Pua exposes ‘brilliant’ Arul’s so-called “successes” while Guan Eng says no records show he was earning RM10 million a year.
How Arul “reduced” debt:
- Claimed reduced RM9.83 billion debt – in reality, disposed of 1MDB’s only profit-making asset for RM9.83 billion originally acquired for RM12.1 billion, which meant the sale actually incurred a loss of RM2.27 billion
- Claimed reduced RM3.2 billion debt – transferred ownership to MoF two properties that carried RM3.2 billion debt
- Announced 1MDB has been successfully repaying RM7 billion debts over past year – in reality, MoF secretly financed the payments
Former prime minister Datuk Seri Najib Razak must explain why his administration awarded Arul Kanda Kandasamy an RM5 million contract to remain 1MDB president, DAP’s Tony Pua said yesterday.
The Damansara MP also demanded Najib explain how Arul “successfully” managed to reduce 1MDB’s RM50 billion debt to RM30 billion, which the latter asserted.
“The question which begs to be asked is, why pay the purportedly brilliant Arul Kanda a whopping RM5 million contract and then place him immediately on ‘garden leave’?” Pua said in a statement.
The DAP national publicity secretary pointed out that Najib’s explanation was the first time he admitted that 1MDB had accumulated RM50 billion of debt as a result of the company’s excesses since its inception in 2009.
In a sarcasm-laden statement, Pua urged Malaysians to ask what “magnificent” Arul had done to reduce 1MDB’s RM50 billion debt to RM30 billion – a measure which Najib had cited as justification for the obscene bonus.
He disputed the “success” of Arul’s efforts in trimming the state investment firm’s debt burden, noting that assets were sold for less than what the firm paid.
“The first thing Arul Kanda did was to dispose of 1MDB’s only profit-making asset, its power plants for RM9.83 billion, ‘successfully’ paring down 1MDB’s debt by an equivalent amount.
“However, as highlighted many times – 1MDB’s energy business was originally acquired for RM12.1 billion, which meant that the sale crystalised a loss of RM2.27 billion for 1MDB.
“It certainly took a genius like Arul Kanda to come up with a plan to sell the company’s prized asset at a loss,” said Pua.
He said Arul’s next “fantastic idea” was to transfer ownership of Tun Razak Exchange and Bandar Malaysia – two 1MDB subsidiaries – to the Finance Ministry two years ago.
This was done under the pretext of following advice from the Parliament’s Public Accounts Committee, but Pua accused Arul of hiding key facts about how the debts incurred by 1MDB were ultimately transferred to taxpayers.
“What Arul Kanda didn’t have the cheek to admit was that he didn’t just transfer the Tun Razak Exchange and Bandar Malaysia properties to MoF (Ministry of Finance), they came attached with an RM2.4 billion sukuk bond and an RM800 million loan from Socso.
“Very cleverly, Arul Kanda successfully reduced 1MDB’s debt by another RM3.2 billion,” he said.
“Then the masterstroke from Arul Kanda must have been the ability to disingenuously announce that 1MDB has been successfully servicing and repaying approximately RM7 billion of its debts over the course of the past year, when in reality, it was MoF which was forced to secretly finance these payments,” Pua said.
Since the Pakatan Harapan administration was formed, it has been established that the Najib administration had quietly bailed out 1MDB to the tune of RM7 billion in a year.
It has been established that funds from Bank Negara and Khazanah Nasional were used for the bail-out.
“The people shall be the judge if Najib’s emphatic defence of maestro Arul Kanda can withstand the test,” Pua concluded.
Earlier, Najib claimed that Arul gave up higher pay to join 1MDB after it was revealed the latter was offered RM5 million to do so.
Najib also argued the remuneration was justified given Arul’s performance, despite the recent release of the Auditor General’s report on 1MDB showing its debt mountain remained largely intact despite a so-called “rationalisation”.
Finance Minister Lim Guan Eng disclosed the pay package this week, before saying the government will not pay the remainder of the RM2.5 million due to Arul.
Lim further revealed the RM5 million package was personally approved by Najib and signed off by former Treasury Secretary-General Tan Sri Irwan Serigar.
Arul, 41, a law graduate from the London School of Economics, took over as 1MDB president and group executive director on Jan 6, 2015.
It was reported that he was terminated on June 28, two days earlier than the date his contract ended, with sources claiming he was not paid his May and June salaries nor given his contractual bonus.
Lim also revealed there are no records showing that Arul earned a much higher pay prior to his appointment to 1MDB.
“We have no such records showing he was earning RM10 million a year. We all know where he worked before, and even that [company’s] CEO does not earn such numbers in a year,” Lim said.