1MDB president and CEO Arul Kanda Kandasamy (photo) said in an email.

He did not respond on whether Clause 117, which says Najib has final say on TIA, still stands for 1MDB.

It is likely that parts of the M&A had been amended when TIA was transformed into 1MDB.

 

However, checks with the Companies Commission of Malaysia (CCM) revealed that its database only has records of an earlier M&A, dated Feb 27, 2009 - the date the company was incorporated.

 

At the time, TIA was still owned by the Terengganu government and there was no mention of the prime minister in the M&A at the time.

 

Should Clause 117 of the M&A dated Sept 2, 2009 remain at status quo until today, it would mean that the prime minister had given his consent to many of 1MDB's controversial deals.

 

This include the decision to move US$1.1 billion from Cayman Islands to a bank in Singapore, the deal with Mongolia-based company Gobi Coal & Energy Limited (GCE) and the sale of Tun Razak Exchange land to the Lembaga Tabung Haji , among others.

 

The establishment of the TIA was mooted by Terengganu Sultan Mizan Zainal Abidin in late 2008, as a vehicle to manage its oil royalty payment funds from Putrajaya after the state government fell to PAS.

 

Joint venture with PetroSaudi

Once the company was formed in February 2009, it issued RM5 billion worth of federal government guaranteed bonds.

 

The federal government formally took over TIA on Sept 2, 2009 and renamed it 1MDB on Sept 25, 2009.

 

1MDB's entered into its first eyebrow-raising deal just three days later, when it signed a joint-venture with little known oil and gas firm PetroSaudi International.

 

The deal saw 1MDB pumping RM3.5 billion (US$1 billion) into the joint venture, or 70 percent of the RM5 billion it had just raised.

 

The funds were injected into 1MDB-PetroSaudi Limited, incorporated in the British Virgin Islands on Sept 18, 2009. The company is wholly owned by PetroSaudi International.

 

1MDB pulled out of the deal six months later and said that its US$1 billion investment had been converted into Murabaha notes valued at US$1.2 billion.

 

It is understood that the Public Accounts Committee (PAC) has been furnished a copy of the M&A dated Sept 2, 2009 by government officials.

 

However, no PAC member would confirm this on grounds that investigations were still ongoing.

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