Thursday 28 Mar 2024
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(June 12): Tun Dr Mahathir Mohamad today said businessman Low Taek Jho had advised Datuk Seri Najib Razak to turn the Terengganu Investment Authority (TIA) into the sovereign fund that is 1Malaysia Development Berhad.

Writing in his blog, Dr Mahathir claimed Low, better known as Jho Low, "persuaded" Najib to make TIA into a sovereign fund but still remained under the prime minister's control, with staff appointed by Najib without informing the east coast state.

"Terengganu agreed at first but when Najib decided to raise through bonds RM5 billion using Terengganu oil wells as collateral, the Istana (palace) and the government thought it was not right," he said.

"Terengganu requested that the issuance of the bonds be deferred. Najib went ahead. Terengganu accordingly withdrew as it cannot let its’ oil wells be put at risk".

Dr Mahathir's revelation echoed that of former Terengganu menteri besar Datuk Seri Ahmad Said who had told the state assembly last month that 1MDB had attempted to use Terengganu’s oil and gas as collateral, but the decision was later withdrawn.

Ahmad had said the attempt was made when 1MDB was linked to TIA, and that Najib was unhappy with his decision.

Dr Mahathir said Jho Low also advised Najib that Putrajaya guarantee the RM5 billion loan, and that the deed was done without the Cabinet's knowledge.

"Strictly speaking, such a matter should be discussed and approved by Cabinet. There is no evidence that a cabinet paper was prepared and presented for approval despite the amount being unusually big. In fact for a long time Cabinet was not aware of the activities of 1MDB," he said.

He further revealed that the loan was classified as off-budget, meaning it was outside the annual budget presented and approved by Parliament.

This, said Dr Mahathir, was done to avoid scrutiny by officials, adding that proper procedures had not been adhered to.

"Off-budget spending can be made but usually only limited in amount. RM5 billion have never been borrowed by Government or any of its agencies. It should not be off-budget. It should get Cabinet approval first and then presented to Parliament. None of these procedures were followed.

"It is not clear whether any government department or agencies have scrutinised the terms of the loans. But the terms were very unfavourable to 1MDB and the government," he added.

He said Goldman Sachs was tasked with raising the RM5 billion loan at an interest rate of 5.9%, with the global investment bank taking 10% commission.

"What this means is that of the RM5 billion borrowed, 1MDB would get only RM4.5 billion. Goldman Sachs would get RM500 million as commission, an inordinately large sum.

"But 1MDB would pay 5.9% interest on the whole of RM5 billion. Since it gets only RM4.5 billion the rate of interest on this amount would be 6.6% plus. Goldman Sachs need not pay interest on the RM500,0000 it got as commission," he said.

In contrast, Dr Mahathir said loans taken by the government or guaranteed by government normally carries a 3% interest or less.

However, 1MDB's loan was almost 7% interest, or about RM350 million a year or almost RM1 million per day.

"Who approved such terrible terms for a loan to a government owned company? We would like to know who. There must be some documents with the signature of the approving authority. If not somebody needs to answer for this stupidity. Or is it abuse of authority.

"But the final approval must come from the minister responsible. And the minister responsible is also the effective head of 1MDB".

A strident critic of the debt-laden state investment arm which has to date chalked up RM42 billion debts in just six years of operations, Dr Mahathir has upped his criticism against Najib administration.

He had repeatedly called for Najib to quit over the issue, saying that the problems surrounding 1MDB can be resolved if the prime minister stepped down and allowed a full probe into the company.

Najib had previously declared that he would not resign. In his latest blog post, he accused Dr Mahathir of making “insinuations, speaking half-truths, cracking misleading jokes and twisting statements to make his views exciting and palatable”.

The Auditor-General is currently looking through 1MDB's books, with a preliminary report expected to be submitted to the Parliament this month, while Parliament's Public Accounts Committee (PAC) started its investigation into the company last month. – The Malaysian Insider

 

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