1MDB attacks Dr M, says his motives suspect

(Malay Mail Online) – 1Malaysia Development Berhad (1MDB) lobbed a curveball today at Tun Dr Mahathir Mohamad, questioning the motive behind the former prime minister’s dogged concern over its financials.

In a lengthy press statement detailing its highly-publicised deal with Petrosaudi International, 1MDB pointed out that despite repeated clarifications on the movement of its funds, Dr Mahathir has continued to repeat his claim that the firm’s money is missing.

“Despite repeated public clarifications, Tun Mahathir chooses to ask the same question again and again.

“One must question the motive behind why he keeps saying that the ‘USD1billion is missing’ when it is obvious that the funds have been accounted for and audited,” the firm said.

Yesterday, Dr Mahathir again posed questions on the US$1 billion that 1MDB recently redeemed from its Cayman Islands account and parked in Singapore’s BSI Bank, pointing to the confusion surrounding the nature of the funds that was at first said to be in cash but was later clarified to be “units”.

“Statements without documentary proof are, as we have seen, quite useless,” he had written in yet another blog post on the controversy.

“We need proof of all the investments and payments made by the 1MDB. But no proof has been shown accept for the acquisition of the power plants and purchase of Government land in Kuala Lumpur and private land in Penang.

“Until signed documentary proofs and not just statements by the Chief Executive Officer or Prime Minister, are shown, we have to assume that the money borrowed by 1MDB has disappeared,” he added.

But 1MDB turned the tables on Dr Mahathir today, pointing out that that former prime minister himself has issued conflicting statements on its so-called missing funds, having claimed at one time that “RM42 billion is missing” and then at another time that, “USD1 billion is missing”.

“This continuous change in figures is perplexing, and raises questions as to the motivation behind these ever-changing claims,” the firm said.

It added that all “documentary proof” for 1MDB’s assets, including the fund units in BSI Bank and its other financial assets, have already been presented to auditors who have signed off on them without qualification.

It said the same proof has also been presented to the Auditor-General and Bank Negara Malaysia, both of which are currently investigating the firm for alleged impropriety.

In the same blog post yesterday, Dr Mahathir had also claimed that 1MDB paid US$1 billion for a 40 per cent share of a joint venture with Petrosaudi, which he claimed “did not pay a single cent”.

Petrosaudi then bought the assets of Petrosaudi International, he claimed, and subsequently, the JV between 1MDB and Petrosaudi then requested that 1MDB pay US$700 million to settle the loan from Petrosaudi International to Petrosaudi.

Clarifying today, 1MDB explained that Petrosaudi, via a subsidiary company, owned assets, comprising rights to oil fields in Turkmenistan and Argentina, worth approximately US$2.7 billion.

It said these assets were sold by the firm to another subsidiary, “JV Co”, a firm that was formed for the purpose of the JV with 1MDB.

In return for the transfer, JV Co had to pay Petrosaudi US$700 million. This indebtedness to Petrosaudi, 1MDB explained, is from the asset transfer, which means there was no loan made “to settle”.

After the 1MDB-Petrosaudi JV deal was formalised on September 29, 2009, 1MDB confirmed that it contributed US$1 billion of cash for a 40 per cent stake in JV Co while Petrosaudi had the remaining 60 per cent stake by way of its US$2.7 billion worth of assets.

As part of the JV deal, 1MDB said that of the US1 billion it contributed, US$700 million would be used to pay Petrosaudi for the initial asset transfer while the remaining sum of US$300 million would remain in JV Co.

1MDB noted that in his blog, Dr Mahathir had claimed that the US$300 million of 1MDB’s contribution had been converted into a Murabaha loan and that “we really don’t know where it is”.

Explaining again, 1MDB said the when the JV with Petrosaudi was terminated in March 2010 with the oil company assuming 100 per cent ownership, 1MDB converted its US$1 billion of equity in JV Co to murabaha notes issued by JV Co, under the terms of a Murabaha Financing Agreement.

PetroSaudi, as 100 per cent owner of JV Co, fully guaranteed JV Co’s obligations under the murabaha notes, it said.

1MDB then made further investments of US$500 million and US$330 million in additional murabaha notes issued by JV Co, which put its total investment to US$1.83 billion.

The US$1.83 billion was “repaid” in June 2012, 1MDB said, by way of conversion into shares in Petrosaudi Oil Services Limited, for a value of US$2.22 billion.

In September the same year, 1MDB said it sold these shares for US$2.318 billion and received fund units in a Cayman registered fund. The units were owned by 1MDB via its subsidiary Brazen Sky and held through Singapore’s BSI Bank as custodian.

These facts, 1MDB said, can be verified by reference to the notes to its annual audited financial statements in from 2010 to last year.

“We are fortunate in Malaysia to have rule of law which states a party is ‘innocent until proven guilty’.

“The Prime Minister has already said, on numerous occasions, that if any wrongdoing is proven, action will be taken. 1MDB fully supports this position and is accordingly cooperating fully with the lawful authorities in their ongoing investigations,” it said.