Bankrupt 1MDB? Yes! Yes! Yes!
Explain those number differences. And we are not yet even in the territory of defining costs, opportunity costs and interests, much less debt. So stop fudging.
Shu Zheng
Arul Kanda has lauded the 1MDB business model as ‘good’ when it relied solely on debt for its range of businesses so that public finances could be freed for use in schools, hospitals and so on, and not passed through government to the company.
Set aside the infantile nature in the argument — it is so inane, it doesn’t need a rebuttal. But that’s the starting point in its cascade of troubles leading, finally, to what 1MDB has become: a 40 plus billion bull romping through a shop full of china porcelain.
So where, after five years, does it leave us?
Answer: Unwinding. Unwinding, and unwinding.
It is in this unwinding that has become 1MDB’s core business, yes, core business: How to sell its assets, that is, if they are worth anything. But, still, let’s focus on the selling.
First off the block: Edra.
Prior to its deal with a consortium led by CGN, 1MDB tried other exit doors, an IPO most prominently. That flopped, for whatever reason it doesn’t matter.
Now Communications and Multimedia Minister Salleh Said Keruak says this:
“The situation is becoming more complicated when society doesn’t know what it wants.
“They want 1MDB to reduce its debt but at the same time they don’t want any local company to buy 1MDB assets, and would not allow 1MDB to sell its assets to foreign investors. With that, what do they want 1MDB to do?
“In the end, 1MDB can only do three things, and all three are unacceptable to the critics. There is however a fourth alternative, and that is bankruptcy.
“Is this what they want 1MDB to do, which is to declare bankruptcy? So that they can use this issue against the prime minister?”
Salleh has now cast the 1MDB as an abused child, the wounds inflicted on it by people such as Mahathir Mohamad, in order to punish the parent named Najib Razak. And the whip, the cane, that is being used to flog Najib? It is called Edra. Hence, Salleh’s implication, captured in the Malaysiakini remark is: “Damned if it does, and damned if it doesn’t.”
Salleh’s response to the criticisms are two-fold: Edra, the Deal, which is then conflated with 1 MDB the Debt.
Edra, the Deal: Let’s cut to the chase. Why should it matter with who Edra ends up? Even to Eskimos or monkeys, so long as they can come up with the money. Those stations sit on Malaysian soil, so there isn’t anything the Chinese can do about it. It was therefore easy for Salleh to dismiss this part about foreign ownership but he lets himself off on the more specific criticisms, for example, from Mahathir. Which is, the numbers don’t add up.
Before that, 1MDB and Arul popped post-deal champagnes, letting off with the impression they have done a wonderful job: No hands, Ma. No bail out. Then as it turns out, 1MDB ‘broke even’ on the deal. Hang on there to your incredulity.
1MDB, the Debt: Edra is purely the beginning of the unwinding process which, to put it unflatteringly, is called asset stripping.
