February 23, 2015

Tony Pua says 1MDB president Arul Kanda Kandasamy should explain its loss of US$1.1 billion over a deal with a Saudi Arabian petroleum firm. – The Malaysian Insider file pic, February 23, 2015.Debt-laden 1Malaysia Development Bhd (1MDB) said it made US$488 million profit from a Saudi Arabian deal but a DAP lawmaker today called it a con job.

Tony Pua also said today instead of making money from the deal with PetroSaudi International, 1MDB's president Arul Kanda Kandasamy had to explain a loss of US$1.1 billion.

"The whole complex and mind-boggling financial manoeuvres all point towards the perpetuation and massive cover-up of a multi-billion ringgit fraud.

"Arul Kanda proudly announced that 1MDB made US$488 million of profit from the Petrosaudi transaction but what we have at hand is at least US$1.1 billion ‘missing’ in unknown whereabouts.  The next question to ask is hence, where exactly is this US$488 million of ‘paper’ profit Arul was talking about?" he told a press conference in capital city Kuala Lumpur today.

The cover up, Pua said, had its origins in the 1MDB joint venture with 1MDB PetroSaudi, which looked like a scam to give US$700 million to another company.

That company was 1MDB PetroSaudi’s parent, PetrolSaudi International (PSI), which received US$700 million from its subsidiary.

Pua said PSI had created the shell company, 1MDB PetroSaudi, from scratch on September 18, 2009 just 10 days before its subsidiary received US$1 billion from 1MDB.

Documents on the whistleblower website Sarawak Report showed that four days after 1MDB PetroSaudi was created, PSI signed an agreement saying the subsidiary owed it US$700 million.

Four days later, on September 29, 1MDB bought 40% of new shares in 1MDB PetroSaudi and injected RM1 billion in cash.

The next day, US$700 million was taken out of 1MDB PetroSaudi and given to PSI.

“1MDB already knows this, that 1MDB PetroSaudi is working hand in hand with its parent company to take out US$700 million to do what it likes.

“On the surface it looks like a con job,” Pua said.

On February 21 1MDB Arul Kanda claimed that the company made US$488 million from the failed deal through the conversion of Murabaha notes or Islamic loans to 1MDB PetroSaudi.

In today’s press conference, Pua claimed that Arul Kanda’s statement completely avoided dealing the fact that there was an attempt to siphon US$700 million from 1MDB to PetroSaudi.

Pua said 1MDB’s further dealings with 1MDB PetroSaudi six months after their joint venture was abandoned also raised more suspicions.

In 1MDB’s audited accounts on March 31, 2010, the company supposedly sold off its 40% shares in 1MDB PetroSaudi.

“They sold the shares for US$1.2 billion. Except they did not take back the money. Instead they lent back the money to 1MDB PetroSaudi in the form of Murabaha notes or Islamic loans.

“Why would you exit a joint venture with a company and then turn around and loan it money?”

Pua said this smacked of a potential move to cover-up the original con job, the one where US$700 million went to PSI.

“By converting (the US$1 billion investment) to PetroSaudi into a loan, 1MDB was then able to avoid reporting the details of the JV agreement in its 2010 financial report.”

When it sold off the RM1.2 billion in Murabaha notes in September 2012, 1MDB supposedly made a profit of US$488 million, but this money was not brought back to the country, Pua said.

It was instead poured into a mysterious investment scheme in the Cayman Islands where even 1MDB’s auditors were not able to determine its value, he said.

“Hence the restructuring of the Murabaha notes into Cayman Islands investment raises the question if this was a last-minute transaction to cover up the original cover up to avoid further scrutiny in the financial report for March 2012.”

After much public pressure, 1MDB said it redeemed US$1.103 billion from the Caymans investment in January.

“However, Arul Kanda has refused to disclose the whereabouts of the US$1.103 billion balance proceeds from the redemption, only announcing that the funds will not be repatriated to Malaysia.” – February 23, 2015.

- See more at: http://www.themalaysianinsider.com/mobile/malaysia/article/1mdb-petrosaudi-deal-massive-cover-up-of-multi-billion-ringgit-fraud-says-p#sthash.BUdyr6de.dpuf