1MDB guilty until proven innocent, Dr M says

(Malay Mail Online) – Unless proven innocent, it must be assumed that the management of 1Malaysia Development Berhad (1MDB) had misappropriated the funds invested in Cayman Islands, Tun Dr Mahathir Mohamad said today in his continued tirade against the troubled state investment firm.

The former prime minister said although the money had been redeemed and is now parked in a Singapore bank, it has yet to be proven that the funds are in actual tangible form.

“The money cannot be demonstrated to be there in tangible form, then management will be held responsible for its loss.

“The assumption must be that management had misappropriated the money unless otherwise proven,” he wrote in his latest blog post today.

He added that even if 1MDB’s debts end up getting full paid up through the sale of its assets, it would not automatically mean that the firm is free from the charge that it cannot account for the billions lost in the first place.

“In business, money can be lost through bad investments or bad management. That is acceptable though the CEO and Managers would be sacked.

“But when money is lost and the management cannot explain where it went and how it disappeared then management would still be responsible even if there is a bailout or the debts paid,” he said.

In January, the Finance Ministry said 1MDB had deposited the US$1.103 billion (RM3.91 billion) it redeemed from its offshore account in the Cayman Islands into a Singapore-based branch of Swiss bank BSI Bank, with the amount held in US dollars.

Explaining why the funds were not repatriated back to Malaysia, 1MDB chief executive Arul Kanda Kandasamy then told a Business Times interview in February that this was because the funds were to be used to service 1MDB’s US dollar debt interest payments.

But in the latest twist to the story last week, DAP MP Tony Pua revealed yet another Finance Ministry reply to him claiming that the redeemed investment was not held in BSI Bank in cash but in assets.

Explaining the matter, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah confirmed his ministry’s clarification that the redemption, now parked in Singapore’s BSI Bank, is in the form of “units” and not US dollars as previously claimed by 1MDB CEO Arul Kanda Kandasamy.

He said that Putrajaya is also working to repatriate all its assets currently being kept in the bank in question.

The US$1.103 billion is the second tranche of funds in 1MDB’s Cayman Islands foray, which totalled US$2.32 billion.

1MDB, a brainchild of Prime Minister Datuk Seri Najib Razak, is currently the subject of investigations by the Auditor General’s Department and Parliament’s Public Accounts Committee.

Yesterday, Dr Mahathir, now Najib’s harshest critic, asked if the reason that 1MDB chose to store the redeemed funds in Singapore instead of repatriating the sum is because it may be laundering money.

“The question is, was 1MDB with the knowledge of its adviser involved in money laundering, until its money from the Cayman Islands needs to be stored in Singapore?” Dr Mahathir asked on his blog.

“Or was the real reason to lie about storing the money in Singapore, is because there is no cash at all stored there, that the US$1 billion is gone?”