Fact checking the 1MDB and ‘donation’ debacle

On 1MDB

Ever wonder why the exercise to save 1MDB is called a ‘Rationalisation Plan‘?

Because 1MDB had an irrational business model from the beginning..

Step 1: Acquire massive loans

Step 2: Buy assets. Can’t pay loans.

Step 3: Sell assets to pay the loans

But now they are congratulating themselves by saying that 1MDB had made a success in that rationalisation plan.

Not sure which success they are talking about. Is it their success in getting IPIC to help pay the loans they unable pay by themselves?

Is it the staggering loss of RM665 million in their 2014 financial year?

Is it the begging request of loan repayment extensions they made so many times in 2014?

Is it the delays in listing of their power assets due to their own shortcomings? (the government’s propaganda team had the cheek to say this was caused by Tun Mahathir when the fact is, the delays occurred way before Tun’s first article on 1MDB).

Is it the success in getting taxpayers to fork out RM950,000,000 as a standby credit to help 1MDB pay their financial obligation?

Lastly, probably the success is due to the fact that the had needlessly amassed debts to the tune of billions and now need to ‘rationalise’ this by selling off their assets. Some to TNB, some to foreign interests, etc., so that they can pay their debts.

Fun fact – when 1MDB bought the prized land in Sungai Besi and TRX at really low prices, the government and the taxpayers were shortchanged. Some nonsensical people said that that is just left pocket entering the right pocket. This could be true if 1MDB is acting as part of the government. But then again, even the cabinet was not privy to its dealings and operations (at least not until recently).

So when 1MDB could not pay their humongous loan debts and interests, they had to sell these crown jewels of Kuala Lumpur. They are selling them at market price. This would be partially good if all the monies from the sale is returned to the government. It is only partially good because the lands would now be in private hands, not the government (ie., the people).

But the reality is worse. The monies from the sale will almost definitely be used by 1MDB to settle ‘rationalise’ their debts. Which means, the only people who are laughing at the end will be the bankers (for getting their money back), and the new owners of the land once gazetted for bumiputra development.

Double loss for the people and the government. We lose when the land was sold at below market value, and we lose again when the land was sold just to pay off debts.

Now would there be anyone accountable for the irrational behaviour of 1MDB all these while? Shouldn’t there be anyone responsible for this mess? Besides the Deputy Prime Minister, was there anybody in 1MDB that was sacked for this debacle?

It is always funny the way 1MDB responded to questions about their business operations. The usual recycled excuse they give would be – “we have answered the questions”.

But all sundry knows they have not even tried to clear the air over anything.

For instance, when questions were asked as to why they pumped in USD1.83 billion worth of cash into PetroSaudi and yet this obscure middle east company did not pump in a single cent, they went on to give the process on how it happened, instead of why. In the end, it was indeed true that PetroSaudi did not pump in a single cent for the joint venture.

Why did 1MDB terminate the joint venture just after 6 months?

Why did they continue to pump in cash to a JV they had terminated, amounting to USD1.83 billion by 2011?

Why was the joint venture sealed and signed in lightning-quick time? Why was the decision taken in a private meeting in a yacht between the Prime Minister and PetroSaudi without any government officials and 1MDB top management present?

These are just some questions left unanswered by 1MDB. There are a lot more, but we are told not to raise any noise against 1MDB.

Donation

“Malaysians are not stupid” – this is what the former Deputy Prime Minister, Tan Sri Muhyiddin Yassin had said prior to his sacking two weeks ago.

We had written before that the donation story concocted by the propaganda team was just an afterthought. The reason why this was an afterthought because nobody knew about the money (not even the propaganda team) when the WSJ article appeared.

The Deputy President of Umno did not know about it. The head of Barisan Nasional backbenchers did not know about it. Even the whole Supreme Council did not know about it.

The principle matter is this – why did the money deposited in a personal bank account of a public servant?

That is the main issue. Doesn’t matter if the spin is that the donor wanted it that way, or the money comes from a ‘brotherly nation’, or the money is used for elections, or that RM2.6 billion is used to repair houses and roads in rural areas. Why wasn’t it credited into Umno’s own party accounts? This in turn had raised a lot of questions and dented the credibility of a prime minister.

Some delusional sycophants had the audacity to say it was a trust account when they also do not have the proof it was indeed a trust account. Be it as it may, a trust account would then be transparent and known to all parties in Umno, but it wasn’t transparent therefore it couldn’t be a trust account.

Some even said it is better for the Prime Minister to put that donation money meant for Umno in his personal bank account rather than with proxies. This will surely create a bigger mess if the Prime Minister, god forbid, dies and the billions of money is stuck in that account and legally it will then belonged to his family as inheritance.

Ultimately, if there is an aspiration to say that all the money ‘donated’ have been used for Umno to face the general elections of 2013, then the public, especially Umno members would want to know how the money was spent. Where is the detailed expenditure list for all the RM2.6 billion spent on Umno? How else can the public be assured that the money was not used for personal gain?

But of course, the reply to the public is, we shall do it if the opposition parties show their party accounts too. There is no urgency to show accountability at all.

Firstly, just like Barisan Nasional’s own MCA had said – “party funds never put in private accounts”.

Secondly, if Umno cares about leadership by example and setting the bar high, the people involved in that RM2.6 billion must take the lead in exposing how it was spent, to who and to where and what are they for.

Thirdly, and this is why the afterthought wasn’t thoroughly vetted, a donation is deemed breaking the MACC law if it is deposited in a personal bank account of a public official.

This is succinctly put by a legal practitioner (truncated for clarity):

It doesn’t matter whether the 2.6 billion in the prime minister’s personal bank account was a donation or whether it was held on trust for UMNO. It does not matter, because the law on corruption is very clear.

Let me spell it out for you the provisions of the Malaysian Anti-Corruption Commission Act 2009 (Act 694) (for brevity, “MACC Act”), despite (the) ignorance and arrogance in insisting that it is okay for Najib to receive funds from ‘donor(s)’.

Section 16 of the MACC Act provides that it is an offence for any person to accept gratification.

Now, what is gratification?

Section 3 of the MACC Act defines gratification as to include “money, DONATION, gift, loan, fee, reward, valuable security, property or interest in property being property of any description whether movable or immovable, financial benefit, or any other similar advantage.”

So, clearly, DONATION equals GRATIFICATION.

And then there is section 50 of the MACC Act, which provides for the LEGAL PRESUMPTION that “gratification shall be presumed to have been CORRUPTLY received … unless the contrary is proved.”

What this mean in simple layman term is that the very fact there was an amount donated into the prime minister’s personal bank account (and Najib was aware of it) is more than enough evidence of corruption in the eyes of the law. If the prime minister so insists that he is not corrupt, then it is his duty to adduce cogent evidence to rebut the LEGAL PRESUMPTION that he is guilty (and in so rebutting it is not sufficient to merely provide unsubstantiated denial).

Bear in mind, the MACC Act is an Act of Parliament, which simply means that the provisions of the Act bind the whole nation — i.e. the government as well as all citizens — unlike the UMNO constitution which is not even a law and as such inferior in nature, and applicable only to UMNO members. As such whether or not UMNO Constitution allows its funds to be held on trust by its president, is immaterial and wholly irrelevant, when it comes to the presumption of corruption against Najib.

Be that as it may, if Najib so insists that the alleged donation was received on trust, then the burden lies on him to provide the trust documentations. Even so, it is important to note — in the unlikely scenario that he could adduce such documentations — that does not ipso facto clear him of the offences under the MACC Act. Instead, the very fact that he held the money on trust would actually by extension, make UMNO possibly liable to be charged for corruption as well, because the legal definition of ‘persons’ that could be guilty under the MACC Act, as per spelled out in the Interpretation Acts 1948 and 1967 (Act 388) “includes a body of persons, corporate or unincorporate”.

Even the Prime Minister himself had said in 2012 that putting political fund in personal bank account is a form of corruption. Is this a case of not walking the talk?

As the result, today the opposition is suing the Prime Minister for breaking the election law. They may or may not have a case, unless of course the propaganda team creates another new story to defend this ‘donation’ story.

We shall wait for more ‘facts’ to be thrown at us by the minions desperately trying to disseminate their version of the truth.

You might also want to read:

  1. Good governance means walking the talk
  2. SOALAN MUDAH UNTUK NAJIB – MANA BAKI RM2,600 JUTA, MASIH ADA ATAU SUDAH HABIS?

  3. Quotable quotes on 1MDB and ‘donations’ to Umno
  4. Malaysia’s Prime Minister: A Dead Man Walking? – Forbes

#1mdb, #malaysian-corporate-matters

Afterthoughts on 1MDB and donations

Some reading materials for the weekend by avid observers of the current socio-political issues in Malaysia.

1MDB: The story so far

by TK Chua

I put in abridged form what we have gathered so far on 1Malaysia Development Berhad (1MDB). There is nothing new here, just a catalogue to help us to stay on track. With new events emerging every day, it is easy to lose sight that the messes in 1MDB are actually much bigger than the huge sum of money going in and out of the prime minister’s personal account. We must not lose focus on all the big issues.

  1. There were questions asked if some of 1MDB’s excessive borrowings were sovereign guaranteed. The answer given was that the borrowing was used to buy assets and for strategic investments, including parking some money in Caymans temporarily to earn higher returns. Till today, we are not sure how “strategic” the investments have been and whether the returns earned were in US dollars or in “units”.
  2. When asked why 1MDB faced problems servicing these loans, the answer given was that it was a temporary cash flow hiccup. 1MDB has “assets more than liabilities” was the oft-repeated mantra and the mother of all explanations. But do the problems in 1MDB look like temporary cash flow setbacks? If they have to par down assets to reduce debts, I think the problem is more about assets not generating sufficient income to sustain their own upkeep.
  3. Questions were asked of the high fees and commissions incurred and why discounts were generously given when issuing 1MDB bonds. The answer given was that it was a normal practice to pay high fees and to give discounts in order to entice lenders. However they conveniently failed to explain why the desperate need to borrow.
  4. We asked why 1MDB bought overpriced assets. The answer was that the IPO was supposed to solve this problem, ignoring the fact that IPOs are about value, not about solving overpriced assets, unless they believe future IPO investors are nincompoops.
  5. We asked why government land was sold to 1MDB for a song. The answer was that 1MDB was a government strategic company, so it was just from the right pocket to the left pocket. When the government sells lands and other assets, the money goes into the Consolidated Fund of the Treasury. When 1MDB sells government lands and other assets, where does the money go?
  6. We asked why Tabung Haji was asked to buy a small piece of land from 1MDB at many times more than what was paid for it initially. The answer was that it was a good investment for Tabung Haji; many other investors were willing to buy over the land from Tabung Haji at an even higher price. However till today, Tabung Haji is still holding on to the land, as far as we know.
  7. The Auditor-General and his team were asked to do a comprehensive audit on 1MDB since there were so many unanswered questions. So far the interim report has been completed, but it was made confidential. When the final report will be ready and made public is anyone’s guess.
  8. We asked whether or not the accusations and allegations in Sarawak Report (SR) were true. The answer was to shut down SR and accuse white men of interfering with the leadership of this country. But are Tan Sri Muhyiddin, Tun Mahathir, Rafizi Ramli, Lim Kit Siang and Tony Pua white? Now a warrant of arrest has been issued against SR’s editor.
  9. When The Wall Street Journal (WSJ) claimed that there were massive amounts of money going in and out of the PM’s personal bank accounts, the answer given was that the money was not for personal use. Since then, they have written to WSJ seeking clarification about the article and threatening to sue. But till today there has been no lawsuit filed although no further clarification from WSJ was forthcoming. I am not sure if the PM’s lawyers are still in the midst of seeking consultation.
  10. We asked what happened to the task force (consisting of Bank Negara Malaysia, the Malaysian Anti-Corruption Commission, the Police and the Attorney-General) formed to investigate 1MDB. The answer was “no status”. Thus far, we only know one of the members of the task force, the AG, was “retired”. The rest of the investigators are currently being investigated for “leaking” information, whatever this means. The latest news report said the task force was no longer needed. All the agencies are now supposed to investigate and act on their own.
  11. The Edge Weekly published an incriminating story on 1MDB based on information given to it by a “blackmailer”. So far, no clear denial or confirmation was established based on the report. However we know the former deputy prime minister who depended on that very paper for news was sacked and the paper itself suspended for three months. Gradually, some of us might have forgotten Xavier Andre Justo is still languishing in a Bangkok prison.
  12. The bipartisan Public Accounts Committee too wanted to ask many questions. However so far the committee has gathered very few answers. First they said the relevant people from 1MDB were busy and therefore unable to attend the hearing. Then they said some of the witnesses could not be traced. Now the entire PAC investigation is in limbo after many members were suddenly appointed to the executive branch. PAC hearings have now been postponed indefinitely.
  13. We asked why the draft “charge sheets” against the PM and others were circulating. The answer was that those charge sheets were fake but strangely enough, the authorities are questioning and investigating those who might have leaked the information, including the charge sheets.
  14. We asked whose money it was moving in and out of the PM’s personal bank accounts, which till today no one has denied or confirmed. First they answered that the money was not for personal use which by implication meant it must be for official/party/societal use then. They then implied the money was not from 1MDB. Now they have openly declared it was from a donation.
  15. So far they have not shed light on how the huge donation was used; what has happened to the balance, if any; who donated the bulk of it (did part of it come from SRC?); and whether or not there were any strings attached or if national interests were compromised. I guess any person with some common sense will be able to ask even more questions about this, except perhaps talented ministers from Sabah.

However do not be too optimistic that you will receive an answer. Most probably, they will insist that political donations require reform and all political parties, especially the DAP and PKR, must agree first.

I write this piece based on memory alone. You are most welcome to add if you remember anything else.

Thank you TK Chua. Next is an article which asked very pertinent questions for us to ponder.

SOALAN KEPADA TUKANG JAWAB

oleh Mat Rodi

Dalam cubaan membela PM Najib Razak, YB Rahman Dahlan telah mengesahkan bahawa wang derma USD700 juta telah masuk ke akaun peribadi Presiden parti.

Maknanya, ini bukannya akaun parti yang dibuka dan didaftarkan di atas nama tiga pemegang amanah sebagaimana amalan parti dahulunya.

Sebaliknya- ini adalah akaun peribadi.

Menerima derma sebanyak itu dan dimasukkan ke akaun parti politik tidak ada salahnya. Parti boleh menerima 2.6 billion mahupun 260 billion wang derma. Malah bukan isunya. Hatta NGO yang kononnya ‘Bersih’ juga diberikan ‘derma’ dari pihak luar untuk kegiatan mereka.

Tetapi menerima derma sejumlah wang tersebut dan dimasukkan ke dalam akaun peribadi presiden boleh menimbulkan persoalan.

Persoalan pertama adalah adakah ahli Majlis Tertinggi telah berbincang dan bersetuju menjadikan akaun peribadi Presiden parti bagi tujuan menerima derma?

Jika sudah berbincang dan sepakat, mengapa terdapat ahli Majlis Tertinggi merangkap Menteri Penerangan ketika itu (Shabery Cheek) berkata “tidak logik PM ambil wang sebanyak itu masuk ke akaun peribadi.”

Bahkan, Ketua Penerangan UMNO Ahmad Maslan berkeras “Perdana Menteri bodoh mana yang akan mengambil RM2.67 bilion untuk dimasukkan ke dalam akaun peribadinya. Jika benar, ia adalah kebebalan yang terlalu amat sangat,”

Adakah ini cubaan mereka untuk menggulingkan presiden parti yang dipilih secara demokratik?

Tetapi mereka tidak pula digugurkan daripada jemaah kabinet sebagaimana nasib Timbalan dan Naib Presiden.Tidak juga mereka disoal siasat polis.

Sama ada PM Najib telah melakukan kebebalan yang teramat sangat ataupun tidak tidaklah penting.

Persoalannya yang kedua adalah, jika perkara ini tidak pernah dibincangkan di dalam mesyuarat Majlis Tertinggi, siapa pula yang memberikan kebenaran untuk menjadikan akaun peribadi beliau sebagai akaun amanah?

Tidak logik Presiden melantik diri sendiri tanpa berbincang. Perlembagaan UMNO juga tidak mempunyai peruntukan tersebut.

Persoalan ketiga- jika ahli MT UMNO tidak tahu mengenai wang derma ini dan sememangnya derma tersebut digunakan untuk tujuan politik, tujuan politik siapa?

Politik parti ataupun politik Presiden parti?

Jika politik parti, masakan ahli MT UMNO tidak tahu?

Jika politik presiden parti, tidakkah ini bermakna beliau telah menggunakan wang tersebut bagi tujuan peribadi?

Ini bercanggah dengan kenyataan beliau yang menafikan penggunaan sebarang wang bagi keuntungan peribadi. Sesungguhnya memenangi pilihanraya akan mengekalkan beliau sebagai Perdana Menteri dan ini adalah keuntungan bagi dirinya.

Pengarah Komunikasi Barisan Nasional serta barisan menteri yang baru dilantik boleh berkata apa sahaja mengenai derma politik. Mereka boleh berkata seperti adalah lebih selamat wang derma masuk ke akaun peribadi PM dan parti memerlukan lebih banyak wang.

Tetapi ini bukanlah kebenaran sebaliknya skrip/jawapan yang dibuat ‘after thought’.

Hakikat perkara ini baru disebut berminggu-minggu selepas pendedahan awal dibuat membuktikan mereka juga seperti kita semua yang tidak tahu apa-apa.

Isu mengapa wang derma ke akaun peribadi presiden penting bukan kerana kita tidak mahu wang derma bagi perjuangan parti. Ramai yang faham keperluan dana yang banyak untuk kerja-kerja politik.

Sebaliknya, kita tidak mahu ‘rasuah jadi budaya, amanah dikhianati dan parti membisu hanya untuk membela golongan tertentu atas nama kesetiaan pada parti. Atau disiplin kepartian mentaati pemimpin’ – sebagaimana yang disebut oleh MB Johor.


Let’s wait for more ridiculous statements by the powers that be in the next few days.

In the mean time, you might also want to read:

2. A New Strain of STD- Mandatephilis

3. Kantoi Lagi : Maka Makin Susahlah Memanda Menteri Mencari Pelakon Arab Main Watak Penderma

4. Commit A Wrong Unto Others and Therefore Unto Yourself

5. Kes Derma RM2.6 Bil Najib – Rakyat Memerhati…..

 

#1mdb, #malaysian-corporate-matters

The absurdity continues…

The shifting of goalpost in the RM2.6 billion defence:

  1. WSJ created a lie. There is no way a Prime Minister could accept that much money into his personal bank account. He is not stupid.
  2. The propaganda team rebuked WSJ for not supplying any proof, therefore the newspaper is lying. They also bent over backwards to say that the PM’s name was misspelled in a diagram of the money trail therefore, it is all a lie.
  3. The PM mulls to sue WSJ over this apparent political sabotage. He also accused Tun Mahathir for working with foreign nationals over that RM2.6 billion article.
  4. The lawyers sent clarification letter but the mainstream media declares the PM has sued WSJ.
  5. WSJ published the documented proof of the banking transactions. The propaganda team, working on a narrative, zoomed in on the swift codes. Gleefully claiming the swift codes are wrong, summarily claiming that there are no such account exist. WSJ had lied. The documents were tampered.
  6. The Task Force issued a statement that the accounts did exist but has been closed. The narrative began to change to ‘political fund’. Obviously by this time, the propaganda team did not know anything unless they were told how to think.
  7. Propaganda team bending over backwards to justify that political fund is legal and can be done through trustee accounts. Their past excuses and defence that the accounts did not exist and no money was transferred were shamelessly forgotten.
  8. Believing in their own hype they created, propaganda team began to float the trust account story, saying that Umno Constitution provides for trustee accounts. But nobody, including Deputy President of Umno did not know it existed.
  9. 5 weeks have past, lawyers still have not made any action towards WSJ.
  10. And the latest shifting of goalpost came out today whereby the account was indeed not a trustee account but actually a personal bank account, possibly contravening with Umno Constitution and MACC Act.

Better for Umno president to hold money rather than proxies

It is better for the Umno president to hold the party’s assets and monies in his own account rather than parking them under proxies, Barisan Nasional (BN) strategic communications chief Datuk Abdul Rahman Dahlan said today.

The Housing, Local Government and Urban Well-Being Minister said that he “preferred” Umno president Datuk Seri Najib Razak to be holding the money in his personal accounts as this provided more security than the proxies.

“Even when Tun Dr Mahathir Mohamad resigned as Umno president, he had to look for the proxies to reclaim a lot of Umno’s assets and shares.

“I would be a lot more worried if these individuals were holding the accounts instead of the president,” he said during an interview with TV1 tonight.

Abdul Rahman said that the current controversy has sparked off a discussion that is “good” for future regulations of political funding.

“I am relieved and happy that the money is from donations. Now the goalposts for the discussions have shifted,” he said.

He said that he was “thankful” to have a president who was able to source funds from the party, insisting that the donors made the donation without expecting anything in return.

Reading this at first glance, the first question people asked is – Is Umno, the oldest and the biggest political party is Malaysia do not have its own banking accounts?

Why did it have to be a personal bank account?

Secondly, the issue is not whether proxies should be used. Tun Mahathir himself declared when he was the prime minister, this kind of money was never credited into a personal bank account.

The real matter is about RM2.6 billion being secretly deposited back in 2013. It was a secret because nobody knows about it. Including the people in the propaganda team. Yet they now claim that Umno members have agreed that political donations can be deposited into the personal bank account of the party president! (source).

When was this asked? Did they make a referendum among party members in 2013 for this decision to be made?

If indeed Umno members knew about it, why did Umno leaders and their propaganda team made gibberish arguments to discredit WSJ and tried to prove that the accounts never existed? All this had destroyed their credibility in the end.

Umno members must thank WSJ for exposing about this mystery money. If it wasn’t disclosed, they will not know about this. The price for the truth is hefty, especially if it wasn’t revealed much earlier. A deputy president and vice president lost their jobs because of this.

Now people are asking, who are the donors? Public servants and officials are beholden to the truth and accountable to the public. It took a month for the confirmation of truth to come out; that there was indeed RM2.6 billion worth of money held by the prime minister. Even then, it wasn’t the prime minister who confessed about it.

Will it take another month of silence for the prime minister to reveal who the donor and how the money was spent?

But instead of revealing to the public to end all speculation, the propaganda team asked the opposition to declare their political funding first.

Leadership by example is surely not being applied here. They now are saying all sorts of nonsense:

a) in Islam, a donor must not reveal himself as a sign of piety,

b) the money is a private matter because it was in a personal account,

c) if donor wanted to publicly announced his donation, he would have done it much earlier

d) it is safer for the money to be in a personal account of the party president than any other accounts (but they also do not know how the billions were spent)

e) please add some other nonsense

Is Umno afraid that speculation would end up as the truth? A leader needs to be honest. A political party needs to have integrity. They must lead the way in finding the truth for the public. Not, trying to spew nonsense which ultimately secures nothing but disdain and disgust from the people.

Yes, you want the opposition to be accountable too in revealing about their political funding. But the correct question Umno leaders should ask, which will compare apple to apple with the situation at hand is:

Did DAP’s political funding and donation receive through Lim Kit Siang’s personal bank account?

Only then, the propaganda team can move forward with whatever strategy they have to discredit the opposition. Otherwise, the effort to make opposition parties to reveal their political funding is moot, and ridiculous.

The diversion is unnecessary. Please do not accuse other people of moving goalposts when your own flip flopping attempt to defend is nothing short of absurd. And for brevity purposes, we have not touched on the lame excuses made on 1MDB.

The truth should be a friend, not something you spin just to fit your selected narrative.

Do they know why Anwar Ibrahim can never capture the hearts and minds of the people at large? Because he is surrounded by loyal but dumb followers who could never criticise or pin point anything wrong that he is doing.

For instance, his followers concocted all sorts of nonsense just to defend their leader was not the man in that video which rocked the nation a few years ago.

If Umno wants to emulate this kind of leadership where smart and critical followers are thrown out but loyal yet deaf mute ones are retained, then there can never be any improvement.

The voters are now smart. They are informed via many sources of information and can make up their own minds.

There is a running joke being bandied around which goes like this:

What is the difference between Anwar’s supporters and Najib’s supporters? Nothing. They just like to make fools out of themselves.

It is always better for a leader to speak of truth. The sooner the better. Many scandals have erupted which turned leaders into a laughing stock just because they tried to lie their way out, and their followers did not point out what was wrong.

No wonder people are disgusted.

You might also want to read:

  1. Now I know, a Mandate is a license to do as we please, to Loot and Pillage.
  2. Membalas Rahman Dahlan

#1mdb, #malaysian-corporate-matters

Endless absurdities

We would like to record our appreciation towards Datuk Kadir Jasin and his readers for their concerns and well wishes. We would like to give assurances that everything is alright.

Looking at the current situation and the leadership crisis happening in this country, there is now a general feeling that Malaysians are no longer confident with the leadership in Umno.

We termed it as a leadership crisis because top bosses in Umno were sacked from their jobs just for asking questions and expressing their anxieties.

The justification for the sacking is that criticisms, even to the point of beating tables must be made at the right platform and not in public. But it is ironic indeed to know that the purported speech that caused the sacking was made in an Umno private function – a divisional meeting. The excuse is even more chaotic when the Supreme Council meeting, the most appropriate platform to discuss these concerns was cancelled at the last minute “in order to avoid heated debates”.

Maybe “sweeping everything under the carpet” is Umno’s new de riguer.

We also call it loss of confidence because people who are investigating a crime were also sacked from their jobs and some were arrested for doing their jobs. Furthermore, those heading a parliamentary investigation team were conveniently promoted; resulting in a delay.

Nevermind the fact that a week before the promotion, the former PAC chief said 1MDB probe is much more important and that “he would prefer to stay as the PAC chief and oversee the investigation to its conclusion.

But that was then.

This blog had criticised and highlighted the problems surrounding 1MDB and allegations of billions of money transfered into the personal bank account of the prime minister.

When we asked for accountability and corrective measures to be taken, the opposite seemed to be taken place.

When we suggested that an acting prime minister should have instructed for an independent investigation, the loyalists deemed it as an attempt to overthrow the government. Maybe Tan Sri Muhyiddin Yassin is from the DAP party because should he stepped is as the acting PM, the Barisan Nasional government will fall.

The hogwash that came after just to defend the indefensible were utterly mindblowing. The last straw was when a couple of bankrupts were used to prop up the argument that all problems surrounding 1MDB and personal bank accounts in Ambank rest heavily on what these bankrupts had to say.

When their credibility were tested, the best they could come out with is to look at the message, not the messenger. Basically, they beg the public not to shoot the disgraced messengers.

But all these time, the government had killed off messengers with such glee and impunity. They attacked Tun Dr Mahathir for raising questions, tried to discredit his past tenureship as the prime minister, they killed off the careers of the deputy prime minister and an umno vice president for raising questions and they tried to arrest whistleblowers, investigators and critics.

The highest levels of hypocrisy have been reached.

When WSJ broke the story that billions were credited into personal bank accounts of the prime minister, most cabinet ministers bent over backwards stating that WSJ had made accusations over something that did not exist. They claimed there were no such accounts and no money were banked in.

Their mission to cover up changed from day to day. First the swift codes were wrong, because no PM would be so stupid to get billions of money in his own accounts. Then they say the allegations were just foreigners’ attempt of political sabotage, and lastly, they claim that political funding is legit because past prime ministers have done the same way; vaguely admitting that WSJ’s allegations could be true.

Of course the legality of the political funding was crushed by a former prime minister in his blog today.

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

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

And it was indeed revealed by the MACC that there were billions of money in the prime minister’s personal account. Some even went to great lengths that Umno constitution provides the prime minister to have a trustee account under his name. We are not sure which clause they are talking about; when no other members of the supreme council even knew about the existence of that account. Was the opening and closing of the accounts minuted in the meetings? Obviously not. Otherwise the deputy president wouldn’t have been so shocked to hear about the accounts and the amount of money that went in.

Everyday, the justification made have become more and more ridiculous. Some even say the way the prime minister leads the country is similar to the Prophet.

Recently, an Umno supreme council member just declared that if we attack Najib, then that is akin to attacking all muslims in Malaysia. The absurdity is endless.

We are entertained by it all.

This blog has been criticising Malaysian leaders since its first article. We stopped blogging for awhile because people without moral compass will never listen to reason and criticisms. They have charted their own doomed course and the direction of this country. There is nothing more to say to save them.

You might also want to read:

1) RM2.6 billion in Najib’s personal accounts is corrupt money – Din Merican

2) The UMNO mad dogs are out walking under the scorching sun

3) Sah Najib Terima RM2.6 Billion Ke Dalam Akaun Peribadi !! Persoalan Sekarang Salah Atau Tidak?

4) MAKNANYA BENARLAH LAPORAN WSJ, SARAWAK REPORT DAN THE EDGE SELAMA INI…

5) Hooray! MACC Confirms RM2.6 Billion In Personal Accounts

6) Benarkah Deposit RM2.6 Billion Itu Dana Politik ? Jika Benar, Najib Cakap Tak Serupa Bikin

#1mdb, #malaysian-corporate-matters

1MDB and the shifting of goalposts

There were many instances when 1MDB and the people involved in it were caught shifting the goalpost. When people argued on a particular issue, their immediate response is to argue on a different issue to defend the original matter which was brought up.

This can be seen when Wall Street Journal showed an alleged evidence that billions of ringgit were credited into the Prime Minister’s private accounts, the immediate response to it is, “the PM have never taken 1MDB fund for personal gain“, instead of issuing a more doubt removal reply of “the PM did not receive such money”.

The early signs of trouble within 1MDB can be traced when it requested a second extension to a loan repayment deadline in early 2014. Imagine a company that could not repay loans in the billions on time. This had caused some noise in the banking system.

The people had been writing about it and raised concerns. But the concerns were not heeded. The more prominent opposition members and a few bloggers had been telling the government for months that there is something seriously wrong with how 1MDB operates. Some even highlighted the problems since 2012.

In late 2014, Tun Dr Mahathir began to write a note of concern on 1MDB in his blog.

Yet for the whole of 2014, the government was saying there is nothing wrong with that company; despite the changing of CEOs, the resignation of directors, the change of auditors, the inability to pay loans on time and the acute cashflow problems.

1MDB even had the audacity to seek another extension back in January 2015, and yet nobody in the government bat an eyelid. In February, the CEO of 1MDB began to reassure the public that there is some cash in their bank statements. But matters went up to a whole new level when it was discovered that the MOF had given 1MDB RM950 million of standby credit to alleviate its financial burden.

The goalpost moved again when in May it was discovered that there weren’t any cash as stated in February, but it was actually paper assets. The poor reporting by 1MDB and MOF about its own cash assets had caused the public to question the government in anger.

In the end, the paper assets were classified as units. What exactly are these units, nobody could answer till now, not even 1MDB.

In May, the whole of Malaysia really began to know the existence of 1MDB when it was exposed that Tabung Haji had bought a land from 1MDB at a price hundreds of times more than 1MDB originally had paid for it.

The furore it caused had received a knee-jerk reaction from the top advisor of 1MDB when he ordered Tabung Haji to resell the land immediately. Tabung Haji’s chairman proudly claimed that they can sell the land within a few week’s time to a ready buyer with an astronomical profit of RM5 million.

But until July, the land has yet to be sold.

1MDB began to be bombarded with all sorts of questions regarding its business model. The apparent lack of governance in its business venture, the sheer inability in servicing their loans, the net loss of approximately RM665 million in their financial year 2014 accounts, and the total absence of common sense in piling up massive debts to buy assets which ultimately had to be paid by selling off those same assets.

In the end, MOF announced debt rationalisation plan for 1MDB which made the public even more confused. 

When investigations kickstarted a few months earlier, 1MDB made a promise that they have been cooperating and had given documents to the authorities but recently when the PAC and the auditor general revealed that 1MDB had not been submitting crucial documents, 1MDB could only defend themselves by saying that they will continue cooperating with the auditors.

Never mind the fact that they had wasted a lot of other people’s time.

The public had a shock of their lives when Wall Street Journal began a series of expose into the Prime Minister’s private accounts. If whistleblowers had not exposed these shenanigans, the public would not have known about it. Transparency was not the order of the day. The government only talked about its virtues when matters were made public.

To digress, in the old days, whistleblowers brought forward confidential information to the media in order to expose any wrongdoing so that when it is made public, the government must order an investigation and there will be no cover ups.

The media will protect the identity of the whistleblowers and stand by the stories they publish by staking their reputation, credibility and liability to prove the authenticity of the information they have obtained.

If at anytime the media feel that the information is suspect, they will not publish them as their credibility will be in ruins. Revealing who the whistleblower is will not make the expose any more credible, otherwise nobody will come out to give any information. And no wrongdoings will ever be made public.

The Watergate scandal was an example where the whistleblowers were not revealed until decades later.

Back to the issue at hand, some of the media in Malaysia seems to be in total opposite of what journalism should be doing when it comes to 1MDB.

For instance, when the wife of the Prime Minister was revealed to allegedly have millions of ringgit in her private accounts, some members of the media began to question the documents exposed. Some even went on a wild goose chase of showing the public that the IC number could be wrong or there is no way the account would have been opened in 1984 as the bank did not exist at that time.

WSJ-NAJIBThe issue was laid to rest when her lawyers themselves admitted that the account belongs to her.

Same goes to the issue of the Prime Minister’s private accounts. Instead of trying to figure out the truth, the media went on a rampage of trying to discredit whether the Prime Minister’s accounts did exist.

In the end, after such useless acts of defending the indefensible, the Attorney General himself confirmed what Wall Street Journal had been stating, that the accounts did exist.

People should not fall prey to the shifting of goalposts. Every statement made must be dissected and read between the lines.

Thank you and Selamat Hari Raya Aidilfitri, maaf zahir dan batin.

You might also want to read:

1) Nazri defends Rosmah over RM2 million cash deposits

2) How can a ‘housewife’ earn RM2m in cash?

3) Bila 1MDB Tuduh TheStar Sloppy, Tapi Jawapan Yang DiBeri Lebih Sloppiest!

4) How it will all end

5) Going on leave best of 3 options for Najib, says Musa Hitam

#1mdb, #malaysian-corporate-matters

Liar, liar pants on fire. They lied to save 1MDB

vghjc

“We won’t be using people’s money to bailout 1MDB”

Everytime a politician, a minister or any Tom, Dick and Harry tried to defend 1MDB, they will lose credibility.

Take for example what the Prime Minister said yesterday when he defended Tabing Haji’s land purchase from 1MDB:

Najib, who is also 1MDB’s advisory board chairman, reiterated today that the land purchase was not a bailout.

“Surely we won’t be using the people’s money to bailout 1MDB.

“That is not a responsible government,” he said.

This is the ‘responsible’ government that had given RM950,000,000 of rakyat’s money to 1MDB back in March 2015 under the pretext of ‘standby credit’.

Nine hundred and fifty million ringgit of our money just to save a company which had stupidly acquired massive loans unnecessarily?

But the Prime Minister, without any guilt or hindsight had simply blurted out, “we won’t be using people’s money to bailout 1MDB”. He added ‘surely’ in the beginning of his sentence in case we do not believe him.

And since it is proven that indeed the government had bailed out 1MDB, it is now without any doubt the government under his administration is truly irresponsible. Can you believe a liar? Who had lied in parliament, and now in front of the media and bloggers in a buka puasa event?

The audacity of it all, the ability to lie to an audience with a straight face is a skill nobody can easily adapt.

Perhaps a better script management should be set in place.

fbd

Losing more and more credibility and integrity

Another politician who often times give misrepresentation of facts is the Finance Minister II.

When trying to defend 1MDB, he grabbed at straws and pinned all 1MDB’s woes to the arrest of one Xavier Justo.

Ahmad Husni said the arrest of former PetroSaudi International Ltd (PSI) executive, Xavier Justo, in Thailand recently has much impact to the 1MDB issue.

“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,” he said when winding-up debate on the 11th Malaysia Plan at the Dewan Negara here Monday.

Basically, it seems that 1MDB is a healthy company and moving along well. Nevermind that it had raked RM665 million in losses with burgeoning debt of RM42 billion!

An article by one Khairie Hisyam says it all. Excerpt:

And now Second Finance Minister Ahmad Husni Hanadzlah has claimed that because Justo is now in custody, 1MDB’s problems do not exist.

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

But the logic is flawed and incomplete. Do we know what documents were allegedly tampered and how many? What do the originals look like? What information could have been changed by Justo to create a scandalous picture out of nothing, if Husni and his people are to be believed?

Then again maybe the minister has forgotten that 1MDB’s woes exist long before Justo’s leaked documents came to public awareness, tampered or otherwise.

From perusing 1MDB’s annual accounts lodged with the Companies Commission of Malaysia (CCM) alone, the discerning public would have noticed that 1MDB has never made real profit throughout its existence. Its claim to annual profit in four out of five full financial years so far had been entirely due to paper gains (see chart).

bdfb

Comparison on types of profit

As a quick aside, in FY10 1MDB booked RM651.8 million in paper profit when it converted its 40% stake in a short-lived joint venture with Petrosaudi International into a loan to the latter. Then in FY11 through to FY14 the company booked revaluation gains on property it originally acquired at cheap prices from the government.

In other words, 1MDB had been bleeding since it was born, hiding these losses with paper profits. The company was shown up in the 2014 financial year ended March 31, 2014 (FY14) when its paper gains were no longer enough to paper over its cash bleed.

This is simply unsustainable. Clearly 1MDB had been speeding down the highway to ruin. So how is 1MDB on the right track, dear minister?

Unless, of course, by “right track” the good minister had meant something else entirely: borrow billions to pay inflated prices for power assets and invest the rest in dodgy schemes, losing money in the process, only to turn around and sell those assets and investments to pay the billions of debt in the first place.

Read the rest of his opinion here.

Please do not lie to the public. Salam Ramadhan everyone and have a good weekend.

You might also want to read:

1) Wall Street Journal claimed Najib Razak siphoned money

2) Acting Prime Minister must lead the 1MDB investigation

3) Najib – Ikut Ajaran Islam, Kita Perlu Cari Kebenaran

4) PM must go on leave after WSJ’s 1MDB claims, says MP

5) When ‘Yes’ can mean ‘No’

#1mdb, #malaysian-corporate-matters

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 – Apply for projects from government, 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

#1mdb, #malaysian-corporate-matters

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

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 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