MoF to address questions about 1MDB’s debts next week

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KUALA LUMPUR: The Ministry of Finance (MoF) will address the issues that have been raised by the opposition on 1Malaysia Development Bhd (1MDB) when it rounds up the budget debate next week, said Deputy Finance Minister Datuk Ahmad Maslan yesterday.

The opposition had noted that The Edge weekly in its cover story this week (Oct 27-Nov 2) had reported that the federal government had provided a “letter of support” for 1MDB Global Investments Ltd, a wholly-owned unit of 1MDB, to borrow US$3 billion (RM9.6 billion) in March 2013.

The report, quoting the letter, stated that “in the event 1MDB, as shareholder of the Issuer (1MDB Global Investments), fails to provide the required funds, Malaysia shall then step in to inject the necessary capital into the Issuer or make payments to ensure the Issuer’s obligations are fully met”.

Ahmad told reporters that the Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had directed him to debate the budget speech and take questions on 1MDB from the opposition.

Opposition lawmakers debating the budget speech have criticised its failure to address 1MDB’s huge debt.

In a written response to MP Lim Guan Eng on Tuesday, Prime Minister Datuk Seri Najib Razak said 1MDB’s debt as at March 2013 totalled RM36.25 billion.

Najib, who is also Finance Minister, said that besides the RM5.8 billion of the company’s loans that has the government guarantee, 1MDB’s other financial liabilities were its own responsibility.

Commenting on a report on 1MDB in The Edge Financial Daily (TEFD) on Wednesday, opposition lawmaker Tony Pua called on Najib to sack the top management of the government fund for paying RM1.54 billion in “certain commissions, fees and expenses” to Goldman Sachs Group Inc.

TEFD had quoted the US investment bank as saying that the “certain commissions, fees and expenses” referred in the loan offer documents were standard terms used to describe part of Goldman Sachs compensation for the risks assumed in underwriting the bonds in question.

Pua said under normal circumstances, raising RM1.52 billion by an entity wholly-owned by the government should not have cost more than”RM152 million.

“Instead, 1MDB footed a scandalous bill of RM1.54 billion,” he told a press conference at Parliament yesterday.

This article first appeared in The Edge Financial Daily, on October 31, 2014.