More than 5 weeks ago, we wrote about the silence of Securities Commission on the misused of cash by 1MDB back in 2009. The cash, totalling RM5 billion was derived from the bonds 1MDB acquired under the Islamic Medium Term Notes which was guaranteed by the government.
This IMTN bond which was fully guaranteed by the government can be categorised as taxpayers money. Because in the event of a default, it is the taxpayers who had to pay for it. Since BNM had revoked the permissions, this should trigger red flag from other regulators.
One such regulator is the Securities Commission (SC).
The SC is the controller of bond issuance process. And they also ensure compliance to documents when the bond was offered. Below is the term sheet for the IMTN and the purpose stated when it was issued:
Is sending money to Good Star Ltd in compliance to Shariah principles? What does Good Star do? Selling hijabs to Hollywood celebrities during lavish birthday parties?
Plus, is putting the USD1.83 billion in Cayman Islands in compliance with Shariah principles? Are the units endorsed by a Shariah Adviser? Is the Hong Kong based Bridge Partners which ultimately managed those worthless units a Shariah compliant company? The bond is called the ISLAMIC medium term notes guaranteed by the Government, not It’s My Daddy’s Money So I Can Do Whatever I Want With It.
Many rules, act and terms were broken here yet there weren’t any noise coming out from Securities Commission. The data and goalpost have been changed unilaterally by 1MDB’s management yet the supervisory body like Securities Commission did not even make a squeak.
But up to this date, the SC has been quiet.
Perhaps they are no longer following their own mission statement and the reason for their existence. They proudly state in their website that their ultimate responsibility is to protect investors of the bonds. But alas, there seems to be a breakdown in this regulatory body.
We have had enough absurdity coming from the AG Chambers and the PAC. Now it seems SC is also following suit.
Tan Sri Zeti of Bank Negara made a valiant effort in upholding the principles of corporate governance by castigating and reprimanding 1MDB. The top management of this debt laden and near bankrupt company will have to pay the price soon. Even now they are stripping their asset and selling them just to pay off their massive debts.
A colossal chunk of their asset totaling around RM18 billion will be taken off their books due to the sale of Edra Energy Berhad.
Now 1MDB whose assets are around RM52 billion as per their 2014 accounts will be reduced to approximately RM34 billion.
To put matters into perspective, the total cost of building Putrajaya from 1995 to 2008 was about RM12 billion. Imagine if the government had to sell the whole of Putrajaya to foreigners in order to pay off debts they had foolishly accumulated.
And all this stemmed from the misused of those RM5 billion bonds back in 2009.
Clearly, 1MDB did not use the bonds according to Shariah principles. Bank Negara Malaysia even went to the extent in exposing that 1MDB had given false information when they applied to remit the money overseas.
The evidence are for all to see. The Board minutes of 1MDB back in 2009 revealed that some USD700 million was asked by the board members to be repatriated back immediately as soon as it was known to be wrongfully credited into an unauthorised company called Good Star.
This led to the resignation of 1MDB’s two board members.
There were so many red flags yet Securities Commission buried its head in the sand. Is this the end Securities Commission’s reputation?
Perhaps the boss of SC is waiting for a Tan Sri-ship first before he could do his job properly? Perhaps only then will he act with much bravery like the illustrious Tan Sri Zeti?
Bear in mind that Najib Razak won’t be the prime minister forever. He will have to step down eventually. Nobody is an immortal. And after he steps down for whatever reason, people will remember those who are in charge of corporate governance but are closing both eyes for the many wrongdoings in his administration.
In any case, it is already too late. We were hoping at least Securities Commission would have enough integrity to reclassify or proclaim that the IMTN bonds have failed to comply with the Shariah principles, just like how they periodically publish in their website on other securities. But even this simple act they have failed to live up to.
Speaking about Tan Sri-ship, there is another Tan Sri who are as quiet as the boss of Securities Commission.
This person is the CEO of Inland Revenue Board. He is YBhg Kolonel (K) Tan Sri Datuk Wira Dr. Hj. Mohd Shukor Bin Hj. Mahfar.
All sundry now know that Najib Razak had received enormous amount of money in his personal bank accounts. It is an amount many could not have imagined to be amassed in a short span of time. But he did receive RM2.6 billion through overseas banks and another RM42 million from SRC International.
This was not denied by Najib Razak himself. He did not even give any proof on what it was spent on.
Therefore, the people would like to know how much tax have they paid for this sort of income?
We all know that IRB is very strict in its regulation. Any Tom, Dick and Harry will immediately be hunted down if they ever tried to evade taxation.
The little people on the streets will be slapped with penalties if they submitted their tax returns late.
Hence, if IRB still have their corporate soul and have the courage to stand up for good corporate governance, and upholding the law without fear or favour, many questions would have been answered expeditiously; rather than leaving everything hanging and unanswered.
We do hope these institutions would remain respected in the eyes of the world. There is no point strutting around meeting people and giving speeches about corporate governance when behind your backs, people are questioning why didn’t you do your job as expected?
Again, Najib Razak won’t be the prime minister forever. Once he is gone, the public will look back and scrutinise the institutions which had failed to uphold the tasks that they are trusted to do.
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