It’s hands off if 1MDB’s debts collapse, says Najib

(Bernama) – The government will not be liable to 1Malaysia Development Bhd’s (1MDB) debts if the company goes bankrupt, Najib Tun Razak said.

The prime minister said only loans amounting to RM5.8 billion taken by 1MDB had an explicit guarantee from the government while other loans did not.

“Like other companies governed by the Companies Act, 1MDB has limited liability, and apart from loans or bonds that had government guarantees, 1MDB’s financial matters are not included in the government’s contingent liabilities.

“The financial situation of 1MDB rests in the hands of the company,” he said in a written reply to a question from Lim Guan Eng (DAP-Bagan) on whether the government would bear 1MDB’s debts if the company goes out of business at the Dewan Rakyat here.

Najib said 1MDB’s total debts for the year ended March 31, 2013 amounted to RM36.25 billion.

He said 1MDB was able to get international recognition for the bonds issued due to a sound governance framework, apart from regularly conducting financial and technical due diligence exercises before making a decision to invest in any project.

“So far, 1MDB had never missed its obligations to fulfil its financing schedules. 1MDB’s financial position remains strong, supported by strategic assets with proven track records as well as strong growth opportunities,” he said.