KUALA LUMPUR (Jan 15): 1Malaysia Development Bhd (1MDB) violated its RM2.4 billion sukuk agreement, when it agreed to sell 60% of Bandar Malaysia Sdn Bhd equity, PKR's Rafizi Ramli said today.

1MDB issued the sukuk in 2014 through Bandar Malaysia, and one of the "positive covenants" of the deal was that the company remain a wholly-owned subsidiary of 1MDB Real Estate Sdn Bhd, he said.

But 1MDB on Dec 31 announced that it was selling the 60% equity to the Iskandar Waterfront Holdings Sdn Bhd (IWH)-Chinese Railway Express Corporation Ltd (CREC) consortium, as part of its debt reduction plan.

"The announcement that 60% of 1MDB's equity in Bandar Malaysia was being sold to a private consortium comprising a Chinese government-linked company makes Bandar Malaysia an associated company, and not a company wholly owned by 1MDB.

"Hence, one of the main pillars of 1MDB's rationalisation plan carried out by Datuk Seri Najib Razak actually breaches the sukuk agreement, which is still in force," the PKR secretary-general and vice-president said in a statement.

Rafizi said this also affected Retirement Fund (Incorporated), or KWAP, and pilgrims' fund Lembaga Tabung Haji as they were both trustees of the sukuk.

The Pandan MP said Tabung Haji had subscribed to RM920.8 million of 1MDB's sukuk, and that KWAP had "most likely" subscribed to RM579.2 million – claims he said he had repeatedly made in the past which had not been denied by authorities.

"If Tabung Haji and KWAP did not agree with the breach of the terms, why did they not take legal action against 1MDB?

"If they agreed with the breach of the terms, who authorised the management of Tabung Haji and KWAP to agree to it?

"When will Tabung Haji and KWAP receive the money they lent to Bandar Malaysia through the sukuk, which by now is worth an estimated RM1.5 billion?"

He added that if 1MDB refused to explain in detail how it had utilised the sukuk, the onus was on Barisan Nasional (BN) strategic communication director Datuk Abdul Rahman Dahlan to explain how Tabung Haji and KWAP's money was spent.

The Finance Ministry-owned firm said the sukuk had been used to partly finance the relocation of the air force base at Sungai Besi, pre-fund the fees and expenses of the sukuk programme, fund the requisite financing reserve accounts, and fund the working capital requirements of 1MDB Real Estate, which is now known as TRX City Sdn Bhd.