KUALA LUMPUR: The opposition and one non-governmental organisation (NGO) led by influential figures have seized the joint investigation report by Sunday Times newspaper and whistle blower website Sarawak Report to pressure Prime Minister Datuk Seri Najib Razak and the relevant authorities to tackle fresh scandals concerning 1Malaysia Development Bhd (1MDB).
The Centre to Combat Corruption and Cronyism (C4), an NGO set up last year by human rights advocate Cynthia Gabriel, with Datuk Ambiga Sreenevasan as its legal adviser, yesterday called on the Malaysian Anti-Corruption Commission (MACC), the Auditor-General (A-G) and the Public Accounts Committee (PAC) to conduct an investigation into 1MDB.
“C4 urges the MACC to immediately begin investigations into the financial scandals of 1MDB, in particular the allegations of the US$700 million (RM2.5 billion) allegedly siphoned off by Jho Low’s company,” said C4, which was represented by Gabriel and Ambiga, in a statement yesterday.
The NGO was referring to Sarawak Report’s allegations over the last weekend that a sum of US$700 million had been channelled to an entity said to be controlled by the Penang-born businessman. The huge amount, which formed the bulk of the US$1 billion equity 1MDB invested in a joint venture with Petro Saudi International Ltd (PSI) in 2009, was originally said to repay a loan to PSI.
C4 urged Najib to table a detailed report in Parliament on the US$700 million transaction. It also wanted Najib to reveal details of the effects of 1MDB’s alleged scandals on public coffers, the rejection of a RM3 billion loan by the Cabinet, and what steps were being taken to salvage the economy.
“We want answers, as public anger comes to a boil with rising prices of goods, petrol prices up by 25 sen and the impending GST (goods and services tax),” said C4.
Meanwhile, in a press conference yesterday, DAP’s national publicity chief Tony Pua demanded that 1MDB show proof of the US$1.1 billion investment it claimed it had redeemed in cash after the strategic investment fund exited from the PSI deal.
“Show us the money … the one way to silence us is to show us the redemption statement of the US$1.1 billion from Cayman, payable in cash to which bank. Don’t show us another bank account with US$1.1 billion, not from Cayman Islands,” he added.
The reactions from C4 and Pua came despite an immediate clarification by 1MDB and PSI on allegations brought up by the Sarawak Report over the weekend.
“1MDB notes with concern certain claims carried by an online media portal concerning the business arrangements 1MDB entered into with Petro Saudi. 1MDB exited the relationship in 2012, and received back its investment in full, with a profit of US$488 million,” said 1MDB president and group executive director Arul Kanda Kandasamy in a statement on Sunday night.
“These facts, and all details related to this transaction, may be verified by reference to our audited accounts, which are publicly available on the Suruhanjaya Syarikat Malaysia website,” he added.
PSI also said in a statement on Sunday that upon 1MDB’s exit, PSI had paid the Malaysian strategic fund in full and both parties no longer had any financial or legal relations.
“We wish to state categorically that all funds from 1MDB went to PetroSaudi-owned entities — any other inference is false,” said the company in response to allegations by Sarawak Report on the US$700 million transaction.
PSI said its subsidiaries received the full US$700 million, and it paid US$2.3 billion to 1MDB and the Malaysian company exited the investment (1MDB had lent another US$800 million to PSI in 2010 and 2011).
The company said it was seeking legal advice on the appropriate course of action to take against “these malicious and slanderous allegations”.
1MDB’s audited accounts as at March 31, 2014 showed that the company received the US$2.3 billion and made a profit of US$488 million.
To recap, 1MDB invested US$1 billion cash in a 40% equity interest in 1MDB Petro Saudi Ltd (1MDB Petro Saudi), a subsidiary of Petro Saudi International Holdings Cayman Ltd (PSI Cayman) in September 2009.
According to the joint-venture (JV) agreement disclosed by Sarawak Report, PSI, the parent company of PSI Cayman, would inject assets worth US$1.5 billion, which would represent a 60% equity interest in 1MDB Petro Saudi.
However, Pua alleged that, “as at Nov 24, 2009, PSI did not have US$1.5 billion of assets in the joint venture with 1MDB (1MDB Petro Saudi)”.
He then questioned why 1MDB had subsequently sold its 40% stake in 1MDB Petro Saudi back to PSI for US$1.2 billion, which it then lent back to 1MDB Petro Saudi Ltd in an 11-year Murabaha Notes.
Pua also urged the A-G to immediately conduct an audit on 1MDB, as “it is a matter of immediate urgency”.
Earlier on Feb 26, the PAC also called on the A-G to conduct an immediate audit on 1MDB, to “quell rumours and further negative perception”. PAC chairman Datuk Nur Jazlan Mohamed said in a statement that they had identified several issues that needed to be audited.
This article first appeared in The Edge Financial Daily, on March 3, 2015.