US DoJ’s claim that ‘fund units’ were “relatively worthless” and a front for money that had already been stolen seems true.
“Utterly dishonest” Arul Kanda now sings a different tune – previously insisted fund units available for repaying debt, now says unsure about its value or even if it exists, “in the dark” about state of company’s finances because on ‘garden leave’
- Directors confirmed 1MDB “insolvent”, unable to repay debts.
- ‘Shocked’ Lim refuses to ink document to settle 1MDB’s debt
- PricewaterhouseCoopers to conduct special position audit and review of 1MDB – then Malaysians will know the true financial state of affairs in 1MDB and the cost of the shenanigans to taxpayers
- MoF to take over 1MDB’s offices – Lim hopes all the documents still in place
After receiving a briefing from 1MDB, Finance Minister Lim Guan Eng says that one of the company’s directors had admitted that its alleged US$2.5 billion (RM9.8 billion) in “fund units” investments were a scam.
Lim said this after receiving a briefing from 1MDB directors Norazman Ayob and Kamal Mohd Ali, president and CEO Arul Kanda Kandasamy, former CFO Azmi Tahir and former general counsel Ivan Chen.
(L-R) Azmi Tahir, Arul Kanda, Ivan Chen.
“The board of directors, who would be supplying the ministry with the 1MDB board meeting minutes, claimed that they have repeatedly disputed the value and even the existence of these investments during the monthly board meetings.
“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.
“Kamal Mohd Ali called these 1MDB investments ‘a scam’. That’s the director himself saying it,” Lim said at a press conference in Putrajaya today.
In total, 1MDB previously claimed it held approximately US$2.5 billion (RM9.8 billion) in “fund units” with US$940 million being held by its subsidiary Brazen Sky Ltd, and another US$1.56 billion by a separate subsidiary, 1MDB Global Investment Ltd (1MDB GIL).
However, the US Department of Justice has claimed the “fund units” were “relatively worthless” and was a front for money that had already been stolen.
During the same briefing, Arul Kanda, who previously insisted the fund units were available for 1MDB to use in repaying its debt, now said he was unsure about it.
“Arul Kanda…claimed that all financial matters were handled strictly by the CFO and he is absolutely uncertain as to what the value of these ‘investments’ are, or whether they even exist in the first place,” he said.
“It is completely unbelievable that a highly paid and ‘experienced’ investment banker can be so irresponsibly clueless as to not know whether RM9.8 billion worth of investments is even real.
“Arul’s response was utterly shocking and preposterous because prior to the change of government, he had toured the country preaching the financial viability of 1MDB and the soundness of its investments.
“In fact, Arul is today singing a completely different tune from the song he sang to the Public Accounts Committee as recorded in the Hansard.
“I have found Arul Kanda to be utterly dishonest and untrustworthy, and instructed the legal advisers to the Ministry of Finance to review his position as the president of 1MDB.”
According to Lim, Azmi said the ‘investments’ existed.
However, he said Azmi gave the “unbelievable excuse” that the fund managers refused to communicate with 1MDB in writing due to the ongoing investigations by the DoJ.
Lim said 1MDB directors had confirmed with him the state fund was “insolvent” and unable to repay its debts.
He added that Azmi himself had purportedly written to the Ministry of Finance (MoF) in March this year to say that 1MDB will be unable to service its interest payment due in April and May.
If 1MDB’s ‘investment units’ supposedly worth RM9.8 billion could be redeemed, Lim said this would be more than enough to pay back 1MDB’s financial obligations for the next few years.
However, it remains uncertain what has happened to these ‘units’.
The 1MDB CEO also said that he is “in the dark” about the state of the company’s finances, according to Lim.
“Arul Kanda when asked, highlighted that he is on ‘garden leave’ until the end of his contract in June 2018. “Therefore, he claimed that he is in the dark as to the financial situation of the company,” said Lim.
Lim has refused to ink a document which authorises the MoF to settle 1MDB’s debt of RM143 million, which is due next week.
He has instructed Arul Kanda to inform the ministry in writing on whether the firm can fork out the sum or not.
Failing which, Lim said he would not authorise the MoF to pay off the debt.
“I was shocked that the first document I had to sign is to pay off 1MDB’s debt. I refused to sign unless I see all the relevant documents.
“We have to make the payment before May 30 so as part of the procedure, he (Arul Kanda) has to inform the government.
“He has been instructed to write a letter to state whether 1MDB can pay or cannot pay […] he has to do it as soon as possible,” he added.
Lim also said he had instructed his ministry to take steps to appoint PricewaterhouseCoopers (PwC) to conduct a special position audit and review of 1MDB.
“We want Malaysians to know the true financial state of affairs in 1MDB. We would then be able to determine the cost of the shenanigans to the taxpayers.
“We will submit the PwC Report to the 1MDB Special Committee set up by the prime minister once it is completed.”
According to Lim, the MoF will take over 1MDB’s offices as its shareholders.
“It is time for us to take over the offices of 1MDB and we have instructed Finance Ministry officials to take possession of the building as shareholders and the general counsel have agreed, and he’s handing over the keys to our possession.
“We hope that all the documents are still in place,” Lim told reporters.
Yesterday, Lim said the MoF has been bailing out 1MDB’s debt service obligations since April 2017.
The total amount paid by the MoF has amounted to RM6.98 billion, including payments to IPIC’s settlement agreement amounting to RM5.05 billion.
The new Pakatan Harapan government has accused the previous BN administration of trying to cover up the multi-billion ringgit 1MDB scandal and has vowed to uncover alleged wrongdoings.