To explain quit call on Najib, Dr M again dissects all that is ‘stupid’ with 1MDB
(Malay Mail Online) – Tun Dr Mahathir Mohamad sought again today to give a blow-by-blow account of everything that he felt was “stupid” about 1Malaysia Development Berhad (1MDB) — including loans with excessively high interest and expensive investments with low returns.
The former prime minister said from the comments on his blog and questions from those who approach him in public, it was clear that many do not know much about 1MDB.
“They know enough that Najib has done something wrong with the RM42 billion borrowed money, but are not clear about what is so wrong that I should call upon him to resign,” he said in a latest blog post, referring to Prime Minister Datuk Seri Najib Razak.
As such, Dr Mahathir said he found it necessary to explain in greater detail the many alleged missteps taken by 1MDB, the debt-laden investment firm that has been the subject of his attack on Najib.
For one, Dr Mahathir questioned the decision for Putrajaya to back a RM5 billion loan that was raised by Goldman Sachs with an alleged commission of RM500 million, leading to an effective loan of RM4.5 billion with alleged interest rates higher than usual.
“Loans taken by government or guaranteed by government would normally carry 3 per cent interest or less. But the 1MDB loan cost almost 7 per cent interest i.e, about RM350 million a year or almost RM1 million per day.
“Who approved such terrible terms for a loan to a government owned company? We would like to know who. There must be some documents with the signature of the approving authority. If not somebody needs to answer for this stupidity. Or is it abuse of authority,” he asked.
Dr Mahathir pointed out that 1MDB later went on to borrow more and chalked up debts of RM42 billion, insisting that the interest on this sum “must come to almost RM3 billion a year”, despite acknowledging the borrowing terms were unclear.
“Unless the investment yield fantastic returns, the interest burden would sink 1MDB,” he said.
He then went on to question if business tycoon Ananda Krishnan’s RM2 billion aid for interest repayments was a loan or a free gift, besides noting that 1MDB had to sell US$1 billion (RM3.7 billion) worth of assets to pay off a loan from a “German bank”.
Dr Mahathir hinted that the buck stops with Najib as both the prime minister and finance minister, stating: “When loans of more than 100 million are raised for investment overseas, Bank Negara has to approve.
“But the final approval must come from the Minister responsible. And the Minister responsible is also the effective head of 1MDB.”
Earlier in his post, Dr Mahathir mentioned the alleged role of flamboyant billionaire Jho Low in purportedly advising Najib to turn the Terengganu Investment Authority into a sovereign investment fund and in an aborted attempt to use Terengganu’s oil wells as collateral for a RM5 billion bond – which was later backed by the federal government.
Dr Mahathir also questioned the wisdom of 1MDB’s investments in independent power plants (IPP) purchased from private owners, stating that the Ministry of Finance-owned firm had paid RM18 billion for these assets and also taken over RM6 billion in unpaid loans.
Some of these IPPs were bought “well above market price”, with licences due to expire, Dr Mahathir said.
“Had 1MDB waited until the licenses expired, the price would be next to nothing,” he said, noting later that the firm is unable to get the IPPs listed again as he said they would be considered “overpriced and obviously unprofitable”.
“So not only is the borrowing costly but the high cost of investments will mean low returns. Why is 1MDB so stupid,” he questioned.
Dr Mahathir also listed several land deals by 1MDB, questioning Putrajaya’s sale of 70 acres of land along Jalan Tun Razak to the firm at a low price of RM60 psf instead of around RM3,000 to RM4,000 psf, stating: “One cannot help thinking it is because the PM ordered the sale. If so it is wrong and it constitutes abuse of authority. The full value should be paid to the Government now.”
But 1MDB then went on to gain an “enormous profit” from Muslim pilgrim fund Tabung Haji when it resold a portion of the land above the initial purchase price, Dr Mahathir said, also noting that the firm appeared to have “overpaid” a private seller for “useless land” in a non-central location in Penang with over 1,000 squatters and without state approval for development.
In concluding his post of what allegedly went “wrong” with 1MDB, Dr Mahathir cast doubt on 1MDB’s assertion that it owned RM52 billion worth of assets, noting that its valuation had not been explained.
“Future values after development may be big but billions of Ringgits must be invested before the property can be sold. After deducting cost, the return cannot be very big. The power plants and the land cannot be worth RM52 billion.
“Even if this money is used to repay debts, the disappearance of billions of Ringgit must be recovered, or 1MDB should be charged for the loss,” he said.
Besides being probed by the Auditor-General and Public Accounts Committee, 1MDB is also under investigation by Bank Negara Malaysia while Home Minister Datuk Seri Ahmad Zahid Hamidi confirmed yesterday that police had completed its probe into allegations of criminal breach of trust.
