Tuesday 19 Mar 2024
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KUALA LUMPUR (May 23): The Ministry of Finance (MoF) will appoint PwC to conduct a special position audit and review of 1Malaysia Development Bhd (1MDB) to be submitted to the 1MDB Special Committee upon completion, said Finance Minister Lim Guan Eng today.

According to a statement by Lim, he has also instructed MoF legal advisers to review Arul Kanda Kandasamy's position as 1MDB president.

The decisions, said Lim, came on the back of conflicting statements obtained in two separate meetings between Lim and three deputy treasury-generals with 1MDB personnel earlier today.

"The purpose of the meetings was to determine the financial status of 1MDB, especially with regards to its ability to repay and service its debt obligations," said Lim.

The first meeting was with 1MDB directors Norazman Ayob and Datuk Kamal Mohd Ali, and the other was with its president Arul Kanda. Accompanying Arul Kanda was 1MDB former chief financial officer (CFO) Azmi Tahir and general counsel Ivan Chan.

Lim said the two directors of 1MDB claimed that the troubled firm is "insolvent" and that it has been "scammed" out of RM9.8 billion worth of investments.

The investments refer to US$940 million worth of investment "units" previously held with BSI Bank, Singapore, as well as US$1.56 billion worth of overseas investment funds belonging to 1MDB Global Investments Ltd.

"Together, these investments are worth purportedly some RM9.8 billion, which if redeemed, would be more than sufficient to meet 1MDB's financial obligations for the next few years," said Lim.

The director's statement on 1MDB's insolvency, said Lim, was in line with a letter from Azmi dated March 2018, which stated that 1MDB "will not be able to service its interest due in April and May 2018".

Lim said both Norazman and Kamal claimed that they have repeatedly disputed the value and existence of these investments during the monthly board meetings.

"This is because the 1MDB management has repeatedly failed to supply the board with any evidence over the existence of these investments over the past two years. Kamal called these 1MDB investments a 'scam'," he added.

However, Azmi defended that the investments exist even though BSI Bank has wound up, but gave the "unbelievable excuse that the fund managers refused to communicate with 1MDB in writing because of the ongoing investigations by the US Department of Justice (DOJ)", Lim said.

Arul Kanda, meanwhile, claimed to be "in the dark" with regards to the firm's financial standing, saying he is on "garden leave" until the end of his contract in June 2018, Lim added.

"Arul Kanda on the other hand, claimed that all financial matters were handled strictly by the company CFO, and he is absolutely uncertain as to what the value of these 'investments' are, or whether they even exist in the first place," Lim said.

Lim described Arul Kanda's stance and answers as "utterly shocking and preposterous".

"Prior to the change of government, he (Arul Kanda) toured the country preaching the financial viability of 1MDB and the soundness of its investments," said Lim.

"It is completely unbelievable that a highly paid and 'experienced' investment banker can be so irresponsibly clueless as to not know whether RM9.8 billion worth of investments are even real," he added.

Yesterday, it was revealed that 1MDB has interest payout amounting to RM143.75 million due May 30, with another RM810.21 million worth of interest due between September and November this year.

According to Lim, under 1MDB's debt agreement, the government will have to continue to pay on 1MDB's behalf if the fund fails to meet its debt obligations.

 

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