Opposition warns of risk of financial collapse for 1MDB and M'sia

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KUALA LUMPUR: Opposition lawmaker Tony Pua has warned that Malaysia's financial system is at risk of a financial collapse due to the massive accumulated debts of the country’s sovereign fund, 1Malaysia Development Bhd (1MDB), that amounts to some RM36 billion.

The DAP MP for Petaling Jaya Utara said the accounts of 1MDB was submmitted in April this year but the accounts of its two other major subsidiaries, 1MDB Energy (Langat) Sdn Bhd and 1MDB Real Estate Sdn Bhd for its financial results ended March 2013 have not been filed yet.

"1MDB Energy, which is a key subsidiary forming part of the twice postponed on-going exercise to list 1MDB's energy assets, has not filed it's financial statements since September 21, 2012, for the March 2012 accounts," he told reporters at the Parliament lobby today, adding that the unit has taken at least RM2.8 billion in secured loans from Affin Investment Bank Bhd.

As for 1MDB Real Estate, he noted that the real estate arm’s last known debt was at RM5.9 billion, with collaterals pledged to AMMB Holdings Bhd (Ambank) and AmInvestment Bank Bhd.

He also said the fund has accumulated debts in excess of RM36 billion on the back of the government’s explicit and implicit guarantees and urged Prime Minister Datuk Seri Najib Razak to walk the talk on prudence in financial management.