KUALA LUMPUR: Deputy Finance Minister Datuk Ahmad Maslan yesterday told Parliament that the government did not issue any letter of support to 1Malaysia Development Bhd (1MDB) for its loans.

“I want to stress that the government had only given an explicit guarantee for a 1MDB sukuk for a sum of RM5.8 billion compared to 1MDB’s total debt of RM36.25 billion. There is no such thing as mentioned by the MP (Tony Pua) of a letter of support.

“That is all that has been guaranteed by the government. 1MDB did not get any [other] guarantee from the government for any other loans,” he said.

Ahmad was replying to a volley of questions on 1MDB from Petaling Jaya Utara MP Tony Pua, which had sparked a heated debate between Barisan Nasional (BN) and opposition MPs during his winding up of his ministry’s budget speech in the Dewan Rakyat yesterday.

Pua had questioned if the offer circular issued by Goldman Sachs on behalf of 1MDB, that was given to all bondholders totalling US$3 billion, was fictitious. He further asked why it had been necessary for 1MDB to pay “a ridiculous 10% commission” or RM1.54 billion to investment banker Goldman Sachs. The commission was for two 10-year loans amounting to US$4.75 billion raised in May 2012 and March 2013.

The Edge weekly revealed in its cover story dated Oct 24 to Nov 2 that the government had provided a “letter of support” for 1MDB’s unit 1MDB Global Investments Ltd to borrow US$3 billion in March 2013.

The letter, dated March 14, 2013, stated that “the government of Malaysia hereby confirms and undertakes to provide the necessary financial assistance to the issuer” in the event the issuer is unable to meet its payments. The guarantee is valid through March 19, 2023.

But Ahmad said he had met and discussed with 1MDB’s chief executive officer and chief financial officer specifically on the offer letter — that had been highlighted by Pua — and verified that no such letter existed.

BN’s Titiwangsa MP Datuk Johari Abdul Ghani then challenged Pua to lodge a police report on allegations that the government had not declared the actual amount guaranteed to 1MDB.

“We have to be responsible in Parliament. 1MDB also needs to be responsible to the country. But today, we are debating as if the government is cheating us all.

“You bring the facts and we walk to the police station and make a police report. Why worry? Let’s investigate those [claims]. As it is now, we have to accept that this RM5.8 billion is the official announcement,” he told Pua.

At the Parliament lobby later, Pua said Ahmad had opened a can of worms when he said the letter of support did not exist.

“He said there is no such thing; he did not even say it was not a guarantee. Goldman Sachs must now answer the bondholders if they had been provided a fictitious or fake letter of support from the Malaysian government,” he said.

This article first appeared in The Edge Financial Daily, on November 7, 2014.