The weird mental state of 1MDB bosses and the politicians

Yesterday we discussed about the reports on how TNB had bailed out 1MDB after it withdrew from the Project 3B. Instead of being penalised for wasting Energy Commission’s time, 1MDB were given millions by TNB.

Imagine, 1MDB haven’t started anything yet with the project they were awarded, canceled their involvement and then get paid for it! From now on, all companies vying for projects in Malaysia will follow this trend – tender for government projects, get the award letter, don’t do anything for several months, then get paid by the next idiot who takes over the project.

1MDB even had the audacity to reply Wall Street Journal with the most nonsensical and delusional answer in history.

Asset acquisitions driven by long-term view

1MDB notes a recent Wall Street Journal article suggesting that 1MDB had overpaid for the acquisition of its energy assets. As we have previously stated, we only acquire assets when we are convinced that they represent long-term value, and to suggest that any of our acquisitions were driven by political considerations is simply false.

The fact of the matter is that these claims are a repetition of old allegations that have been driven by political opponents of the Government, including the former Prime Minister Tun Dr Mahathir Mohamad. They have never been substantiated nor supported by evidence, just as Tun Mahathir has never produced any evidence for his claim that RM42 billion was missing from 1MDB, because the reality is that this RM42 billion is debt backed by RM51 billion of assets.

1MDB takes a long-term view of value when entering into transactions; not just for the company, but for the country, as befits our 100% ultimate ownership by the government of Malaysia. The acquisition price we paid was based on this long-term view, as well as advice received from independent valuation advisers, and the prevailing market conditions at the time. On this basis, we believe that the value paid upon asset acquisition – which may have involved a premium in certain instances, as is common when acquiring another business – is commensurate with the existing and future potential of the assets.

It is important to note that since acquiring the first energy asset in 2012, 1MDB has built a leading international independent power producer in Southeast Asia. The portfolio currently comprises 13 power plants in five countries, along with the rights to construct further gas and solar-powered plants. Today, Edra Energy is the second largest independent power producer in Malaysia, and the largest in Egypt and Bangladesh, with additional operations in Pakistan and the United Arab Emirates. In total, it has gross installed capacity under management of 6,619 MW with an effective capacity of approximately 5,594 MW.Source

What good has come out of building a leading IPP when your company health is in turmoil? It’s akin to a person arrogantly claim to build a huge house but then a short while later had to dismantle the house midway in order to service the massive loan he took to build that house. Isn’t this stupid?

The arrogant and the delusional

The arrogant and the delusional

Today, what can 1MDB be proud of? The Prime Minister wanted to create mega projects of his own but had done it using sovereign debts which ultimately could not be repaid. In the end, he had to sell piece by piece the assets 1MDB acquired through loans even before anything has started in order to pay the billions of loans they took.

Most of 1MDB defenders are also clamouring on the narrative that 1MDB critics must submit proof. These people and politicians alike are actually telling the rakyat if we want to criticise 1MDB, we need to show them implicating documents to prove that our questions are valid.

This kind of arrogance will prove to be a curse for Barisan Nasional. Imagine, the rakyat asked questions, but the government is asking us to furnish the proof. Are the documents being kept by the rakyat or by the government/1MDB?

Is the rakyat managing the RM42 billion debt? Is the inability of 1MDB repaying its loans due to over-stretching its debt is caused by the rakyat?

The rakyat asked questions based on the information 1MDB had released. Even this blog questioned the silly decisions and the mismanagement which made them lose money based on their own submission of information.

Yet, the rakyat is asked to show evidence to the government? From which planet did these people come from?

When critics asked questions and ran down Malaysia Airlines for losing money and getting bankrupt. Did MAS management asked the rakyat to bring proof? No, their management is not as arrogant as 1MDB’s delusional bosses.

When the MAS-AirAsia share swap was criticised by the rakyat as a bad idea, did the government asked the people to show proof of documentation that the idea was really bad? Of course not. People have common sense.

Then why is 1MDB any different? Is it because the Prime Minister is directly involved and needed to be saved by hook or by crook? Have all the 1MDB loving people lost their common sense and gone cuckoo?

Is it not enough proof that mismanagement had occurred when 1MDB needed to be rescued via a rationalisation exercise? Is it not enough proof that based on 1MDB’s own press statement that billions of cash disappeared and is mysteriously replaced by dodgy units?

Is it not proof of stupidity in managing a business when for financial year 2014, 1MDB is straddled with RM42 billion debt with net loss of nearly RM700 million in that year itself? This is not 700 ringgit or 7,000 ringgit ladies and gentlemen. It is a loss of approximately 700,000,000 ringgit! Even their cashflow statement is in the negative. Hence, by 2015, 1MDB could not continue as a going concern and has to be bailed out! Why is 1MDB so stupid?

Suddenly for the lovers of 1MDB, RM700,000,000 loss is alright and acceptable? People have been sacked, heads have rolled for something much less than that! Remember, for every ringgit lost in 1MDB, that’s one ringgit less for something that could’ve been done better elsewhere.

Is it not enough proof of management incompetency that most of the projects could not start because 1MDB now have barely any money to sustain even its basic operations?

Is it not proof that the Prime Minister holds 4 other powerful positions (Finance Minister, President of Umno, Chairman of 1MDB Board of Advisor and Chairman of Khazanah Nasional) which is perceived to render all investigations by PAC and Auditor General as useless? When the AG Report is reported not to be made public, it is indeed deemed useless by the public.

Does it not seem that with the all powerful PM clinging on to power, he is deemed as a covering up for 1MDB’s blunders and do not want to be held accountable for its failures?

There are many more questions which are not comprehensively answered but has proven to be the cause of 1MDB getting into this massive scandal.

The best news of the day came from the Finance Minister II where he said nothing is wrong with 1MDB and the company is on the right track! Husni Hanadzlah today have said:

“Before this, 1MDB was seen as a ‘fragile’ company, involved in scandals and faced various ‘online’ accusations. 

“With the arrest of Justo, and based on what he said, it is clear that the various issues concerning 1MDB did not arise and that it is on the right track”.

This kind of imbecilic answer is only fit in a mental institution.

If they had been honest and did not not resort to lies when answering the questions, and did not dither in giving us the explanation, perhaps the damage caused which led to much public distrust will not be this catastrophic.

Has the Board of 1MDB and its advisors been sacked yet? Has the Finance Minister stepped down in shame for his inability to supervise 1MDB with good governance?

It seems everyone involved in wrongdoings are trying hard to cling to power. Worse, those around them are very supportive about it.

You might want to read:

1) About Justo

2) Najib foregoes chance to regain credibility

3) Sumbangan 1MDB Amat Besar Kepada Umat Islam

4) Nyawa Extension 18 Bulan. Untung atau Rugi Kepada UMNO/BN?

5) WSJ: Valuation on IPP was done by Goldman Sachs

TNB rescued 1MDB for an undisclosed price

We are very much alarmed that Tenaga Nasional Berhad will get their hands dirty in order to rescue 1MDB.

After exclaiming that TNB will not bail out the debt-infested company, TNB made a U-turn and will buy 1MDB’s stake in the Project 3B after all.

From the news report:

Tenaga Nasional Berhad (TNB) will buy over 1Malaysia Development Berhad (1MDB)’s stake in the Project 3B coal power plant, the Energy, Green Technology and Water Minister Datuk Seri Maximus Ongkili confirmed today.

Ongkili told reporters at the Parliament lobby today that TNB is buying over 1MDB’s 70% in the project, held through the state investor’s energy arm, Edra Global Energy Bhd, for an undisclosed price.

“It’s on a willing-buyer-willing-seller basis,” he said.

The Cabinet approved the move as the power plant project has been delayed by 1MDB, which faced cash flow problems as it sat on a RM42 billion debt.

When the fee is undisclosed then automatically people will assume that there is something to hide. Especially when a day later, TNB’s CEO, Datuk Seri Azman Mohamad had said:

“Based on financial analysis, the project is expected to have a positive impact on the earnings of TNB. It is not a bailout of 1MDB. We wish to stress that no premium will be paid for the acquisition of the 70% stake in the project.”

Is TNB working for 1MDB or for the people?

Is TNB working for 1MDB or for the people?

In the first place, when 1MDB withdrew from the Project in March, the Energy Commission should penalise 1MDB  and re-tender the 70% stake of the project. Or at least, award it directly to TNB without TNB buying over the 70% from 1MDB. That would be the most cost effective solution for TNB and the rakyat.

But since TNB is owned by Khazanah Nasional and its Chairman is also the Top Advisor of the troubled 1MDB, then bail out money need to be given under the pretext of, “no premium will be paid for the acquisition”.

Obviously the desperate seller will be more than willing to sell to the ‘willing’ buyer since both entities ultimately report to the same person.

And these people would want to think that the public will be stupid enough and won’t see TNB paying an undisclosed fee as a bail out.

1MDB had not even pumped any money into the project as it was delayed since October 2014 because 1MDB could not get any financing. Who wants to further finance a company which is unable to make loan repayments without getting help from others?

Therefore, if TNB had really paid millions of ringgit to 1MDB for a project which they had not pumped any money into, then truly this country is governed by idiotic people. Even RM100 million ‘compensation’ will be considered excessive and a bail out. The people has the right to know how much is being paid to 1MDB.

Energy Commission could have made this project continue without TNB’s reputation being tarnished and its cash depleted for bailing out a failed company yet they managed to do it at a more costlier way; just so that 1MDB could pay off some loan interests or overheads.

Will electric tariff be hiked soon because ‘revision is due’? Only time will tell.

You might also want to read:

1) NGO: Cancel 1MDB’s RM11bil project

2) Tangguh Pemilihan 2016 – Usul Wujudkan Jawatan Presiden SeUmur Hidup!

#1mdb, #malaysian-corporate-matters

PAC scolded Umno’s top lawyer over 1MDB

We are very much amused to read that the chairman of PAC, Datuk Nur Jazlan had criticised Tan Sri Shafee Abdullah over his comments regarding Tony Pua, a committee member of PAC yesterday. Shafee was reported as saying:

“I’ve noticed Pua, as a PAC member, has issued a lot of statements which can affect investigations into the company.

“As such, I propose that he withdraw himself from PAC to return the public’s confidence that the inquiry can be conducted fairly and transparently,” Shafee was reported saying.

“PAC members including Pua should be like judges in this case, and not by making accusations and making public statements. It is better they be witnesses if they want to issue such statements.”

Tony Pua is no stranger in questioning 1MDB for its dubious deals but Nur Jazlan however was quick to defend his colleague:

“He doesn’t have the right to tell off PAC members who are members of the legislature, the third branch of the government and elected by the people.”

“I personally think he has helped to highlight the issue on 1MDB which the majority of Malaysians today believe the PAC will dismiss in favour of the government. We are working well as a team.”

“Pua performs a dual role as a MP for PJU and a PAC member. And as far as I am concerned he has not used any information obtained from PAC hearings on 1MDB in his statements.”

“Whatever information he uses in his statements are obtained from parliamentary answers and other sources”.

Basically Nur Jazlan is telling all the fanatical supporters of 1MDB not to poke their noses into PAC’s business in investigating 1MDB. Not only that, he thinks Tony Pua is a great help in highlighting important matters to the public in regards to 1MDB.

Shafee, who received a lot of flak for his involvement in the disastrous ‘Liwat Roadshow’ last February, seemed to think that only Tony Pua is the biased individual. Which is not true.

Tun Mahathir Mohamad gave another insight when he was asked about Shafee’s nosy outburst. He quipped:

“They said Tony Pua is biased, that he is one-sided. But the others are biased too, they are on Umno’s side. So they are all considered biased. So in the end you, you might as well not have (PAC).”

For the record, the members of PAC are:

1. (Chairman) Datuk Nur Jazlan from UMNO

2. (Vice Chairman) Dr Tan Seng Giaw from DAP

3. Dato’ Seri Reezal Merican bin Naina Merican from UMNO

4. Dato’ Abd Aziz bin Sheikh Fadzir from UMNO

5. Datuk Mas Ermieyati binti Samsudin from UMNO

6. Datuk Liang Teck Meng from GERAKAN

7. Datuk Madius Tangau from UPKO (BN)

8. Tuan Haji Hasbi bin Habibollah from PBB (BN)

9. Datuk Wee Jeck Seng from MCA

10. Dato’ Kamarul Baharin bin Abbas from PKR

11. Tuan William Leong Jee Ken from PKR

12. Dato’ Haji Kamarudin bin Jaffar from PAS

13. Tuan Tony Pua Kiam Wee from DAP

Tun Dr Mahathir is wise enough to lend the bigger perspective on the fairness and transparency of the PAC. How confident are we to have a PAC Chairman or members from UMNO sitting in that body when their political career is dependent and beholden to the President of Umno?

How confident are we to have faith in them when their candidacy as member of parliament (and perks) for the next general election is determined by the President of Umno?

And who is the President of Umno? He is also the top boss and advisor of 1MDB!

The conflict of interest is too obvious.

We must be fools to think that these PAC members will, without fear or favour investigate thoroughly their own President while he is controlling their political careers.

That is why, Tun Mahathir had suggested way back in April that this 1MDB fiasco should be investigated by a totally independent commission.

“Berani kerana benar, takut kerana salah”

Trying to outdo each other on who is the better yes-man.

Trying to outdo each other on who is the better yes-man.

After all, an RCI was created in order to investigate the RM12.5 billion PKFZ fiasco. Another RCI was created just to investigate VK Lingam’s “correct, correct, correct” video clip.

But the scandalous RM42 billion 1MDB which triggered a debt crisis is only being investigated by the Umno President’s own underlings? From the start, PAC was even dictated by 1MDB’s bosses on which date they could be interviewed. This flippancy and the charade of it all is too glaring.

The voters are not stupid.

The powers that be can dumb down the brainless 1MDB fans, but not the people who can think for themselves.

Happy Friday everyone.

You might also want to read:

1) Exposing 1MDB’s propaganda

2) Malaysia’s biggest embarrassment

3) Why auditors can’t guarantee there was no fraud at 1MDB

#1mdb, #malaysian-corporate-matters

If only 1MDB is honest in giving us the answers..

..but they can’t, because they couldn’t.

The previous article on 1MDB showed that there was misappropriation of funds into shell companies in exchange for units which are deemed suspicious even by their own external auditors.

We don’t even need the investigation of PAC, the report from Auditor General or MACC to know that something is wrong in the entire business deal. People with brains will instantly know that 1MDB has zero corporate governance just by studying 1MDB’s replies.

Rubbing salt to the wound, the PAC has announced last week that the AG Report will not be made public and had also insinuated that their own investigation could last for a year!

This is highly probable since PAC will only start interviewing the main players only in August, long after they had started the investigations in early May.

So much for screaming “Wait for the AG report!” by the Prime Minister and his sycophants.

For 1MDB supporters (PM included), they pinned their faith in the external auditor’s reports as well as the AG report to see if something is wrong. This is not the most intelligent thing to do since audit report cannot guarantee there is no fraud.

If we close our eyes, maybe the problems will go away

If we close our eyes, maybe the problems will go away

This is proven in 1MDB’s 2014 audit report itself when Deloitte stated that the financial assets they have in Cayman Islands are dodgy because its fair values are doubtful (classified as level 3 assets). The audit report even stated that 1MDB is unable to exercise control over their own funds in those companies in the Caymans!

This is a huge red flag, but Deloitte insisted there is nothing wrong with it and passed the account anyway.

Basically, the audit report stated that a few billion ringgit have an unknown status yet everyone in 1MDB are saying there is nothing to be worried about!

They thought all is well, until the scandal was made public and the panicking 1MDB had to revamp their debts after facing liquidity problems.

The reality is, there is no honesty from everyone within or affiliated with 1MDB. Recently 1MDB repeated the lie that they paid RM3.6 billion to a consortium of banks “ahead of deadline to show the firm’s commitment to reduce its debt levels”.

All sundry know that 1MDB had to pay that debt ahead of time because the consortium of banks got jittery as they believe the collateral of USD1.103 billion are in worthless units. The banks wanted their loans repaid way before the September deadline and IPIC had to come and rescue them for this.

Basically, this ‘commitment to pay early’ was actually a pathetic rescue attempt and a cover up for the unnecessary loans they took. It was not so much ‘commitment to pay early’ but rather ‘the bankers are breathing down our neck and we need to pay them fast!’.

1MDB’s simplified business model is becoming more and more like:

Step A: Take massive loans

Step B: Buy assets, apply more loans

Step C: Sell those assets because loan commitments can’t be met

In the end, they built nothing except to service bank loans. Public money had to be used just to help 1MDB pay their loans, and the assets they bought could end up in the hands of others.

Seriously, you don’t need really high IQ to admit that 1MDB is a massive pile of diabolical mess. Even the Prime Minister cum-Finance Minister slash 1MDB Advisor admitted that 1MDB is in trouble and needed to be bailed out.

We don’t need the PAC or the upcoming, well guarded AG Report to tell us 1MDB is problematic.

So problematic that even its CEO was confused in providing the right information to the public regarding their funds. Its CEO had to lie twice. First in February and  secondly in June in a published press release. It was a major breakdown in corporate governance and trust there.

The Prime Minister even told a lie in Parliament back in March which precipitated the MOF to amend the parliamentary answers. Regardless what the defenders of 1MDB would like to justify, the Prime Minister had lied in Parliament over something he should be aware of.

If an opposition member lied in Parliament, everyone would not think twice to vilify him/her.

But maybe these days there is a huge shift in principles and values; when a lie is condoned just because there was an amendment made afterwards.

Similar to ‘Ahmad lied about giving misleading financial information but the lie is justified because he finally amended his statement months later’.

But then again, principles can be bought at low prices while standards can be lowered to achieve the most acceptable value.

If we put a little bit of thinking and some honesty, the 1MDB epidemic would not have escalated to this current toxic level. Surely there will be no buy-in from the public when the creators of the fiasco and the abusers of corporate governance are appointing themselves to repair the damage they have done.

Quo Vadis?

Going to be crucified again?

You might also want to read:

1) How Malaysia begged for debt forgiveness

2) In a nutshell

3) Exposing 1MDB propaganda

#1mdb, #malaysian-corporate-matters

The chronology of 1MDB’s suspicious joint venture

Thanks to 1MDB trying to deflect the allegations levelled at them, the public now has received more information which finally shed light into the murky business deals which 1MDB was involved in.

1MDB’s strategy is simple. Deflect and spin their replies to give the impression that they had answered all questions. This very disturbing strategy is now a trend which will prevail in all of their press releases.

Even in one of their first business forays was mired with corporate abuse, misappropriation of funds and absence of corporate governance.

Below is the chronology of that business foray, the 1MDB – PetroSaudi venture. Note that since 1MDB issued this information via their press release on their own accord, we can believe that all the information given were hopefully true.

Now let us try to understand what had happened:

18 September 2009 – a JV Co was incorporated by PetroSaudi Holdings (Cayman) Ltd (“PSH”) with or without the knowledge of 1MDB.

25 September 2009 – assets (rights to oil fields) worth USD2.7 billion was transferred to JV Co and JV Co is now indebted to PSH, USD700 million for the asset transfer; with or without the knowledge of 1MDB.

29 September 2009 – 1MDB entered into the JV Co via the joint venture agreement and USD1 billion cash (RM3.4 billion) was pumped in immediately by 1MDB into the JV Co. 1MDB gets 40% while PSH holds 60%.

30 September 2009 – As part of the agreement, USD700 million (RM2.38 billion) was paid from that RM3.4 billion of 1MDB’s cash into PSH.

Why 1MDB agreed to pay money for a deal that was agreed before they joined in the JV Co, is unclear and of course, common sense dictates it was a stupid move.

This massive transfer of money happened in a period of just 12 days. Bear in mind that according to industry practice, an independent valuation of assets or any due diligence of this size will take on average, at least a month to complete.

Do note that the JV Co’s objective is to “seek, explore, and participate in business and economic opportunities which result in the enhancement and promotion of the future prosperity and long-term sustainable economic development of Malaysia. It is expected to actively make investments in the renewable energy sector.”

-slightly more than 5 months later-

March 10 2010 – 1MDB terminated the business venture stated above. It is not illogical to think that the whole thing was just a scam to siphon out USD700 million from 1MDB. Upon termination, instead of getting back the cash as any ordinary shareholder would get, the JV Co gave ‘murabaha’ notes in return for cash to 1MDB. In layman terms, since the JV Co do not have cash of USD1 billion, they issued an IOU papers to 1MDB to be claimed at a later date.

So the business venture ended. Logically any business deal should have stopped between them.

Sometime in 2010 – 1MDB gave the JV Co USD500 million (RM1.7 billion) for additional murabaha notes. 1MDB stated they are ‘investing’ in this JV Co which they had opted out back in March 2010. In other words, they continued giving money to this JV Co like a moneylender, in return for some more IOU papers.

May 2011 – 1MDB gave another USD300 million (RM1.02 billion) to the JV Co for God knows what reason, and the JV Co issued further murabaha notes in exchange for the cash. Note that 1MDB was not mandated to be a moneylender. Plus, JV Co was not incorporated to be a fund manager.

Up to this point, 1MDB has pumped in USD1.83 billion (RM6.22 billion) cash into a company which had done absolutely nothing. Did the JV Co make any active investments in renewable energy sector in Malaysia? Has anybody heard of 1MDB Petrosaudi Limited here in Malaysia? That is the name of the JV Co.

-13 months after the last tranche of money given to JV Co-

June 1 2012 – the USD1.83 billion was redeemed. We thought that FINALLY, 1MDB could get their cash money back but that is not to be. The JV Co converted the murabaha notes into share certificates of another shelf company called PetroSaudi Oil Services Ltd (“PSOS”)! The best part is, they revalued these IOU notes upwards to USD2.22 billion (RM7.55 billion).

This new value was agreed between themselves. Unfortunately, we do not know what PSOS does. And how did they come to the figure USD2.22 billion. If there was an independent financial firm assessing the value, we want to know which firm was doing it.

-4 months later-

September 12, 2012 – 1MDB sold their stake in PSOS just 4 months later for USD2.312 billion (RM7.86 billion). And their share certificates were magically turned into ‘units’ which then owned by 1MDB subsidiary called Brazen Sky. What is the relationship between Brazen Sky and PSOS is unclear. Brazen Sky is just another company newly incorporated by 1MDB in August 2012 to handle this massive labyrinth of paper trail.

Cash was given to JV Co. But 1MDB who supposedly get their money back only received non cash items called ‘units’ which was borned out of share certificates, which originally came from IOU notes.

Invest cash, gets units.

Invest cash, get dodgy units.

We can imagine a lofty business deal which was made by the billions were terminated just 6 months after it began but money kept flowing into that JV Co all the way to 2012.

What is more infuriating, 1MDB had the audacity to say that all their investments in the bogus companies gained a profit of USD488 million (USD2.312 billion minus USD1.83 billion)!

To all those who can’t think further beyond their self interests, that is USD2.312 billion worth of made up units, not cash. The profit of USD488 million was just paper profits.

1MDB should call up PSH to get back their cash worth RM7.86 billion back. But that is now water under the bridge. 1MDB have let PetroSaudi conned their money. Question is, what did JV Co do with all that cash?

The cow 1MDB had were sold to get beans. Not magical beans, but dodgy beans.

Note that these ‘beans’ are classified as Level 3 by their external auditor in terms of valuing their fair values. Level 3 is the lowest form of financial instrument where its valuation are derived from unobservable data. In layman terms, very difficult to determine its exact worth, or if they are worth anything at all.

The absence of governance, compounded by the intent to deceive will make any company lose money.

Can we not see the deceit and the shady multi-layered transactions made in order to cover up the money trail?

Can we once again see the money that was lost in the merry go round of schemes concocted by 1MDB?

We doubt it.

Otherwise, 1MDB could have easily paid their interests instead of getting stand by credit from the MOF or getting IPIC to rescue them. This is how 1MDB lost liquidity; for ‘investments’ they made in bogus companies.

Now who authorised all these transactions?

Maybe 1MDB could shed more light into this scandal. Mind you, this is not the only shady business deal 1MDB is involved in.

You might also want to read:

1) 1MDB debt settlement by IPIC

2) The 1MDB – PetroSaudi joint venture agreement

3) The 1MDB – PetroSaudi moneytrail

4) The PM confirms 1MDB needed to be rescued and is in bad shape

5) Whistleblower caught yet 1MDB still not vindicated

#1mdb, #malaysian-corporate-matters

What people know about 1MDB – PetroSaudi ‘assets’

From around the blogs, there are people who had dig deeper into the dubious agreement 1MDB had made with PetroSaudi back in September 2009.

petrosaudi2After it was exposed that 1MDB had to fork out huge sums of money to PetroSaudi in return for some highly doubtful assets, Petrosaudi by 1MDB’s own admission, indeed did not pay a single sen for the joint venture.

Some even question the assets which PetroSaudi had put down as equity in the joint venture company with 1MDB.

Information gathered from the public domain had pointed out that the assets – the oil exploration rights claimed to be owned by PetroSaudi are shady in nature i.e., they may not belonged to PetroSaudi at all.

Excerpts from article – Rubbishing 1MDB’s Rebuttal by Wenger J. Khairy:

The second issue relates to the investment rationale behind the PetroSaudi Joint Venture.

1MDB claims 1MDB’s contribution was in cash, whereas PetroSaudi’s contribution was in independently valued assets worth US$2.7 billion.

What rubbish! The exploration rights for the block in question – Offshore Block III in Turkmenistan – was given to a subsidiary of Canadian exploration firm Buried Hill Enterprise and not Petrosaudi.

So 1MDB was investing in a company without any real assets, consistent with what Dr Mahathir was saying that PetroSaudi did not pay a single cent!

Note: the writer listed out four issues to rubbish 1MDB’s press statement it made last week and all four are equally damning towards 1MDB.

Another excerpt from – 1MDB Turkmenistan Fact or Fancy by Freddie Kevin:

What exactly does “rights to oil fields” mean?

It is Production Sharing Agreements (PSA) that has true value.

I have searched and never found any reference to Petrosaudi having any interest in the oil and gas industry of Turkmenistan or vice versa.

The US-Turkmenistan Business Council is a Washington, DC based non-profit organization that promotes commercial relations between the United States and Turkmenistan. A publication dated 3/10/2009here does not mention any Saudi based company, onshore or offshore.

Why would or rather why should 1MDB be a party in a joint-venture with Petrosaudi, whose presence in Turkmenistan is doubtful and which Petronas had already made inroads 13 years before?

U.S. Department of State in its Executive Summary on Turkmenistan in 2014 here (Note: the US-Turkmenistan Business Council publication above must have been the U.S. Dept of State Executive Summary 2009) also does not mention any Petrosaudi presence.

By 2014, the offshore PSA had increased to six with Petronas still in the mix,

In addition, there are six PSAs for offshore operations: Block I operated by Petronas of Malaysia; Block II (Cheleken Contractual Territory) operated by Dragon Oil (UAE); Block III operated by Buried Hill (Canada); Blocks 11 and 12 operated jointly by Maersk Oil of Denmark and Wintershall of Germany; Block 23 operated by RWE of Germany; and Block 21 operated by Itera of Russia.

And still no mention of Petrosaudi or Saudi presence.

So what Petrosaudi “rights to oil fields” in Turkmenistan is 1MDB crowing about that is worth USD2.7 billion (together with Argentina) when it seems to be non-existent?

Clearly, this joint venture started with some imaginary assets in 2009 and ended with some assets nicknamed as ‘units’ in the Cayman Islands.

And how did the external auditors labeled these units in the Caymans? They are labeled to be the lowest form of assets called, the “level 3 assets”. They are defined as:

“Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 assets trade infrequently, as a result there are not many reliable market prices for them. Valuations of these assets are typically based on management assumptions or expectations.”

The scandal that is surrounding 1MDB can never be covered by the people who are busy defending it. The stink emanating from this gigantic pile of debts can be smelled everywhere. It is heartening to see that the only people who still see nothing wrong with 1MDB are people who are paid to defend it, or people who have self-interests in maintaining their own position.

Hence, their methods of defending 1MDB are mostly in the form of character attacks towards its critics. Salleh Said Keruak and his incessant, nonsensical ululation immediately comes to mind.

The Member of Parliament from Raub succinctly put matters into perspective in his article dated 1st June 2015 – Digging Holes and Moving Earth. Here are the excerpts:

There was fraud from the beginning. The JV with Petro Saudi was an act to swindle money from Malaysia. It would appear that people in 1MDB made that fraud possible. That would suggest complicity.

Money was paid into a shell company. Money was transferred into an account belonging to another person. The amount was slightly more than USD1 billion.

The amount made the earth moved under somebody’s feet. From then on, in an attempt to cover up, more financial holes were created that got 1MDB into deeper shit. The earth was indeed moved when more holes were dug.

I hear some accountants say the value of the assets owned by 1MDB is around RM20 billion only and never got close to RM51 billion as claimed. The figures were massaged to make them appear comforting.

The liabilities- loans, bonds, derivative loans amount to RM49billion. If that is so, then, 1MDB is really RM30 billion in the red. The value of its assets if fully liquidated can never cover the loss. In the end, the government will have to bail it out.

1MDB cannot shake off the perception that it’s now insolvent. It claims it has assets but yet cannot repay its loans. How can it service its interests on loans that many amount to RM2 billion a year? Will it able to honour the value of its bonds when they mature?

Clearly, the PM as the final authority over 1MDB’s transactions is panicking. He will not cause this problem to go away by listing out the wrongs created by Mahathir. He should know two wrongs do not make a right.

He is equally liable over what Mahathir did because he was also on the ship that Mahathir commanded. He too made hay while the Mahathir sun shone.

He is not fooling the people any longer. The wrongs created by 1MDB will never be erased even if Jho Low returned the money or if the PM forces GLCs to buy 1MDB’s assets at overpriced values, or sell down 1MDB’s assets. These after the fact measures will never erase wrongdoings, embezzlement, CBTs and all that.

Let’s take an example. When Felda bought over hotels in London by paying an extra RM100 million, that overpayment is not excused by saying- don’t worry, the cost including that extra RM100 million has been recovered as a result of better business. The hotel business is booming and revenue is increasing.

Even if all the cost is recovered, the fact that RM100 million was artificially created clearly with the intention to defraud Felda, the wrongful act, will not go away. Fraud was committed and it’s not erased by later events. If business if good, then it’s fortuitous.

Same as in the case of 1MDB. Fraud, embezzlement, cheating, dishonest dealings are not erased even when all the total costs are recovered.

I hope these people understand all these. Wrongs are not corrected by after the fact fortuitous events and deceptive measures.

It appears that this is what is happening at the very moment. The Arabs which 1MDB paid off to forfeit their option to buy up to 49% of businesses to be listed by 1MDB now becomes the white knight to help 1MDB? The second finance minister has no shame to announce that help has come from this white knight.

Then we urge him to be brave and tell the public the terms and conditions of the help given by the Arabs. Which arm and leg do we give up? The terms and conditions can be expected to be onerous since having paid off the ah long, it seems they are the only financier willing to touch 1MDB which has since become a leper. Surely they will demand more onerous terms since they know that 1MDB has no one else and 1MDB is in distress!

Arul Kanda may have disappeared for a few days running back to his former employers, asking for help while denigrating Najib and the stupid Malaysians at the same time.

Jho Low was probably in town to meet up PM Najib to tell the latter that he is making steps to reimburse the money he has taken. That will allow PM to later declare that he has fully recovered the money that went to Good Star Limited.

You might also want to read:

1) 1MDB money trail
2) 1MDB – background on the JV Co with PetroSaudi
3) PetroSaudi’s US$1.5 billion assets non-existent

#1mdb, #malaysian-corporate-matters

1MDB – the dishonesty and the deceit

We have always believed that those who defended 1MDB, in order to protect their own position or self interests, or simply being paid to do it, will lose their credibility and integrity eventually.

And it is sad that those who defending them would resort to evading questions, indulging in dishonesty and telling lies.

For the past couple of weeks, one by one these people are exposed.

We take from the most recent:

1) Contradictory answers in Parliament by Finance Ministry and 1MDB:

1MDB won’t confirm what they were doing with the money they received

1MDB today said its USD150 million (RM556 million) loan from Finance Ministry-owned Export-Import Bank of Malaysia (Exim) were utilised, but did not specify details.

This does not inspire confidence at all

This does not inspire confidence at all

In a press release, 1MDB president Arul Kanda said the proceeds were used in accordance to the terms of agreement, which is to: “finance the general corporate purposes including but not limited to the working capital requirements, future capital expenditures and equity infusion of the energy business within the 1MDB group of companies”. (In other words: bla bla bla)

However, Arul did not elaborate on the contradictory claims by two deputy finance ministers on how the fund were used.

Chua Tee Yong told the Dewan Rakyat that the sum was used to finance the purchase of land in Pulau Indah, Selangor at RM20.80 per square feet. The deal was inked on February 10.

He also confirmed that Putrajaya issued letters to support 1MDB’s loan application.

However, Ahmad Maslan told the Dewan Rakyat that he was unaware of this, as the money was supposed to be used for for the maintenance of power plants and operations involving energy export.

Petaling Jaya Utara MP Tony Pua argued that he had sighted documents during the Public Accounts Committee meeting which confirmed that the loan was meant for 1MDB to buy land.

He added that this meant that Exim had violated its own mandate, which is to promote international trade.

Both 1MDB and Exim are owned by the finance ministry. Prime Minister Najib Abdul Razak is the finance minister and the final decision maker of 1MDB.

This gives rise to the possibility of conflict of interest.

Sad that Chua Tee Yong’s credibility is diminished while Ahmad Maslan’s credibility sunk even lower. As for Arul Kanda, his press statement is testament to the only strategy 1MDB could play right now – give vague answers to confuse everyone and hope there will be no more questions.

2) Prime Minister and his favourite mantra: “Wait for the AG report” now means absolutely nothing.

Only special people still find them credible

“Wait for the AG Report!” *laughs*

The public were force fed with the idea that the AG Report will quickly settle all questions and suspicion on any wrongdoings in 1MDB. The Prime Minister gave the impression that all will be over soon as the AG will complete their investigation by end of June.

But lo and behold just a few days ago the PAC announced that the preliminary AG Report will not be released to the public.

The Prime Minister himself had stated in his blog in May:

“c. We are expecting the release of the preliminary report by Auditor General very soon. In the mean time, please do not speculate and form conclusions without the information that will be laid out by the Auditor General, who will provide a detailed report into 1MDB’s finances.”

What kind of dishonesty is this? Did the Prime Minister all along intend to lead the crowd with false promises?

“Wait for the AG Report” has now turned into “Wait For My Next Lie”.

To make matters worse, the light at the end of the tunnel which was promised to come soon was quickly doused by an insinuation by the PAC themselves that the investigation could take nearly a year to complete.

Nur Jazlan said the parliamentary committee was part of the legislative arm and had powers and responsibilities according to law, to investigate any government-owned company that used the people’s money or any public funds.

“And this investigation on 1MDB is not the first the PAC, led by me, has done, we have launched proceedings on the klia2 project last year,” he added.

“Taking that example, the PAC took almost a year to complete the report which was eventually presented to the Dewan Rakyat last November.”

It seems the rakyat have been taken for a ride by the people behind 1MDB and those who are in charge with billions of our money. Do you think these people have anymore credibility and integrity?

An MP from Raub once wrote in his blog when the Prime Minister is not being truthful:

You people out there, you have no chance at all against a PM who misled and is not truthful in parliament. What’s not telling the truth to the ordinary folks mean to him? That would be too simple. The people will think of him a liar.

3) Bank Negara exonerates Tun Dr Mahathir regarding the ringgit slump:

Ahmad Maslan, the deputy finance minister in charge of defending 1MDB had blamed Tun Dr Mahathir’s attacks on 1MDB is the cause for the fall of ringgit on June 14. A few days later, he changed his statement. Now he said that Tun Dr Mahathir’s attack on 1MDB is only one of the 3 factors for the fall of ringgit.

But today, Bank Negara itself denied what Ahmad Maslan had been saying all along.

Ringgit slump: Bank Negara exonerates Dr M

Bank Negara has refuted recent media reports blaming former premier Dr Mahathir Mohamad’s criticisms of the Najib-administration for the Ringgit slump.

In a press release today, Bank Negara said the current volatility of the Ringgit was caused both global and domestic developments, which does not involve politics.

“Global developments would include the investor expectations relating to monetary policies of major central banks and the trends in crude oil and gas prices.

“Domestic factors include concerns about government linked entities and ratings related issues.

“While external developments are beyond the control of any open economy, every effort needs to be undertaken to bring about resolution to the domestic issues that confront our economy,” said the central bank.

Noting that Malaysia has sound economic fundamentals and growth prospects, the central bank said the performance of the Ringgit will be stable once these issues are resolved.

Bank Negara added it will never be drawn into any political agenda and will focus on its mandate to maintain monetary and fiscal stability.

Although Mahathir was never named in the press release, it was clear that Bank Negara was referring to Deputy Finance Minister Ahmad Maslan’s recent attempt to pin blame on the former premier.

Imagine that. A deputy finance minister lying to the public and defaming the former prime minister just to make the current Advisor of 1MDB look good. How low will these people go just to defend 1MDB?

4) Two previous auditors for 1MDB were indeed terminated, not rotated:

During a TV interview, when Finance Minister II was asked why did 1MDB changed auditors, he replied that it was just a normal rotational exercise for external auditors. We knew then it was a lie. And today it was indeed exposed by the PAC that those auditors were indeed sacked:

1Malaysia Development Bhd (1MDB), which was formed in 2009, has so far sacked two external auditors, first Ernst & Young (EY) followed by KPMG, according to the Public Accounts Committee (PAC).

EY was terminated before it completed the audit on 1MDB’s accounts for the financial year ended March 2010 (FY10). KPMG, which took over in September 2010, was alleged to have had to rush the auditing job. The former auditor signed off the FY10 accounts one month after it was appointed.

KPMG was dismissed in December 2013, PAC chairman Datuk Nur Jazlan Mohd told reporters after chairing the PAC probe into 1MDB, with officials from KPMG yesterday.

Nur Jazlan said the committee wanted to know the reason behind the termination of KPMG as an auditor, during the period when most major investments were made by 1MDB, including deals with PetroSaudi International Ltd and Brazen Sky Ltd. Brazen Sky is a subsidiary of 1MDB.

Poor Husni. This 1MDB fiasco is way over his head and as the official spokesperson for 1MDB issue, he had made a bigger mess by diminishing trust and wrecking public confidence. As far as public is concerned, it is Finance Minister I who should be answering questions.

5) Husni Hanadzlah said 1MDB’s loan interests is up to RM2.7 billion per year:

Debt-ridden 1Malaysia Development Bhd (1MDB) is paying up to RM2.7 billion a year in interest payments alone to its bankers for the RM42 billion debt it had accumulated over six years, the Finance Ministry said today.

Finance Minister II Datuk Seri Ahmad Husni Hanadzlah told the Dewan Rakyat today that 1MDB pays between RM2.4 billion and RM2.7 billion a year in interest payments.

But in another statement, 1MDB claimed that Tun Dr Mahathir was factually incorrect about RM3 billion loan interests and that is only RM2.4 billion for its RM42 billion debt.

It seems both Finance Ministry and their wholly owned subsidiary can’t even get their figures right. And on top of it all, they did not address Tun Dr Mahathir’s concern about the spiralling debts and interests cost:

14. But more loans were raised from local as well as foreign banks. In all RM42 billion were borrowed. It is not clear what the terms are. But interest on RM42 billion must come to almost RM3 billion a year. Unless the investment yield fantastic returns, the interest burden would sink 1MDB.

And yes, 1MDB is sinking. Otherwise, those behind 1MDB won’t be panicking and started to blabber nonsense to public with rationalising this and that, revamping here and there.

And how did 1MDB answered these concerns?

Like this:

5. Tun Mahathir claims “In all RM42 billion were borrowed…. But interest on RM42 billion must come to almost RM3 billion a year”.

The figures being quoted by Tun Mahathir are incorrect. To be clear; the interest cost on RM42 billion of debt by 1MDB as of 31.03.2014 was RM2.4 billion, i.e. a significant 20% less than what Tun Mahathir claims.

Did that address the concerns the public is asking regarding the massive debts and its interests costs? No it did not.

1MDB pinned their defence on why on earth did they borrow unnecessary loans on: “Tun Dr Mahathir shifting goalpost because his figures are incorrect”.

What a dishonest way in hiding the truth.

The public want answers. They do not want contradictory numbers from people who should know the answers. And they surely do not want to see a blatant trick in trying to evade the issue altogether.

When someone doesn’t understand an issue, questions are often asked. It is always nice if the people we asked will reply with “that is a very good question.. and this is the answer..”, and they proceeded to enlighten us with the proper answer which will remove all doubts.

But in the case of 1MDB, the people who are in charge of it do not seem to have the inclination to answer comprehensively. In fact, in many instances they gave conflicting, even untruthful,  and at best, vague answers.

Is this the end for good governance?

 

You might also want to read:

1) Rubbishing 1MDB’s Rebuttal

2) 1MDB Turkmenistan – fact or fancy

3) 1MDB’s Reply

 

#1mdb, #malaysian-corporate-matters

Anifah Aman misses the point by a mile

There was a minor brouhaha last night in the mainstream media when an article by New York Times was published. The article was regarding an interview with Tun Mahathir Mohamad.

The New York Times’ correspondent had requested to meet the former premier for an exclusive interview and as the result, the article was not well received by the pro-Najib’s camp.

It’s funny to think that the Prime Minister had to pay APCO more than RM70 million to boost his personal image overseas yet Tun Mahathir is perceived to have negated that image without any cost incurred.

And true to Tun Mahathir’s nature of not shying away from tough questions, the article can be read here and here.

They are actually a couple of harmless articles with no new stories or revelation. Basically what Tun said in the interview was nothing new.

But the Foreign Minister, in his haste had lambasted the article and threw misdirected criticisms towards the former premier.

The problem is, Anifah Aman did not know what he was saying. Maybe because he did not read Tun Mahathir’s interview in the New York Times. Or maybe he did read it, but chose to understand only what is convenient to him.

The said interview, which received widespread ire from desperate people in the administration can be summarised below. Tun Mahathir said a few things ranging from the recent pandemonium about a gymnast’s outfit, to the Rohingya issue. We are only going to take the part which stated Tun Mahathir’s opinion about the things that made Anifah Aman jittery.

On the current prime minister:

On the prime minister’s wife, Rosmah Mansor:

“She projects herself too much. Normally, the wife of the prime minister should be in the background supporting the husband.”

On the reasons he has turned against his anointed successors three times:

“They all looked good to me before they held power, but they don’t seem to manage power. They seem to think that power is to satisfy their own ambition. Power is there to serve the people. It’s not for enriching yourself and living a high life.”

On why Umno lacks vision and talented people:

“The little Napoleons in UMNO try to keep out people who are more intelligent than themselves,”

On Western-style democracy in Asia:

“If you look at the history of democracy, initially it was all about the right of the people to choose their own leaders. Since then, we have added more things to democracy. You must have this freedom and that freedom. I know what is wrong about democracy. It is when people interpret it wrongly. And they seem to think that liberty, freedom is absolute. It’s not.”

From the excerpt above, we can see that there is nothing about condemning Malaysia. Tun Mahathir did not go the way of Lim Guan Eng when the latter defamed Johor as a crime hub in an event held overseas.

Importantly, whatever Tun Mahathir had said, has been said before. Everybody knows this.

Below is Anifah Aman’s ‘open letter’ to the New York Times:

OPEN LETTER TO THE NEW YORK TIMES EDITOR

1. It is regrettable to see Tun Mahathir seeking to undermine his own country in the international media as part of a personal political vendetta.

From the NYT article, he did not undermine his own country. He only criticised the Prime Minister and Umno. If the Prime Minister could not stand the heat then get out from the kitchen.

2. It is irresponsible of any citizen, let alone a former prime minister, to spread lies and distortions about state owned companies – saying for example that RM42 billion is missing from 1MDB to create public anxiety, when in fact these are audited debts backed by RM51 billon assets. These reckless claims have affected market sentiment towards Malaysia.

There is a lot of problems with 1MDB otherwise debt rationalisation would not have taken place and Anifah Aman would not have been given the ultimatum to resign in order to silence him from criticising 1MDB. In this regard, the ultimatum worked. Hence, this open letter was duly written.

Plus, even Bank Negara had refuted the claims that Tun Mahathir’s attacks had affected market sentiment. Anifah Aman should be more up-to-date with his writing.

3. Furthermore, it is telling that he continues to mount his attacks, rather than wait for the findings of the enquiries currently being undertaken by Malaysia’s central bank, Auditor General, and parliament’s bipartisan Public Accounts Committee. This shows that Tun Mahathir is not interested in answers from the appropriate lawful authorities. Rather, he is just using 1MDB as an excuse to topple the serving prime minister, Najib Tun Razak.

Anifah Aman should know that the interim AG report will not be made public and the PAC investigation may take up to one year to complete. This shows that Anifah Aman’s boss is not interested to quickly allay fears and anxiety over the 1MDB issue. Anifah Aman is grasping at straws to keep an incompetent Prime Minister in power.

4. And all because his personal demands, as Tun Mahathir himself has acknowledged, are not being met. Prime Minister Najib, as Malaysia’s democratically elected leader, will do what he thinks is right for the nation, and will not allow rule by proxy.

The only personal demand Tun Mahathir had asked from Najib is for Najib to resign. The rest are just questions which the majority of the public want to know. The rule by proxy is just a concocted piece of imagination, created as diversion by Najib himself. The public knows this, but Anifah Aman used this line of defence like a good little toady.

5. Tun Mahathir told the New York Times that Umno “lacks vision and talented people”, that it “has become a repository of patronage-seeking politicians”, and that members “try to keep out people who are more intelligent than themselves”.

But it is Tun Mahathir who led the party for 22 years. It was he that, during his time, worked to cultivate ‘yes men’ and entrench his position – even introducing a quota system for the Umno presidency to prevent challengers – rather than bringing in talent and strengthening the party. It is Prime Minister Najib who democratised the party constitution to make it far easier to challenge him for his job.‎

The Prime Minister and his yes man

The Prime Minister and his eager yes man

How could Tun Mahathir cultivate ‘yes men’ when in the 80’s there were two camps in Umno? And in the 90’s when he sacked Anwar Ibrahim almost half of the Umno leaders left the party to follow the sacked deputy president?

Actually yes-men are people who sees something wrong, but dutifully kept quiet, or worse, begin to malign a former premier for asking questions and telling the truth. Yes-men will do biddings like a good attack dog, barking away making noises just to protect their own self interests.

And there is no truth that Najib had democratised the party. In fact, the new voting system had made it easier for him to hold on to power. Instead of controlling nearly 3,000 voting delegates, he now just have to control only about 190 division leaders. These division leaders  in turn, control the branch leaders in their division. While the branch leaders then instruct their members on who to vote. As the result, there were no changes in party leadership since 2009 and this is a fact. The 2013 party elections saw the same people being voted into power; from the presidency, deputy presidency, vice presidents, women and youth wings.

As for Umno lacked vision and talented people, well that is a matter of opinion. Stupid people might think they have vision and talent, that is why they created 1MDB; and cabinet ministers had approved its existence.

6. For Tun Mahathir to accuse Prime Minister Najib of acts “verging on criminal” is simply outrageous, and entirely false. It is a measure of the reforms put in place under Prime Minister Najib’s administration that Tun Mahathir has the freedom to be so vocally critical of the party and government he once led.‎

Tun Mahathir was talking about 1MDB, not the so called reforms. With all the incidents of poor governance, corruption and abuse of power surrounding 1MDB, it is not illogical to say that the Prime Minister is indeed acting on the verge of criminality.

7. But Dr Mahathir is abusing that freedom, and his privileged standing as a former prime minister, to indulge in reckless and baseless personal smears against Prime Minister Najib and his family. Most Malaysians would rather see Dr Mahathir retire gracefully than continue to damage the standing of his own country for personal political gain.

Anifah Aman, please stop being a yes-man and start become a man. Start giving proper advice during cabinet meetings. For example start telling the Prime Minister to contain the show of luxury and opulent lifestyle his wife is indulging. Start asking the relevant questions about 1MDB and make a stand. Since we all know cabinet ministers are clueless about 1MDB, there is no harm to poke your nose into their business since you are our proxy.

The one that is damaging the standing of his own country is the Prime Minister and his coterie of yes-men. You are included. Because currently, to be something other than a yes-man will be damaging for your personal political gain.

Furthermore, it is very unusual for a foreign minister to issue an open letter to the editor of a foreign press. Usually Wisma Putra will send a letter directly to the intended publication. 

But maybe for the chance to be seen as a Najib loyalist, Anifah issued the letter as a political oneupmanship to out-do the other yes-men.

And by the way Anifah Aman, if you must know, a statesman like Tun Mahathir is impervious to personal political gain. He is a 90 year old man who wants to see that Malaysians deserve a better country.

Will Anifah Aman have the testicular fortitude to do what is right? Only time will tell. After all, nobody wants to leave a legacy to be known only as a yes-man.

You might also want to read:

1) http://www.apanama.my/2015/06/the-new-york-times-najib-1mdb-altantuya.html

2) http://ffrreeddiiee.blogspot.com/2015/06/1mdb-turkmenistan-fact-or-fancy.html

3) http://matrodi.my/2015/05/26/1mdb-and-ipp/

#1mdb, #anwar-ibrahim, #lim-guan-eng

1MDB confirms our suspicions were right

Kudos to 1MDB for replying the questions posed by Tun Dr Mahathir and by the rakyat. They have finally learned to answer the questions by themselves instead of relying on dodgy characters the likes of Salleh Keruak, Shahrir Samad and a myriad collection of cybertroopers with no locus standi to defend 1MDB.

To date, the official spokesperson is Datuk Sri Husni Hanadzlah, although he has gone quiet. Nevertheless 1MDB should be more proactive in answering the questions from now on.

And today, just a day after Tun Mahathir asked 1MDB some questions, they replied in their website on a few pointers.

For the sake of brevity, we shall  first discuss about the first two points from their press release because from the answers given, arose our curiosity to know more about it. And since it is in the interest of the public to be fully informed, we would like to get further clarification from them. Our questions are in the blue font. We tried to make them easy to understand.

1MDB stated:

1. Tun Mahathir claims that “PetroSaudi did not pay a single cent” in a joint venture with 1MDB.

  • PetroSaudi, via a subsidiary company, owned assets, comprising rights to oil fields in Turkmenistan and Argentina, worth approximately USD2.7 billion. These assets were sold by PetroSaudi to another subsidiary, “JV Co”, which at the time of the asset sale, was a company formed by and initially 100% owned by PetroSaudi for the purposes of a proposed joint venture with 1MDB.

1. The main issue here is related party transactions among PetroSaudi’s two subsidiaries, which begs the question, who transferred the assets to who? Was there any profits booked by PetroSaudi prior to passing it to the JV Co?

  • In return for the USD2.7 billion asset transfer, JV Co had to pay PetroSaudi USD700 million. This indebtedness resulted from the asset transfer. Accordingly, there was no loan made or “to settle”.

2. Indebtedness is a position when someone owes another person something, in this case the JV Co owes PetroSaudi USD700 million to transfer the asset, but why was this not included in the valuation of the assets to be injected into the JV Co?

3. What is this USD700 million for? Because USD700M/USD2.7B is only equivalent to 29% of the value of assets being transferred. At this point, this was still a non-cash transaction.

  • On 29 September 2009, 1MDB executed a joint-venture agreement with PetroSaudi. Upon completion of an independent valuation, 1MDB contributed USD1 billion of cash in return for 40% ownership of JV Co, and PetroSaudi was left with a 60% stake in the JV Co. In effect; 1MDB’s contribution was in cash, whereas PetroSaudi’s contribution was in independently valued assets worth USD2.7 billion.

4. This is where the USD1 billion cash from 1MDB came in to get 40% of equity. PetroSaudi with 60% stake and as confirmed by their statement above, PetroSaudi still did not for out any cash at this point of time.

5. Independent valuation of oil fields can be completed within just a few days? Which party verified the valuation to justify the injection of USD1 billion cash? Did 1MDB used their own independent valuer to value those rights to oil fields, or did they just rely on independent valuer hired by PetroSaudi?

  • It was part of the joint-venture agreement that, of the USD1 billion from 1MDB, USD700 million would be used to pay PetroSaudi for the initial asset transfer to JV Co (see above) whereas USD300 million would remain in JV Co. Upon satisfaction with the independent valuation, as per the joint-venture agreement, 1MDB made a payment of USD700 million to a subsidiary of PetroSaudi, and obtained legal title to 40% share of JV Co, a company with independently valued assets worth USD2.7 billion at the time.

6. Referring to 1MDB’s own statement in bullet point number 2 above – “JV Co had to pay PetroSaudi USD700 million”, it is the JV Co who should be paying PetroSaudi as 1MDB had no legal relationship with another subsidiary of PetroSaudi. If another subsidiary held the 40% share of JV Co, then wouldn’t from outset 1MDB is buying equity from another subsidiary of PetroSaudi, instead of injecting into the JV Co as per the JV agreements? Please clarify.

7. What were the business activities of this JV Co and the other subsidiary which justified 1MDB to pump in USD1 billion in cash and subsequently paid USD700 million?

  • Accordingly, PetroSaudi had full rights to the USD 700 million paid by 1MDB and these funds were for PetroSaudi to use, at its discretion.

8. PetroSaudi should have full rights to the USD700 million paid by JV Co, not by 1MDB!

Conclusion: Petrosaudi indeed did not pay a single cent for the JV Co and Tun Mahathir was right after all.

2. Tun Mahathir claims:  “suddenly, USD 300 million of the payment by 1MDB is converted to a Murabaha loan”. He further claimed “We really don’t know where it is”.

  • The joint venture with PetroSaudi was terminated in March 2010, with PetroSaudi assuming 100% ownership of JV Co. 1MDB converted its USD1 billion of equity in JV Co to murabaha notes issued by JV Co, under the terms of a Murabaha Financing Agreement. PetroSaudi, as 100% owner of JV Co, fully guaranteed JV Co’s obligations under the murabaha notes.

9. After just 6 months, this billion dollar business venture was terminated. Why? What were the business activities of this JV Co during time? 

10. So when 1MDB wanted to take their money out of the JV Co, did they not have to sell the equity to PetroSaudi as per the JV Co agreement 1st right of refusal? Under what conditions or mandate of 1MDB that it can lend money (murabaha financing) to a shell JV Co that it tries to get itself out from in the first place? Is 1MDB mandated to be a moneylender?

10. Basically, Petrosaudi group gets USD1 billion cash from loans 1MDB had to borrow, but 1MDB in return gets murabaha notes from the JV Co? Again, this begs the question, what business activities is this JV Co involved in to justify giving them loans instead of getting back the money?  

  • 1MDB then made further investments of USD500 million and USD330 million in additional murabaha notes issued by JV Co.

11. After termination of the business venture, why did 1MDB give more cash loans to the JV Co in return for the murabaha notes? What kind of investments is this JV Co involved in?

  • In total, 1MDB invested USD1.83 billion cash in murabaha notes issued by JV Co, a company that, by then, was 100% owned by PetroSaudi following the termination of the joint venture in March 2010.

12. USD1.83 billion or approximately RM5.8 billion was invested in that JV Co. From the period of March 2010 to June 2012, what did this JV Co do with the cash they were given/loaned to? Why should 1MDB gets murabaha notes in return?  

  • In June 2012, the entire USD1.83 billion amount invested by 1MDB in murabaha notes was repaid, by way of conversion into shares of Petrosaudi Oil Services Limited, for a value of USD2.22 billion.

13. What does this PetroSaudi Oil Services Limited (PetroSaudi OSL) do? How much % equity 1MDB now holds in PetroSaudi OSL? Is it a shell company too? Now the USD1.83 billion is revalued on paper to be USD2.22 billion, but is it legit?

14. Who was the third party valuer of this shares? Is it really worth USD2.22 billion or was it just an agreed amount decided between 1MDB and PetroSaudi OSL?

Up to this point the USD1.83 billion which 1MDB should get in cash as repayment, have been converted into shares instead. The cash of USD1 billion, USD500 million and USD330 million initially given to Petrosaudi group were now in the form of  share certificates of PetroSaudi OSL. 1MDB confirmed this in their point above.

15. From size perspective, this is a very large investment, what was the investment objective of 1MDB to accept the “conversion” into shares? Did 1MDB appoint any BOD member into PetroSaudi OSL?

16. PetroSaudi OSL was created in 2009. Was it a profitable firm? If it was profitable, why the need to sell it back in September 2012 as stated below?

  • In September 2012, 1MDB sold its shares in PetroSaudi Oil Services Limited for USD2.318 billion and received fund units in a Cayman registered fund. The Cayman registered fund is managed by Bridge Partners, a Hong Kong-based fund manager. These fund units were owned by 1MDB via its 100% subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian.

17. After just 4 months holding the shares, they now sold it? What kind of business musical chair of shares were they doing? Suddenly just after 4 months, the shares were revalued upwards to USD2.318 billion and kept by a subsidiary of 1MDB called Brazen Sky. Up to this point, people have got to ask, what kind of real business have 1MDB and PetroSaudi were doing up to that point of time?

18. How long has this Cayman fund been launched? Is this a closed investment scheme, is it a hedge fund, what is the historical returns and the liquidity of these funds?

19. Why did 1MDB accept the settlement in the form of units instead of units presumably originating from PetroSaudi assets? Did 1MDB not get back to square one when they wanted to get out of the JV Co holding some “assets valued up to USD2.7 billion”?

20. Is this the same assets as the first USD2.7 billion that they got themselves into in the first place? Can you, 1MDB share with us the portfolio report from BSI Bank on the marked to market value of the fund, its returns if any and what ever terms and condition attached to 1MDB liquidating them?

Now we hear that the balance of these units are to be sold back to PetroSaudi in return of providing the USD1 billion by June 4th. Does this imply that these units are worthless to the open market and only PetroSaudi will buy them? 

  • Accordingly, 1MDB invested a total of USD1.83 billion with PetroSaudi (initially as equity, then as murabaha notes), and ultimately owned USD2.318 billion of fund units i.e. a gain over time of USD488 million.

21. You put in USD1.83 billion of cash and had to pay interests on loans for it, in return you are proud to get a paper profit of USD488 million?

22. If you managed to get out of the JV Co in the first place you would not need to go out and borrow that much in order to purchase the IPPs or the lands, tell us what is your cost of fund (inclusive of fees paid to all) vs the actual return on these investments?

  • The facts detailed above can be verified by reference to the notes to the audited financial statements of 1MDB dated 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013 and 31.03.2014.

23. 1MDB’s auditor, Deloitte stated that all these “investment held for sale”, including its shares in the Caymans, as Level 3 – the lowest of three levels of assets in the fair value accounting hierarchy.

24. To add, regarding another investment 1MDB made – the 1MDB GIL, after X number of years of not getting your money back from PetroSaudi, you then agreed to invest further into another JV Co with PetroSaudi, can you also share with us the “Investments” made by 1MDB GIL, and are these investments involves buying PetroSaudi “assets” again? (errata: This question is supposed to be regarding the Aabar/IPIC investments, which we may discuss in the future. 1MDB is indeed a confusing ball of mess. Apologies.)

Conclusion: Tun Mahathir was wrong on the figure, it was not USD3oo million but in actual fact it is USD1.83 billion! And we do not know where the cash has gone to after getting units in return.

1MDB are just using wordplay to counter the questions with answers that didn’t really answer the question. In fact, their replies created even more questions!

The rest of their points stressed on semantics, not substance. Wordplay like – Ananda Krishnan did not give RM2 billion to pay interests as Tun Mahathir had claimed, but to pay loan to lenders. Same difference.

Also, Tun Mahathir said the interests come about to almost RM3 billion and they answered with, “the figures being quoted by Tun Mahathir are incorrect. To be clear; the interest cost on RM42 billion of debt by 1MDB as of 31.03.2014 was RM2.4 billion. The person written this must be a joker.

Then they said, Goldman Sachs was not the one raising the sukuk bonds but it was AmBank when all sundry know Goldman Sach is involved in another fund raising venture for 1MDB. Same difference.

Again, they stressed on form instead of substance when they corrected the figure of RM320 million of land purchase to RM230 million. They just corrected the figure but failed to answer the question.

These are all diversions in order to say that they have answered all questions when in fact, they have not. Hopefully 1MDB can clarify the questions above.

Thank you.

You might also want to read:

1) On IPP – http://dinturtle.blogspot.com/2015/06/hot-1mdb-mengaku-ipp-dibeli-hampir.html

2) On the USD1 billion money trail – http://www.themalaysianinsider.com/malaysia/article/1mdbs-first-us1billion-money-trail

3) On PM Najib’s FAQ – http://ffrreeddiiee.blogspot.com/2015/06/1mdb-dato-seri-najibs-fqa-frequently.html

#1mdb, #malaysian-corporate-matters

Perjalanan Umno yang masih panjang?

Apabila ramai yang meminta Perdana Menteri ke 5 Malaysia (Pak Lah) meletakkan jawatan akibat prestasi buruk Barisan Nasional pada pilihanraya umum ke 12, permintaan mereka adalah berasas kerana itulah pertama kalinya Barisan Nasional hilang majoriti dua pertiga di Parlimen.

Para blogger tidak kira fahaman politik boleh dikatakan sebulat suara menyeru agar Pak Lah meletakkan jawatan. Ini diikuti oleh panggilan beberapa pemimpin Umno yang berfikir adalah lebih baik Pak Lah melepaskan jawatan kepada mereka yang lebih layak dan boleh membantu Barisan Nasional di dalam pilihanraya akan datang.

Ini kerana kredibiliti Pak Lah sebagai Presiden Umno dan juga Perdana Menteri telah hancur akibat kecuaian dan kealpaan dalam memerintah Malaysia. Kepimpinan beliau adalah lemah dan tidak memberangsangkan. Para blogger dan ahli ahli Umno sendiri tidak segan silu memanggil beliau dengan panggilan yang agak janggal dan mengaibkan.

Ahli-ahli Umno juga tiada halangan untuk melihat agar Pak Lah digantikan dengan pemimpin yang lain. Parti adalah lebih utama dari individu. Jika kepalanya rosak, maka badan induknya akan rosak.

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Perdana Menteri bersilih ganti. Tiada yang kekal berkuasa jika lemah dan memudaratkan Malaysia.

Walaupun pada mulanya Pak Lah meminta agar pelan peralihan dibuat di dalam tahun 2010, ramai ahli Umno dan para blogger memikirkan ianya terlalu lama. Ramai yang tidak sabar kerana parti harus diselamatkan segera.

Akhirnya, Pak Lah melepaskan jawatan Presiden dan secara langsung melepaskan jawatan Perdana Menteri masing masing pada bulan Mac dan April 2009.

Beberapa bulan sebelumnya, Timbalan Presiden ketika itu juga dengan aktif telah berkempen agar dirinya dilantik untuk menggantikan Pak Lah. Ya, pemimpin yang lemah wajib digantikan dengan yang baru.

Walaupun blog ini mempertikaikan mengapa jawatan Presiden tidak dipertandingkan (kerana banyak bahagian tidak menyokong pencalonan Tengku Razaleigh), penyerahan kuasa berlaku dengan aman kepada Presiden baru, Dato Sri Najib Bin Razak.

Pengajaran yang boleh dibuat di sini adalah, ahli ahli Umno dan juga para blogger pro Umno tidak merasa cemas atau sedikit pun khuatir jika berlaku peralihan kuasa. Ini kerana adalah lebih baik jika Perdana Menteri yang banyak melakukan perkara perkara yang kurang bijak dan bertindak membelakangkan suara rakyat serta tidak berupaya untuk memberi keyakinan yang tinggi kepada rakyatnya ditukarkan kepada calon Perdana Menteri yang lain.

Di dalam tahun 2015, para blogger dan ahli ahli Umno berdepan dengan dilemma yang sama. Adakah mereka perlu konsisten seperti apa yang mereka telah lakukan kepada bekas Presiden mereka yang sebelum ini, atau mempertahankan Presiden mereka walaupun dengan jelas beliau lebih lemah dari Presiden yang sebelumnya.

Hakikatnya, polisi dan taktik untuk meraih undi dan kepercayaan rakyat tidak menjadi, malah kewibawaan beliau merosot teruk dan ini terbukti di dalam pencapaian Barisan Nasional di dalam pilihanraya ke 13. Barisan Nasional juga untuk pertama kali tidak menang undi popular.

Ditambah pula dengan skandal 1MDB dan perkara-perkara sampingan yang mengundang celaan dari masyarakat, kedudukan Presiden Umno merangkap Perdana Menteri kini amat lemah di kaca mata umum.

Kelemahan yang ketara di dalam aspek menjawab persoalan umum, kepincangan strategi di dalam menangani kritikan bekas Perdana Menteri ke 4, pencapaian ekonomi yang tidak mendatangkan keyakinan kepada rakyat kerana tidak bersandarkan kepada realiti kos sara hidup yang tinggi serta dikelilingi oleh menteri menteri yang celupar dan agak bebal apabila berdepan dengan sesuatu isu, telah menambahkan lagi keburukan persepsi terhadap tuan Presiden.

Ahli ahli Umno dan para blogger perlu mengingat kembali kepada perjuangan menukar pemimpin yang tidak elok untuk parti di dalam tahun 2008. Yang penting adalah jawatan Presiden, bukannya orang yang menduduki jawatan tersebut.

Tidak akan kiamat dunia ini jika Presiden bertukar ganti. Tiada yang akan hilang semuanya. Ketua ketua bahagian Umno masa kini kebanyakkannya adalah orang yang sama sejak 15 tahun dahulu. Ada juga yang masih menjadi Ketua Bahagian sejak tahun 90an.

Menantu Pak Lah pun dengan mudah mendapat jawatan menteri. Betul kata orang, jika kalah, tiada yang kalah semuanya.

Umno tidak akan hancur jika Presiden bertukar ganti. Sebagai contoh, Umno tidak hilang kuasanya apabila Tunku Abdul Rahman yang merupakan Bapa Kemerdekaan melepaskan jawatan beliau akibat prestasi buruk di dalam pilihanraya 1969. Malah, Umno menjadi lebih kuat di dalam pilihanraya seterusnya.

Perjuangan ahli ahli Umno perlu digalas untuk jangkamasa yang panjang. Apakah halatuju dan prestasi parti ini akan lebih kuat jika ahli ahli Umno dan para blogger menjadi tidak konsisten dengan berterusan mendukung biawak hidup?

Adakah meminta seorang Perdana Menteri yang lemah melepaskan jawatan hanya boleh dilakukan terhadap Pak Lah seorang sahaja dan tidak untuk pemimpin selepasnya?

Adakah prinsip di mana pemimpin yang lemah harus lah ditukar, sudah digantikan dengan prinsip pemimpin yang lemah wajib dipertahankan?

Dipertahankan untuk apa? Dan untuk siapa?

Ahli ahli Umno yang seramai 3 juta orang ini harus lah kembali kepada perjuangan yang tidak segan silu untuk mengatakan bahawa apa yang tidak betul, adalah tidak betul.

Yang kita sokong adalah ketua yang berwibawa dan berkaliber. Yang kita tidak sokong adalah ketua yang lemah, tiada keberanian dan berprestasi buruk.

Parti ini parti anda. Andalah yang akan mewarisi parti ini apabila pemimpin yang tidak elok membawa anda kepada kekalahan di tangan pengundi nanti. Perjalanan Umno sebagai salah satu parti yang memerdekaan negara akan terbantut di situ sahaja.

Parti ini parti anda. Presiden parti adalah proksi anda. Dan Perdana Menteri adalah proksi kepada semua rakyat Malaysia. Beliau lah yang patut mendengar keluhan dan persoalan kita semua. Oleh kerana Perdana Menteri tidak tahu menjiwai persoalan dan kritikan rakyat Malaysia, maka sebab itulah Perdana Menteri sekarang ini tidak mendapat kepercayaan dari mereka semua.

Pemimpin seterusnya harus menggantikan beliau. Dan Umno tidak akan hancur jika itu berlaku. Parti ini parti anda, bukannya milik Presiden seorang sahaja.

Sekian, terima kasih.

#malaysian-ge-2013

Perihal Proton dan kayu hulu kapak

Kita mulakan minggu ini dengan penulisan dari Ku Seman Ku Hussein yang disiarkan oleh Mingguan Malaysia semalam. Catatan yang membawa seribu satu makna. Semoga menjadi pengajaran.

Alkisah kayu hulu kapak, nasihat Cikgu dan Proton

KU SEMAN KU HUSSAIN (KUSEMANKH@GMAIL.COM)  |  14 Jun 2015 12:59 AM

Saya memulakan catatan hari ini dengan ucapan syabas dan tahniah kepada Proton kerana diberi “publisiti” besar-besaran selama tiga hari berturut-turut oleh TV3 baru-baru ini. Bukan mudah untuk mendapat peluang “keemasan” begitu. Sebenarnya dengan rating TV3 tertinggi, “iklan percuma” pada waktu perdana yang diberikan itu terlalu tinggi nilainya. Nasib baik TV3 memberikan secara percuma. Kita wajar menyanjung sikap pemurah yang ditunjukkan itu.

Kita juga wajar berbangga kerana stesen televisyen ini berjiwa rakyat dan mendengar “rintihan” pemilik-pemilik teksi yang mengadu kualiti kereta Proton terlalu rendah. Pemilik teksi dikira bernasib baik kerana mempunyai TV3 yang mengutamakan keluhan mereka walaupun kereta Proton dijadikan teksi sudah hampir tiga dekad lalu.

Janganlah ditanya kenapa dan mengapa rintihan itu dilayan ketika ini. Elok sangatlah media tempatan seperti TV3 memberikan “iklan percuma” kepada khazanah negara seperti Proton ini. Kalau hendak diharapkan media Barat seperti The New York Times atau The Washington Post, tidak adalah nampaknya. Lagi pun jangan percaya sangat dengan media Barat kerana mereka lebih cenderung untuk meruntuhkan daripada melestarikan yang sudah ada.Proton bagi kita adalah sebatang pokok yang bertaraf balak.

Mengambil masa berpuluh tahun untuk matang, tegap dan teguh menahan ribut dan taufan. Kalau dulu orang Melayu dihina oleh penjajah kerana tidak mampu membuat jarum, tetapi sejak tiga dekad lalu, kita sudah boleh membuat kereta. Proton dan beberapa lagi yang menjadi mercu tanda kecemerlangan dan legasi bangsa adalah sebatang balak yang mengambil masa lama untuk berada seperti yang kita lihat sekarang.

Bercakap tentang pokok balak, ingatan saya pantas melayang ke kampung halaman ketika mula-mula menjadi wartawan di Utusan Melayu 30 tahun lalu. Di kampung ada seorang tua, guru pencen yang terus kekal dengan panggilan hormat “Cikgu” dalam kalangan orang kampung. Cikgu pencen ini seorang pembaca setia akhbar Utusan Melayu bertulisan Jawi.

Dia sangat berbangga apabila saya bekerja di Utusan Melayu sebab dia kagum kepada tokoh wartawan, Ishak Haji Muhammad (Pak Sako). Dia terkedu apabila saya memberitahu bekerja satu pejabat dengan Pak Sako. Dia kata, kalau Pak Sako menyertai UMNO, sudah lama Pak Sako menjadi menteri. Entahlah, saya tidak tahu cerita ini tetapi Pak Sako memang hebat, antara anak Melayu awal pernah jadi majistret zaman penjajah Inggeris.

Suatu hari apabila saya bercuti di kampung, Cikgu datang ke rumah dan berbual panjang di tepi sawah tentang hal ehwal di Kuala Lumpur. Dia kelihatan ternganga apabila saya menceritakan tentang operasi di Jabatan Pengarang Utusan Melayu yang bingit dengan bunyi mesin taip. Cikgu banyak memberi nasihat kepada saya, antara yang saya tidak lupa ialah jangan sama sekali menjadi kayu hulu kapak.

Ketika itu saya tidak faham sangat dengan kiasan-kiasan. Pening memikirkan kayu hulu kapak. Puas mencari maksud tersurat dan tersirat. Kata Cikgu, kayu hulu kapak itu dikiaskan kepada orang yang menjadi pengkhianat. Cikgu menghuraikan, hulu kapak itu diperbuat daripada kayu yang asalnya sebatang balak. Kemudian dibuat hulu tempat memegang untuk digunakan bagi menebang pohon yang “sebangsa” dengannya.

Dalam lain perkataan, kiasan kayu hulu kapak ialah orang yang dipergunakan oleh pihak lain untuk menumbangkan legasi atau khazanah milik bangsanya sendiri. Ini adalah gambaran orang yang hilang maruah dan integriti kerana sanggup menjadi alat untuk menghancurkan sesuatu yang menjadi milik bangsa.

Saya agak terkilan kerana ketika itu tidak mengambil endah sangat dengan nasihat orang tua-tua. Pernah sekali itu Cikgu memberi amaran kepada saya, katanya, “Aku tak mau dengar hang jadi wartawan kayu hulu kapak, dipergunakan untuk meruntuhkan bangsa,”.

Saya terkedu. Sampai hati Cikgu kata saya “wartawan kayu hulu kapak”. Tetapi setelah lama bergelumang dalam dunia wartawan, melihat warna peribadi pelbagai manusia termasuk yang menjadi sesumpah dan rama-rama, barulah saya sedar nasihat Cikgu sebenarnya sangat berharga.Saya bertemu dengan banyak manusia seperti hulu kapak, mereka dipergunakan untuk menumbangkan pohon bangsanya sendiri kerana mengejar habuan dan kedudukan. Mereka melakukan tanpa sedikit pun rasa bersalah.

Oleh kerana Proton diumpamakan sebatang balak yang sudah mempunyai teras, janganlah pula ada manusia yang berperangai seperti kayu hulu kapak yang dipergunakan untuk menebang legasi kebanggaan bangsa itu. Saya percaya tidak ada. Kalau ada, itu tandanya nilai integriti dan maruah mereka lebih rendah daripada sekeping roti yang basi.

Baca selanjutnya di sini.

#malaysian-corporate-matters

6 Simple Questions Any Malaysian Can Ask 1MDB’s Board (by CiliSos)

IT IS THE WEEKEND. 

Therefore we shall just talk about something serious in a light-hearted kind of way.

Below is an article by the website CiliSos which delved into the financial fiasco called 1MDB. CiliSos asked 6 simple questions for the government and 1MDB to answer.

Be careful CiliSos, the Prime Minister in his latest blogpost had said that those who question 1MDB (actually he was only addressing Tun Dr Mahathir) are motivated by self-interests, not Malaysia’s interests. Why are you so selfish CIliSos?

But since everyone are asking the same type of questions, it seems all of us the rakyat are selfish people.

Good work on the article. We love it. 

>START<

6 SIMPLE QUESTIONS ANY MALAYSIAN CAN ASK 1MDB’S BOARD :)

Before we begin, if you’re reading this and you’re still not very sure about what exactly 1MDB is, we highly recommend reading another article that we’ve written here.

If you’ve followed the news on 1MDB, you may have heard that its CEO, Arul Kanda Kandasamy, recently gave a breakdown of the RM42 billion debt of 1MDB.

1MDB_infographic_1_620_639_100

In his statement, Arul Kanda shows us how much was invested in what. He shows us that the debt did indeed reach a total of  RM42 billion (RM41.8 to be exact). He shows us that we owe people a lot of money. Then he says this.

“We trust this clarification will help to clear any confusion on this matter.” – 1MDB CEO, Arul Kanda, as quoted by The Malay Mail Online

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So we know we owe a lot of money is involved, we know we have a lot of debt, and we know where all this debt is from. Unfortunately, for most of us, these numbers are just numbers. We don’t know what they mean, we don’t know how they affect us, and we sure don’t know what’s at stake.

So Arul Kanda’s answers mean nothing to most Malaysians. (Full disclosure: Arul Kanda was also the school captain at our editor’s college)

Tony Pua (the guy who first brought all of this to light) stated that the answers from Arul Kanda do nothing to quell our curiosity but raise more questions and suspicions. And we agree, because we at CILISOS want to ask more questions as well.

So here are 6 reaally basic questions that should be answered by 1MDB to the rakyat.

1. Has 1MDB made any real money?

First, let’s define the term “real money”. Well, it’s money that came from actually providing a sale or a service. Meaning that it earned something by providing value to someone else.

A couple of news articles have pointed out that while 1MDB has been posting profits in their annual reports, these have not been due to selling or providing anything but from revaluation. Revaluation is basically the process of increasing or decreasing the value of assets ‘in case of major changes in fair market value of the fixed asset’ (click to read more).

Would you give our Prime Minister RM4000 to invest for you    CILISOS   Current Issues Tambah Pedas

How much of an impact does the revaluation have on the profits? Well, The Star reports that (as of 2014) 1MDB’s profits for the last 2 years have mainly been due to revaluation of their assets.

“For instance in 2013, 1MDB recorded a net profit of RM778.24mil, helped largely by property revaluation gains of RM2.7bil.” – The Star

Okay, but what about other profits? Has 1MDB made profits from anything other than the revaluation of their assets? So we tried looking for documents that talked about 1MDB’s profits.

First we found that Arul Kanda stated that the company’s earlier venture with a Saudi Arabian company called PetroSaudi had earned them RM1.78 billion. But then Tony Pua said that this money never came back to Malaysia. You can read how Tony Pua talks about where this money went here. So no real money there.

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Besides that, news portal Malaysiakini has tried to obtain the financial reports of 1MDB’s profits but all they got were reports saying that there were profits. But honestly, what we want to see is what the profits are! 

And aside from these two, nothing else. So the point is that we still can’t find any profit that was, in a sense, real

2. Why did 1MDB invest so much money when it was already in debt?

Before we go into that, let us just clarify something with ugaiz. Contrary to popular belief, 1MDB is not a Malaysian sovereign wealth fund.

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According to investopedia.com, a sovereign wealth fund is usually formed when a nation has excess money. Instead of keeping this money in the central bank (i.e. Bank Negara), a sovereign wealth fund utilises the surplus via investments.

(Ironically our other sovereign wealth fund, Khazanah Nasional, also doesn’t refer to itself as a sovereign wealth fund so we’re not entirely sure that we actually have one.)

1MDB’s official website states a major difference between them and a sovereign wealth fund is that a sovereign wealth fund is funded by the gomen and invests on its behalf. On the other hand, 1MDB, while fully owned by the gomen, raises and invests its own capital.

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But for a company that has to raise and invest its own capital, to be RM42 billion in debt is a crazeeee situation to be in. How in the world does anyone even end up with a RM42 billion debt when you start off with nothing? As we’ve just talked about, 1MDB is NOT a sovereign wealth fund and has to raise its own capital.

So the thing here is, 1MDB did not have any capital to begin with.

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In regards to whether or not investments companies generally borrow to invest, we spoke to a guy who wants to be known as FreeLunch, (a former auditor whom we last spoke to here and whom now we owe 2 free lunches) and he had this to say.

Most funds don’t take debt to invest. One of the Norwegian funds use profits from oil sales to invest globally on behalf of the government.

Funds like hedge funds accept money from individuals/corporations to invest, generally no debt. Private investment funds like those run by rich families take on surplus funds and use it to invest.” – FreeLunch

Which basically means that investment companies rarely if not never invest using debt. So why did 1MDB invest on debt?

Do visit CiliSos for the rest of the article and questions.

#1mdb, #malaysian-corporate-matters, #reference

All of us are perplexed by Arul Kanda and 1MDB

NAZIR RAZAK HAS BEEN VERY VOCAL IN THE APPARENT LACK OF GOVERNANCE IN 1MDB AND THE INCOMPETENCE OF ITS BOARD MEMBERS

NAZIR RAZAK HAS BEEN VERY VOCAL IN THE APPARENT LACK OF GOVERNANCE IN 1MDB AND THE INCOMPETENCE OF ITS BOARD MEMBERS

From The Star today:

Nazir Razak questions delay of 1MDB annual audit

PETALING JAYA: The delay of an audit for Government investment arm 1Malaysia Development Berhad’s (1MDB) financial year which ended in March this year is “perplexing” to CIMB chairman Nazir Tun Razak (pic).

“I am perplexed why your March 2015 audit has not even started? How is this allowed? Has standards of GLC governance dropped so low?” Nazir said in an Instagram post on Thursday night, accompanied by a graphic with the 1MDB logo.

On June 10, Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed revealed that 1MDB’s financial year accounts, which ended in March this year, had yet to be audited.

Nazir, who is also the younger brother of Prime Minister Datuk Seri Najib Tun Razak, has been critical of 1MDB in the past, and had criticised 1MDB’s president and group executive director Arul Kanda Kandasamy as well as former CEO Datuk Shahrol Azral Ibrahim Halmi for not attending a PAC inquiry.

In fact, Nazir Razak may not only criticising Arul Kanda, he could also be criticising the Prime Minister cum-Finance Minister slash Advisor of 1MDB for not giving the green light for Deloitte to start auditing 1MDB.  It was reported yesterday:

The PAC found out at yesterday’s meeting that Putrajaya has yet to direct Deloitte to audit 1MDB’s accounts for the current financial year despite growing concerns over the state investor’s financial health.

In reiterating the need for 1MDB’s latest accounts to be audited quickly, Nur Jazlan said until the financials are completed and audited, it would be a hindrance to their ongoing investigation into the firm.

Is somebody still cooking something in the kitchen? Why hasn’t the audit started yet? It is impossible that the management accounts are not yet ready to be audited. It’s mid-June already. Are the employees in the accounts department of 1MDB on sabbatical leave since last Hari Raya?

Why is the Prime Minister actively withholding a proper governance procedure?

Tony Pua was also perplexed by what by the  self-confessed ‘professional’, Arul Kanda had to say about all this. The so called professional have made a reply to Tony on why the external audit has not yet started but that exposes the CEO to further embarrassment because it seems, Arul Kanda had missed the point.

The MP rebuked and chastised the under sieged CEO of 1MDB by giving him a lesson in logical thinking:

Arul Kanda’s denials about audit miss the point

KUALA LUMPUR: Petaling Jaya Utara MP Tony Pua, while commending Arul Kanda Kandasamy for his quick response, pointed out that the 1MDB Chief has completely missed the point that he was making on Deloitte Malaysia not being able to commence audit work on the company for the last financial year.

“His denial does not explain anything,” said Pua who is also DAP National Publicity Secretary. “Arul Kanda’s commendably immediate denial misses the point and was an attempted misdirection.”

“He should stop giving excuses and give his assurance to Malaysians that the statutory financial audit for the scandal-ridden 1MDB for the 31 March 2015 financial year-end will be completed by 30 September 2015 as required by law.

Arul Kanda in his denial, he lamented, said “the board and management of 1MDB met Deloitte as early as February 2015 to discuss commencement of an audit after the financial year-end of 31 March 2015.”

“We want to know about the controversial assets held in various overseas banks. We want to know what was the true debt situation in 1MDB and the extent of the company’s cash flow problems.”

Unfortunately, he said, “what we didn’t get from Arul Kanda was when the audit will actually commence. More worryingly, we would like to ask the President of 1MDB, why is it that since the discussion more than three months ago, the audit for 1MDB has not commenced.”

Arul Kanda claimed that “the audit of a major 1MDB subsidiary, Edra Global Energy Bhd, has already commenced and was well under way”, noted Pua.

“I asked about ‘the holding company, 1MDB, where all the controversy over its funds, cash flow problems and alleged misappropriations lie, but Arul Kanda tells us that the audit has commenced on its subsidiary.”

The commencement of audit work on Edra isn’t at all surprising, he added. “It was expected because the company was preparing for their initial public offering.”

Arul Kanda, Pua further noted, separately highlighted the fact that “1MDB is currently undergoing a thorough review and investigation of its accounts by the National Audit Department.”

“Let me state that the fact that the Auditor-General (A-G) was reviewing the past financial statements of 1MDB does not in any way justify the fact that the statutory audit for 1MDB has not commenced,” said Pua. “These are two different and independent processes which surely a multi-billion ringgit public-interest company cannot afford to neglect.”

In fact, he said, given that there was a parallel on-going A-G review, Deloitte should be invited to commence their audit earlier so as to provide the auditors with a longer lead-time to complete the report.

Arul Kanda have managed to make even Tony Pua sound smarter. And that is the quality we have among the people who are supposed to handle 1MDB.

Intelligent people will instantly know that if an audit has not yet started, then it has not yet started. There is no need to go around in a roundabout just to say something has started when clearly it hasn’t.

In normal audit practice, management accounts of all subsidiaries should have already been consolidated in the management accounts of the holding company by end of financial year. External auditors should have by now, sit in the audit room prepared by 1MDB HQ office and commence the audit (whether executing the ‘stat audit’ – a jargon for checking the legal corporate documents, or other preparatory process).

Again, it is the middle of June now. Their financial year ended 2.5 months ago. If they have to wait for the Edra Global Energy to be audited and the audit report to be signed, then there won’t be enough time for 1MDB’s audit report to be completed and signed to meet its September dateline. Arul Kanda was just saying something that does not make sense.

Only the most ignorant among us would believe his press statement.

From all the news above, it is without any doubt that not only 1MDB have failed in its corporate governance, it also gives so many excuses and idiotic responses, it is not presumptuous to say that there is a deliberate attempt to cover up wrong doings.

And to answer Nazir Razak’s ultimate question, the ultimate answer is, yes it has.

Today, Tun Dr Mahathir wrote his latest blogpost which summarises the history of 1MDB and its stupid business deals. We assume there will be another round of Falsely Answered Questions (FAQ) which will not answer anything. Get ready.

You might also want to read:

https://jebatmustdie.wordpress.com/2015/05/28/the-prime-minister-is-misleading-the-people-with-his-faq/

http://ffrreeddiiee.blogspot.com/2015/06/1mdb-or-jho-low.html

https://jebatmustdie.wordpress.com/2015/06/11/congratulations-arul-kanda-you-are-now-a-politician/

#1mdb, #malaysian-corporate-matters