1MDB unable to repay debts

(Bernama) – 1Malaysia Development Bhd (1MDB) directors have confirmed that the company is unable to repay its debts, says Finance Minister Lim Guan Eng.

He said former 1MDB Chief Financial Officer, Azmi Tahir, had written in March to the Ministry of Finance to state that 1MDB would not be able to service its interest due in April and May 2018.

Lim said he had instructed the ministry to appoint PricewaterhouseCoopers (PwC) to conduct a special position audit and review of 1MDB.

“We will then be able to determine the cost of the shenanigans to the tax-payers. We will submit the PwC report to the 1MDB Special Committee set up by the Prime Minister once it is completed,” he told reporters here Wednesday.

Earlier in the day, Lim held two separate meetings with 1MDB Directors Norazman Ayob and Kamal Mohd Ali as well as 1MDB President Arul Kanda Kandasamy, who was accompanied by Azmi and 1MDB former General Counsel, Ivan Chen.

Tuesday, Lim revealed that 1MDB was due to pay its lenders RM143.75 million by May 30.

Lim said Arul Kanda highlighted that he was on “garden leave” until the end of his contract in June 2018 and was therefore in the dark as to the company’s financial situation.

“The reason we called 1MDB is because we have to sign authorisation to pay debts on behalf of 1MDB by the end of this month.

“I was shocked that the first document I (was asked to) sign is to pay the debts of 1MDB and I refuse to sign before I see all the relevant documents,” he said.

Thus, Lim said, he had instructed Arul Kanda to write a letter to the government that 1MDB was unable to pay its debts; only then would the government pay on behalf of the company.

He said to date, the government had forked out RM7 billion to pay 1MDB debts and had to pay a total of RM954 million by the end of the year.

Lim said he was shocked to learn that Arul Kanda had been the only employee of 1MDB since early this year.

“I have instructed Finance Ministry officials to take over (the 1MDB office) as shareholders. We hope the documents are still in place,” he said.

Lim also said he had asked the 1MDB board of directors regarding the US$940 million worth of investment “units” previously held with BSI Bank, Singapore, as well as the US$1.56 billion worth of overseas investment funds belonging to 1MDB Global Investments Ltd.

Together, he said, these investments were worth purportedly some RM9.8 billion which, if redeemed, would be more than sufficient to meet 1MDB’s financial obligations for the next few years.

However, the board of directors, who will be supplying the ministry with the 1MDB board meeting minutes, claimed that they had repeatedly disputed the value and even the existence of these investments during the monthly board meetings, Lim said.

“This is because the 1MDB management has repeatedly failed to supply the board with any evidence over the existence of these investments over the past two years,” he explained.

He also revealed that Kamal had called these 1MDB investments as “a scam”.

Speaking separately, Azmi had said these “investments” existed even though BSI Bank was wound up, according to Lim.

“He gave the unbelievable excuse that the fund managers refused to communicate with 1MDB in writing because of the on-going investigations by the United States Department of Justice,” he said.

Lim said Arul Kanda, on the other hand, claimed that all financial matters were handled strictly by Azmi, and he was absolutely uncertain as to what the value of these “investments” were, or whether they even existed in the first place.

He added that he found Arul Kanda to be “utterly dishonest and untrustworthy”, and instructed the legal advisers to the Finance Ministry to review his position as 1MDB President.