PUTRAJAYA (May 24): The Ministry of Finance (MoF) has confirmed that the former government led by Barisan Nasional had bailed out troubled 1Malaysia Development Bhd (1MDB) through funds raised from Bank Negara Malaysia's (BNM) purchase of a piece of land for  RM2 billion and a RM3 billion Redeemable Cumulative Convertible Preference Shares (RCCPS) issued by Khazanah Nasional Bhd.

In a statement today, Finance Minister Lim Guan Eng said his ministry confirmed reports published by The Wall Street Journal and Reuters on payments made by BNM and Khazanah to the MoF, which were then utilised to service the debt obligations of 1MDB.

"As highlighted via the press release issued by MoF on May 22, MoF has made payments on behalf of 1MDB amounting to RM6.98 billion due to 1MDB’s inability to pay. This amount includes the payment made to lPlC (International Petroleum Investment Co) as part of the RM5.05 billion settlement agreement," he said.

Lim added that the sources for the payments made to lPlC or its subsidiary Aabar Investments PJS on behalf of 1MDB included the second redemption of RCCPS by Khazanah amounting to RM1.2 billion, as well as the sale of land in Kuala Lumpur to BNM for RM2.07 billion.

"On Dec 14, 2017, MoF through its indirectly wholly-owned subsidiary Hartanah Mampan Sdn Bhd (HMSB) entered into a sale and purchase agreement (SPA) with BNM to sell a piece of land strategically located adjacent to Sasana Kijang," he said.

Later at a press conference, Lim said the federal government remains committed and has the capacity to fulfill its financial obligations.

"It is clear that it is a bail-out... based on the payments made by the government (on behalf of 1MDB) and that 1MDB was already insolvent in 2016.

"We still have money to pay, but the point is imagine if these monies were used to benefit the ordinary people of Malaysia, how much we would have benefited, there will be a lot of difference. Instead, it was used to pay off the largest scandal in history," he said.

"There is a back-to-back guarantee by the federal government (for 1MDB debt), we will honour that commitment and pay as scheduled," he said.

Lim also said the government will evaluate whether those involved in bailing out 1MDB will be held accountable.

"Everyone (involved in the bailout) should be held accountable. Of course if they are instructed in writing to take certain actions, I am sure they have some justification, that is something we have to evaluate fully," he said.

Lim also said certain officials involved in these deals of bailing out 1MDB have covered themselves with written authorisation.

"There are all sorts of pressures (on Treasury officials). Otherwise, I do not think they would make these payments. Of course, they have covered themselves in the sense that there was written authorisation (but) we are talking about (deals worth) billions of ringgit.

"We are looking at those Treasury officials who know that without written authorisation, their heads will be on the chopping board, so they have the necessary written authorisation, but I think you are right that they are under all sorts of pressure," he said.