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