Authorities must investigate 1MDB’s finances, says C4

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KUALA LUMPUR (March 2): Malaysian authorities must investigate the alleged financial scandals of 1Malaysia Development Berhad (1MDB) that has been exposed by whistleblower website Sarawak Report, an anti-graft watchdog said today.

The Centre to Combat Corruption and Cronyism (C4) said the Malaysian Anti-Corruption Commission (MACC), the Auditor-General, and the Public Accounts Committee (PAC) must step in and save Malaysia, given the billions of ringgit in public funds lost from 1MDB, a government-owned strategic investment fund.

"C4 urges for the MACC to immediately begin investigations into the financial scandals of the 1MDB, in particular the allegations of the US$700 million allegedly siphoned away by Jho Low’s company," said C4 executive director Cynthia Gabriel and legal adviser Datuk Ambiga Sreenevasan in a statement.

They were referring to Sarawak Report's claims that the US$700 million (RM2.5 billion)loan 1MDB had repaid to PetroSaudi International (PetroSaudi) in 2009 had actually been channelled to a company allegedly controlled by Low.

C4 also urged the Auditor-General to begin a full audit of the 1MDB without any delay and the PAC to conduct an open inquiry into 1MDB when Parliament convenes next week. The PAC last week told the A-G's office to conduct a probe.

They noted that The Edge Malaysia had reported that audit firms Ernst & Young and KPMG had both withdrawn from auditing 1MDB's accounts, while equity money was turned into a loan, in order for the audit exercise to be completed.

They also urged the Minister of Finance and Prime Minister Datuk Seri Najib Razak to table a detailed report in Parliament on the US$700 million loan and how the 1MDB scandals have affected public coffers, the rejection of a RM3 billion loan by the Malaysian Cabinet, and what steps were being taken to salvage the economy.

"We further urge for Malaysia to sign on to the OECD convention, to allow and assist for greater transparency in how the government engages in business initiatives," said the two.

"Malaysians must not allow the missteps and wrongdoings of 1MDB to happen again."

They said it was clear someone had gained from 1MDB's financial mismanagement, and demanded to know who would bear the responsibility of the enormous loss of funds.

"We want answers. The doors of public confidence are closing in on Najib, as public anger comes to a boil with rising prices of goods, petrol up by 25 sen and the impending GST (goods and services tax).

"C4 urges for the public institutions in the country to step in and save Malaysia from further disasters, as our political leadership is clearly failing its people.

"These institutions must act now, immediately without fear or favour to dig deep,  leaving no stone unturned in dishing out the truth," they said.

Yesterday, PetroSaudi denied reports that funds from 1MDB went to third parties, adding that its subsidiaries had received the entire cash for a joint-venture company, while 1MDB confirmed that it received back its investment in full from the deal besides making a profit.

The privately owned oil exploration and production company in a statement said that upon 1MDB's exit, PetroSaudi had paid the Malaysian strategic investment fund in full and both parties no longer had any financial or legal relations.

"We wish to state categorically that all funds from 1MDB went to PetroSaudi owned entities, any other inference is false," said the company in a statement.

PetroSaudi said that it was seeking legal advice on the appropriate course of action to take against "these malicious and slanderous allegations."

It said that its subsidiary received the full US$700 million. It added that the company paid US$2.3 billion to 1MDB and the Malaysian company exited the investment.

1MDB's audited accounts as at March 31, 2014, shows that the company received the US$2.3 billion and made a profit of US$488 million.

In a separate statement, 1MDB president and group executive director Arul Kanda Kandasamy also said the firm "notes with concern" the claims reported about its business arrangements with PetroSaudi.

"1MDB exited the relationship in 2012, and received back its investment in full, with a profit of US$488 million.

"These facts, and all details related to this transaction, may be verified by reference to our audited accounts, which are publicly available on the Suruhanjaya Syarikat Malaysia website," he said.

Arul Kanda on February 21 also said the same, in response to earlier criticism about 1MDB's joint venture with PetroSaudi.