This article first appeared in The Edge Financial Daily on July 12, 2019

KUALA LUMPUR: Proceeds from the sale of 1Malaysia Development Bhd (1MDB)-linked super yacht, Equanimity, are being kept in a bank account managed by a local law firm.

In response to a question in Dewan Rakyat from Datuk Ahmad Jazlan Yaakub (BN-Machang) on the amount the government received from the yacht’s sale, Finance Minister Lim Guan Eng said it was sold to Genting Malaysia Bhd for US$126 million or RM527.4 million. The sum is now held temporarily in a sheriff stakeholders account.

“The proceeds from the sale [of Equanimity] were received in full on April 23, 2019 and are now being kept in a sheriff stakeholders account managed by a well-known local law firm for three months, for the purposes of settling the maintenance costs of the ship that will be decided by court ruling,” said Guan Eng. After settling the maintenance costs, the remainder is expected to be placed in 1MDB’s recovery account by August this year, and will used to repay 1MDB’s debts, he added.

RM8.92b 1MDB debt paid off

Ahmad Jazlan further asked Guan Eng for 1MDB’s total debt at present and the value of assets associated with the fund. In response, Guan Eng said 1MDB’s principal debt was RM40.57 billion, with interest on the debt that amounted to RM10.44 billion, which brought the total amount of debt 1MDB owed to RM51.01 billion.

But the government has paid off RM8.92 billion in principal, leaving RM26.65 billion debt in bonds, and RM5 billion in sukuk.

“We hope to get back what 1MDB lost and compensation from various parties, including Goldman Sachs. If we look at assets, the value, including real estate assets, cannot be estimated [at this juncture] as the legal matters [involving 1MDB] have not been resolved,” said Guan Eng.

He added that the fund’s Tun Razak Exchange (TRX) project had been detoxified — which he previously said was done as part of a review conducted on all government-related projects by the Pakatan Harapan administration — and that earnings will be known when the project matures in seven years.

Datuk Seri Ahmad Maslan (BN-Pontian) then asked if the government is looking to recoup monies given to 5,800 pilgrims by Yayasan 1MDB.

Guan Eng said the focus of the recovery efforts was not the pilgrims, and accused Ahmad Maslan of playing up racial sentiments.

Ahmad Maslan then quoted former 1MDB president and chief executive officer (CEO) Arul Kanda Kandasamy’s claim that the wealth fund had assets amounting to RM43 billion, to which Guan Eng said it is hard to audit 1MDB so it is difficult to ascertain the true value of its assets.