(June 12): Tun Dr Mahathir Mohamad today asked why troubled 1Malaysia Development Bhd (1MDB) was "so stupid" as to ink lopsided deals which contributed to its current financial woes.

In detailing the deals, which included controversial power plant purchases from several conglomerates, the former prime minister said the state investment arm paid above market price for those assets.

1MDB had paid RM18 billion to buy independent power producers (IPPs), of which RM8.5 billion was for Powertek, RM2.3 billion for the Kuala Langat power plant, RM1.2 billion for the Jimah power plant as well as RM6 billion in inherited debt.

Powertek was previously owned by billionaire tycoon T. Ananda Krishnan's Tanjong Public Limited while Kuala Langat power plant was previously known as Genting Sanyen Power.

"The prices paid for Genting Sanyen and Ananda’s IPP were well above market price. Genting Sanyen and Powertek were nearing expiration of their licences. Had 1MDB waited until the licences expired, the price would be next to nothing.

"Why did 1MDB not wait until the expiry of the licence is a mystery. Genting and Ananda clearly made more money than they were entitled to. One estimate is that the high price netted the sellers an extra RM3 billion. Besides they are relieved of the loan of RM6 billion.

"So not only is the borrowing costly but the high cost of investments will mean low returns. Why is 1MDB so stupid," Dr Mahathir said in his latest blog posting.

He said this was one of the reasons why 1MDB was unable to list its power assets, adding that no one will want to own "overpriced and obviously unprofitable power plants".

Turning his attention to the company's land in Tun Razak Exchange (TRX), Dr Mahathir said it was initially meant for an agency to uplift the livelihood of Bumiputeras.

However, Putrajaya sold the 0.4-hectare site to 1MDB for RM320 million, or RM60 psf.

In contrast, he said, nearby land transactions were at RM7,000 psf, and that 1MDB should have paid at least RM3,000 to RM4,000 psf.

"Government lost a huge amount of money from the sales. The question is why did the government sell at such a low price.

"One cannot help thinking it is because the PM ordered the sale. If so, it is wrong and it constitutes abuse of authority. The full value should be paid to the government now."

Malaysia's longest serving prime minister then trained his guns on the latest fiasco involving pilgrims fund Lembaga Tabung Haji's purchase of part of the TRX land last month, saying that payment was made even before the transfer of ownership was completed.

"Apparently 1MDB needed the money immediately," he said in his trademark acerbic style.

"The directors of 1MDB and Tabung Haji are the same people. They claim that they abstained from voting. But obviously it was not an arms-length deal."

The elder statesman said if Putrajaya can sell the land to 1MDB at RM60 psf, then the same price should also be offered to Tabung Haji.

Instead, he said they had used the money for pilgrims to give an enormous profit to 1MDB.

The same scenario was also true with another of 1MDB's real estate, Bandar Malaysia, located at the former Sungai Besi airport, which Dr Mahathir said was also acquired at a "ridiculously" low price of RM90 psf, when the value of the land was at least RM2,000 psf.

But, he added, 1MDB had bought its Penang land at a much higher price, saying that it was not located in the centre of the city, has more than 1,000 squatters and had not obtained the Penang government's approval for development.

"Seems like 1MDB had overpaid the seller for useless land. Why?" he asked.

The strident critic of 1MDB also said 1MDB claimed to have assets worth RM52 billion but to date, no explanation was given as to how the assets are valued.

"How much is the value of all the power plants. And how much are the prices of land worth?

"Future values after development may be big but billions of ringgit must be invested before the property can be sold. After deducting cost, the return cannot be very big. The power plants and the land cannot be worth RM52 billion.

"Even if this money is used to repay debts, the disappearance of billions of ringgit must be recovered, or 1MDB should be charged for the loss." – The Malaysian Insider