KUALA LUMPUR (Feb 6): The silence over whether 1Malaysia Development Bhd (1MDB) has repaid its RM2 billion loan, which was due a week ago, only leads to speculation that it has once again failed to meet the deadline despite assurances from the government and the strategic investor, says a DAP lawmaker.
Petaling Jaya Utara MP Tony Pua said the RM2 billion loan was due on January 31 after the deadline was extended twice since November last year.
"So, what happened to 1MDB’s RM2 billion overdue loan?" the DAP national publicity secretary asked in a statement today.
For the past three weeks, Pua said, speculation on how 1MDB would repay the debt had been intense.
He said among others, there was speculation on whether it would ask for another extension or get an emergency loan from local tycoon Tan Sri Ananda Krishnan to temporarily settle the debt.
The Edge Financial Daily had reported last week that Ananda was believed to have firmed up an agreement to loan 1MDB as much as RM2 billion to help the strategic investment fund pay the debt to Malayan Banking Bhd (Maybank) and RHB Bank Bhd that was due on January 31.
It was understood that the loan, however, was merely an interim measure, according to the report.
Pua said the Malaysian financial markets had been jittery over the ability of 1MDB to repay the loan which was part of its total outstanding debts which exceeded RM42 billion.
"This RM2 billion loan itself is part of a rescheduled and restructured debt it couldn’t pay in November 2013.
"The Edge Financial Daily even reported that Bank Negara Malaysia has summoned the key executives of 1MDB over the issue and warned them of dire consequences should they fail to meet the next deadline at the end of January.
"If 1MDB defaults on the RM2 billion loan, then the entire outstanding debt of 1MDB becomes due," he said.
Pua said this was despite 1MDB recently claiming that it had fully "redeemed" its investment in the Cayman Islands, amounting to US$1.1 billion (RM3.9 billion).
"Nobody appears to know where the money is, and for those who do know, they have refused to be publicly accountable for 1MDB’s actions," he said.
Pua warned that under such situations, the Malaysian financial system might collapse under the enormous stress while the federal government’s credit ratings would take a massive hit.
He said the ability of 1MDB to repay the loan had therefore become a public interest issue, which must be addressed either by 1MDB itself or the Finance Ministry in a timely manner.
Pua said Prime Minister Datuk Seri Najib Razak, who is also the Finance Minister, could no longer afford to remain silent on the matter without further eroding the confidence of the financial markets.
"His Deputy Finance Minister Datuk Ahmad Maslan had consistently insisted that 1MDB was in sound financial health and never had any problems settling their debt obligations.
"Such empty assurances, or even outright untruths can no longer hoodwink the concerned Malaysian public," he said, urging Putrajaya to come clean about the debt situation in 1MDB.
He said 1MDB had become a laughing stock in the international financial press such as the Wall Street Journal and Financial Times.
"I reiterate my earlier call for Najib to instruct a special audit of 1MDB by the Auditor-General or a reputable independent auditor to uncover its financial shenanigans," Pua added.