This article first appeared in The Edge Financial Daily on May 16, 2018

KUALA LUMPUR: The executive summary of the newly declassified Auditor-General’s Report on 1Malaysia Development Bhd (IMDB) shows only a fraction of the billions raised by the group for land development actually went to its mega Tun Razak Exchange (TRX) and Bandar Malaysia projects.

A big chunk of the funding obtained was channelled to 1MDB instead, which jeopardised those projects. 1MDB took three domestic loans amounting to RM1.58 billion and a term loan of US$150 million, besides issuing notes to raise US$3 billion, and a sukuk to raise RM2.4 billion, for the acquisition of real estates.

Of the RM3.98 billion raised via the domestic loans and sukuk, only RM246 million went into the development of TRX and Bandar Malaysia, while RM2.16 billion went into 1MDB. The US$3 billion raised also did not go into the TRX project.

To finance the infrastructure cost of the TRX project, 1MDB’s unit 1MDB Real Estate Sdn Bhd (1MDB RE) had to sell land plots within the project. But RM1.095 billion that 1MDB RE raised from such sales was advanced to 1MDB instead. A revolving credit of RM229.5 million, secured by a special purpose vehicle created to fund the TRX project, was also not used for its intended purpose.

On Bandar Malaysia, land acquisition, development and relocation of the Sungai Besi airbase cost about RM3.095 billion, of which RM1.117 billion was paid by the government, while the balance RM1.6 billion was to be borne by 1MDB. However, 1MDB rerouted M288 million of the government’s payment to settle its debt interest commitment

Meanwhile, the airbase relocation that was scheduled to be completed by end-2016 was delayed as the contractor was owed RM396.42 million in arrears up to September 2015. “This was because half the RM3.75 billion raised from loans and sukuk to fund the airbase relocation and the development of Bandar Malaysia had been advanced to 1MDB,” the report noted.