1MDB scandal coming to the surface
MP urges police to act before 1MDB brings down the already fragile economy.
Shane Fuentes, Free Malaysia Today
Three happenings have come together in recent days on the troubled 1Malaysia Development Berhad (1MDB).
The sovereign wealth fund missed a debt repayment deadline; an Umno leader made a police report against it and the Cabinet, chaired by Deputy Prime Minister Muhyiddin Yassin, discussed the matter.
1MDB has, not for the first time, missed the deadline to repay an outstanding debt. On 30 November 2014, 1MDB was due to repay a RM2 billion debt but has failed to do so to date, said Petaling Jaya Utara MP Tony Pua in a statement. Instead, it asked for a further extension from the financiers.
Prior to this, notes Pua, the March 2014 1MDB financial statements had revealed that 1MDB was forced to extend for six months a syndicated bridging loan amounting to RM6.17 billion when it was due on 22 November 2013.
“When the sum became due again in May 2014, the loan was extended again. 1MDB was only able to repay RM670 million in August 2014.”
The company had to restructure the balance of the loan into a RM2 billion short-term loan and a RM3.5 billion 10-year bond, he added. “The Singapore Business Times had reported that 1MDB’s debt rescheduling came at an expensive price of 2.5 per cent interest above the annualised cost of funds, on top of the RM20 million to RM30 million in upfront fees.”
It is this RM2 billion which is now due and 1MDB is once again forced to request for an extension, continued Pua.
The financiers, Maybank Investment Bank Bhd and RHB Investment Bank would have no choice but to accede to the request, pointed out Pua. “This is because an official default on the RM2 billion loan will not only cause 1MDB to automatically default on the balance RM42 billion debt, but also likely cause a collapse of the Malaysian domestic banking system.”
“The police report filed against 1Malaysia Development Bhd (1MDB) by an Umno leader testifies that all is not well with 1MDB’s finances as it struggles to repay its debts and fund its projects.”
When an Umno leader files a police report alleging gross mismanagement in a company owned and supported by the Government, where the Prime Minister Najib Abdul Razak sits as the chairman of the Board of Advisors as its sponsor, belabours Pua, “the complainant has either the testicular fortitude for a ‘death’ wish or he has in his possession knowledge of the deepening 1MDB RM42 billion debt crisis”.
“It reeks too much of a coincidence that the 1MDB scandal was raised as a matter of concern in the Cabinet meeting this week.”
The factual evidence presents a dire and desperate picture of 1MDB.
