1MDB will shut down after debts paid, says Irwan Serigar


Source: The Malaysian Insight

Pro-democracy group Bersih had staged an 1MDB protest in Kuala Lumpur, Malaysia back in November 19, 2016. REUTERS/Edgar Su

TROUBLED sovereign wealth fund 1Malaysia Development Bhd (1MDB) will be shut down once it settles all its debts, company chairman Dr Mohd Irwan Serigar Abdullah was quoted as saying by media reports.

This comes a day after Swiss authorities say they will absorb RM400 million in 1MDB-linked funds languishing in Swiss bank accounts.

At a press conference in Universiti Malaysia Kelantan last night, Treasury secretary-general Irwan Serigar said the debts would be paid from revenue obtained from the government’s mega projects such as the development of the Tun Razak Exchange (TRX) building, the East Coast Rail Link (ECRL) and the second Mass Rapid Transit (MRT) project.

“Soon, residents who own a place in the TRX city will pay rent, and we will also sell land plots of Bandar Malaysia which will be developed with public transport such as high-speed train, ECRL and MRT,” Irwan was quoted as saying by the New Straits Times daily.

“Through this, we will pay the debts… Rome wasn’t built in a day, we will not get the revenue immediately, instead it will take more than 10 years to generate income from the long-term development.

“Once the debts are paid, there will be no need for 1MDB.”

Earlier, Irwan said 1MDB, just like any other company set up by the government, was not safe from the possibility of suffering losses.

“Of course, there are companies that profit and suffer losses… when the company suffers losses, it will shut down, but all debts must be paid first,” he said.

The dissolution of 1MDB will close a chapter in the country’s corporate history that is laden with allegations of fund misappropriation, international intrigue and lavish overseas spending.

The investment firm began life as state wealth fund Terengganu Investment Authority in 2008, and was mandated to manage the state’s oil wealth.

Prime Minister Najib Razak announced in 2009 that TIA would be renamed 1MDB, and would be tasked with ensuring the sustainable economic development of the country by forging strategic global partnerships and promoting foreign direct investment.

But allegations of hundreds of millions of ringgit being diverted from 1MDB began circulating in the local and international media.

In 2016, the United States Department of Justice announced a civil suit to recover US$1 billion in assets it said were bought with money siphoned from 1MDB. Another suit was filed last year to recover another US$540 million in assets, which include a US$165 million yacht the Equanimity, owned by businessman Low Taek Jho, and rights to comedy movie ‘Dumb and Dumber To’ produced by Red Granite, a production house co-owned by Riza Aziz, the stepson of Prime Minister Najib Razak.

The suits have been suspended as DoJ pursues a criminal investigation into 1MDB.

US Attorney General Jeff Sessions has called the 1MDB scandal “kleptocracy at its worst”.

One of the key controversies surrounding 1MDB is the dispute it has with Abu Dhabi sovereign wealth fund International Petroleum Investment Company over loan and accumulated interest charges on a US$1.2 billon bailout package 1MDB received in July 2015.

After delays and question marks on Malaysia’s ability to pay the Abu Dhabi, the debt was settled in two tranches last year.

1MDB and the Finance Ministry also assumed responsibility for all future interest and principal payments under two bonds, worth US$3.5 billion in total.

1MDB and IPIC struck up a relationship in 2012, when the former guaranteed two bonds worth US$1.75 billion each for1MDB to raise funds for the purchase of power-generation assets. In return, 1MDB was to make collateral payments to IPIC.

Najib was also found to have received US$700 million in his personal account. Though Najib has claimed the money was a donation from Saudi royals and has been cleared in Malaysia of any wrongdoing, the money is believed to be linked to 1MDB as the DoJ suits cite a Malaysian Official 1 (MO1) as a benefactor of the funds.  A minster has confirmed to the media that MO1 is Najib.

Switzerland is looking to absorb RM400 million in funds linked to 1MDB, which was seized from several banks last year.

Swiss Finance Minister Ueli Maurer said the money is already with the Federal Treasury as there were no claimants.

Though investigations have also been launched several countries, like Singapore, Maldives, Switzerland, Hong Kong and Luxemburg, Malaysian authorities admit only “weaknesses” in the administration of 1MDB and have not charged anyone with any crime.

Singapore is the only country to have jailed or banned bankers and people working in the financial sector for cases linked to 1MDB. – Februry 28, 2018.