January 22, 2015

DAP's Tony Pua regards the prime minister's latest defence of 1MDB as an insult to intelligence of Malaysians. – The Malaysian Insider file pic, January 22, 2015.DAP today said Prime Minister Datuk Seri Najib Razak was insulting the intelligence of Malaysians with his “incredulous” claims about 1Malaysia Development Berhad (1MDB).

Its national publicity chief Tony Pua questioned Najib's justification that Putrajaya had only committed RM1 million to the controversial sovereign fund.

“While it is technically true that the government only invested RM1 million in cash to the company, Najib who is also the finance minister failed to highlight that it also explicitly guaranteed RM5.8 billion of loans as well as issued another ‘letter of support’ which, for all intents and purposes, guaranteed another US$3 billion (RM10.8 billion) of borrowings.

“Hence at the very least, the federal government’s commitment to 1MDB is RM16.6 billion, and not the miserly RM1 million claimed by Najib,” Pua said in a statement.

"Does Najib seriously believe that he could take Malaysians for fools by making such incredulous justifications of the dire performance and imminent debt crisis of 1MDB?"

Pua rejected Najib's claim that Malaysia would receive huge returns if 1MDB's assets were fully utilised by the company.

"Malaysian taxpayers would have received huge returns if the country’s assets were not used to bailout 1MDB and wasted on the company’s gross mismanagement and excesses."

Yesterday, interviewed by TV3, Najib claimed that many people did not realise the government's commitment for 1MDB was only RM1 million in terms of shares.

Najib said that today, 1MDB has assets worth RM50 billion, which Pua claimed was an attempt to dishonestly represent the fund’s current state of affairs.

"Nothing can be more incredulous than Najib's attempt at grossly inflating and dishonestly representing the dire state of affairs in 1MDB, a wholly-owed Ministry of Finance subsidiary," said Pua.

He said credit ratings firm Fitch Ratings had warned of uncertainty over 1MDB's financial position.

Fitch viewed "1MDB as a close contingent liability of the sovereign fund because of the nature of its operations and leadership, as well as explicit sovereign guarantees of some RM5.8 billion of the entity’s RM41.9 billion debt", added Pua.

The DAP lawmaker said although the balance of 1MDB's debts were not explicitly guaranteed, Putrajaya would still be obliged to repay these debts to avoid a total collapse of Malaysia's credit ratings.

"Najib also tried to allay public concerns by claiming that funds from the initial public offering (IPO) of 1MDB’s power plant assets will help reduce its debts," he said.

But Najib had failed to highlight the fact that the IPO had been postponed at least three times for failing to attract investors at the proposed valuations, added Pua.

"This is despite Putrajaya awarding 1MDB with multiple independent power producer contracts worth tens of billions of ringgit via direct negotiations."

Pua said if not for Putrajaya's “generosity” in abandoning open tenders for the power concessions, 1MDB’s proposed IPO would never even have a chance of seeing the light of day.

"This is because of the inflated prices 1MDB paid to acquire the power plants from Genting Sanyen and Tanjong Power, resulting in very low returns to its investment.

"What was most dishonest was Najib's boast that 1MDB also has a landbank of 222.58 hectares within Kuala Lumpur and the value was huge.

"He failed to inform the TV3 audience that these super-prime pieces of land were sold without any form of tender to 1MDB at bargain basement prices."

Pua said the 495-acre Sungai Besi airbase was sold to 1MDB for only RM1.6 billion in 2013 but was revalued to RM4.3 billion as reflected in its March 2014 financial statements.

He said land for the Tun Razak Exchange was sold to 1MDB for RM194 million in 2010, and has since been revalued multiple times to RM2.7 billion in the latest available published accounts. 

In effect, Najib awarded RM7 billion worth of land to 1MDB for only RM1.8 billion, which shortchanged Putrajaya by RM5.2 billion, said Pua. – January 22, 2015. 

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