KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has said the US$2.3 billion (RM7.04 billion), the proceeds and profit originating from the government investment arm’s initial 1MDB-PetroSaudi International joint venture, is “safe”.

Responding to a slew of news reports that raised doubts about the status of the cash that the government development company had parked offshore, 1MDB said the allegations were being made by certain quarters with political agendas.

“This is a smear campaign for their own intended benefit. The notion that these monies were put in Cayman Islands companies and will vanish is based on a lie perpetuated by these quarters and is completely absurd,” IMDB said in a statement issued last night.

It pointed out that the proceeds were clearly reported in the company’s audited account that is publicly available at the Companies Commission of Malaysia and has been independently audited by “a global reputable and established firm”.

“1MDB has earmarked the proceeds for investments in the near future. Pending that, these funds for cash management purposes are currently placed under regulated and licensed international fund managers managing Cayman Islands- based international standard fund structures,” it added.

Commenting on the recent US$3 billion capital raised, 1MDB explained that it was part of the government-to-government collaboration between Malaysia and Abu Dhabi on a strategic partnership sealed on March 12.

It said the money would be used for “strategic investments for sustainable returns”, and the bonds raised are part of the capital for the strategic initiatives it undertakes.

“Both countries are committed to now kick-start the operations of this strategic RM18 billion partnership. Malaysia and Abu Dhabi have maintained a long standing economic partnership and the ADMIC (Abu Dhabi Malaysia Investment Company) initiative is no exception and independent of the elections and should not otherwise be misconstrued,” said 1MBD.

1MDB also pointed out that it had considered all of its financing options, stressing that it opted for a private placement to ensure the timely completion of this economic initiative.

This article first appeared in The Edge Financial Daily, on April 24, 2013.