Heads must roll in 1MDB for being ‘fleeced’ by Goldman Sachs, claims MP
(Malay Mail Online) – The entire top management of 1Malaysia Development Berhad (1MDB) must be sacked for agreeing to what he said was a cutthroat fee for raising funds from an international investment bank, DAP’s Tony Pua said today.
The Petaling Jaya Utara MP said it was “scandalous” that 1MDB agreed to pay a 10 per cent fee to American investment bank Goldman Sachs to secure two 10-year loans amounting to US$4.75 billion (RM15.2 billion), when fees typically do not exceed two per cent.
“Tenaga Nasional, for example, raised US$350 million by paying only two per cent in fees and expenses. For larger fund-raising exercises such as by Penerbangan Malaysia Bhd, US$1 billion was raised with only 0.5 per cent in fees and expenses,” he said at a news conference at the Parliament lobby.
“The Mexican and Uruguayan governments on the other hand, issued bonds amounting to US$3.9 billion and US$2.0 billion by deducting only 0.2 per cent and 0.1 per cent for fees and expenses respectively. Therefore, the logical question I had asked was, who were paid these ‘certain commissions’ as stated in the bond offer documents?” he said.
Earlier this week, The Edge financial weekly reported that 1MDB took a 10-year-loan of US$1.75 billion (RM5.6 billion) in 2012 and another for US$3 billion in 2013, for which it allegedly paid US$196 million (RM627 million) and US$283 million (RM906 million) in commissions, respectively.
The Edge Financial Daily ran a report yesterday quoting Goldman Sachs’ Asia Pacific corporate communications chief, Edward Naylor, as saying that the 10 per cent commission covered “certain commissions, fees and expenses” and did not involve any payment to third parties beyond legal and accounting services.
Pua today queried why the bank avoided explaining why the fees for 1MDB’s two loans were so high, when they charged no higher than 1.3 per cent when handling similar fund-raising exercises by Sarawak’s Equisar International Incorporated, Silicon Valley giant Apple Inc and the Mexican government, among others.
“Hence by taking the bank’s response at face value, and their refusal to give reasons for the cutthroat 10 per cent fees charged, Malaysians can only come to a single conclusion – the top management of 1MDB must have been comprised of idiotic desperadoes to be fleeced naked by an unscrupulous and unethical Goldman Sachs,” said the DAP National Publicity Secretary.
Aside from sacking the sovereign wealth fund’s top management, Pua said 1MDB’s entire Board of Directors must also be penalised for failing to make sure the management performed its tasks responsibly in the interests of the Malaysian government as a shareholder.
“The chairman of the Board, Tan Sri Lodin Wok Kamaruddin, who is also the chief executive of the Armed Forces Fund, must account for why the 1MDB Board has been negligent to check on such incompetence and idiocy,” Pua said.
