Many More Scandals Likely Hidden in Secret “Red Files”

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Expecting more skeletons in the closet.

  • “Red files” believed to have started when 1MDB scandal emerged during Najib’s rule
  • Irwan Serigar gave access to “red files” to only “key people”
  • ECRL considered a “red file”

Finance Minister Lim Guan Eng asserted that more financial scandals in the vein of 1Malaysia Development Bhd (1MDB) remain locked up in “red files” that were previously restricted to only a select few former officials at his ministry.

Lim was granted access to the secret files after he was sworn in as finance minister and immediately discovered that his ministry had paid almost RM7 billion in 1MDB debt and interest payments last year alone.

Choo Choy May

“Actually the debts of 1MDB before this was paid by the government. Before this, 1MDB said they paid it themselves. They have never paid a single sen of their debts,” he told local daily Sinar Harian in an interview.

The files also contained several contracts requiring the federal government to make payments that do not match the progress of the work done, he said.

While payments usually tracked delivery, he said these obligated the government to pay in advance of work completion.

“Why? Because the agreement was made depending on the period, that is payment was made every six months, regardless of whether work is done or not,” he was quoted saying, adding that such lopsided deals would be reviewed.

In a separate interview with local business weekly The Edge, Lim said the Auditor-General had told him on his first day as finance minister that the government’s accounts could not be consolidated due to lack of access to all the files.

When speaking about the hidden “red files”, Lim expressed the belief that it started when the 1MDB scandal emerged during former prime minister Datuk Seri Najib Razak’s rule.

He also ventured that the practice likely did not exist during Najib’s predecessor’s time.

“Pak Lah (Tun Abdullah Ahmad Badawi) is a straight guy, he wouldn’t hide anything. He would just leave it to the professionals. But 1MDB is a different ball game completely. I think there was a deliberate effort to shield the public from this information,” he was quoted as saying by The Edge.

Lim confirmed that all the secret files have now been shared with him and the Auditor-General, but pointed out that the latter had previously been barred from accessing the files despite the department’s auspices.

Lim said only the “key people” who were directed by the former Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah and one of his deputies could in the past access the red files, adding that they were not to be shared with any other department then.

“So the person directly in charge of the (red files), he got all the written authorisation, so you cannot blame him. He was instructed to carry out his duties.

“So the person who instructed was, of course, Tan Sri Mohd Irwan (who has been relieved of his duties),” he said in the excerpt of his interview that was published by The Edge.

Lim said the red files included information on 1MDB and former subsidiary SRC International, adding that he will disclose the other red files next week.

He also said the discovery that MoF and other government agencies had been paying off 1MDB debts proved that the state investment firm’s executives had not been forthright about its ability to repay its loans.

However, he reiterated that 1MDB was effectively insolvent.

Another possible entry in the red files was the multi-billion East Coast Rail Link (ECRL) project, for which Lim said his ministry somehow had been not furnished a copy of the contract.

“The ECRL, yes, in a way, is considered a red file because we (MOF) did not have a copy of the contract until we asked for it. Then, finally, they gave us a copy of the contract.

“The same company that was involved in ECRL also didn’t have the contract. The Treasury’s solicitor did not have the contract,” he said.

Only Irwan possessed the document, he said.

Following the change in government after the 14th general elections, Irwan was on May 14 relieved of his duties as Treasury secretary-general, while his contract that was until March 6, 2019, was shortened to June 14, 2018. – Malay Mail