This article first appeared in The Edge Financial Daily on July 27, 2017

KUALA LUMPUR: Lawmaker Tony Pua has called on the government to disclose what happened to the US$3.51 billion (RM15.02 billion) that 1Malaysia Development Bhd (1MDB) claimed to have been paid to the International Petroleum Investment Company (IPIC) or its subsidiaries.

Pua (DAP-Petaling Jaya Utara) made the call in a statement yesterday in response to the reply he received from Prime Minister Datuk Seri Najib Razak, who is also finance minister, to his oral question in Dewan Rakyat.

Pua had asked why 1MDB assumed IPIC’s liabilities of guarantee for 1MDB’s US$3.5 billion worth of bonds when 1MDB claimed to have already paid IPIC or its subsidiaries the sum of US$3.51 billion.

“In the finance minister’s reply, he stated that 1MDB ‘is responsible for all future interest payments and the repayment of the principal for the two bonds’, while the Minister of Finance Inc has provided IPIC with the relevant ‘undertaking’ and ‘indemnity’.

“This effectively means that the Malaysian government has taken over the guarantee from IPIC,” said Pua.

According to the lawmaker, the reply failed to explain what happened to the US$3.51 billion that had already been paid.

“It is as if the US$3.5 billion paid to the IPIC group previously was but a minor detail or an insignificant ‘lapse in governance’, which didn’t require any justification or concern on the part of the government,” Pua said.

On Tuesday, Najib publicly admitted for the first time that there were lapses in governance at 1MDB, but pointed out that the government has taken steps to address the matter.

“At 1MDB, it is now clear that there were lapses in governance. However, rather than burying our heads in the sand, we ordered investigations into the company at a scale unprecedented in our nation’s history,” Najib had said.

In his statement, Pua pointed out that 1MDB president and chief executive officer Arul Kanda Kandasamy had testified to both the auditor-general and the Public Accounts Committee that the state fund had already paid US$1.367 billion in collateral deposits in 2012, US$993 million in options termination compensation in 2014, and an additional US$1.15 billion in “top-up security deposits”, also in 2014, to the IPIC group.