KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak has revealed that the US$1.103 billion balance claimed by 1Malaysia Development Bhd (1MDB) from its investments in Cayman Islands is being kept in the form of cash in a bank in Singapore.

“The balance of 1MDB’s investment funds managed by Cayman Monetary Authority of US$1.103 billion has been redeemed in the form of cash and is still kept in US dollar denominated currency at BSI Bank Ltd Singapore (BSI Singapore),” Najib who is also the finance minister and chairman of 1MDB’s board of advisers, said in his written reply to a question by Petaling Jaya Utara Member of Parliament Tony Pua that was obtained from Parliament yesterday.

“The decision to use a bank in Singapore was to facilitate withdrawal transactions since approval is needed from Bank Negara Malaysia (BNM) for every transaction conducted above RM50 million,” he said.

BSI Singapore is a wholly-owned subsidiary of BSI AG, Lugano, Switzerland.

Last month, 1MDB president and group executive director Arul Kanda Kandasamy was reported as saying that 1MDB would not repatriate the US$1.103 billion it redeemed from its Cayman Island investments as the money would be used to service the company’s debt interest payments.

Arul also confirmed that 1MDB had redeemed in full its US$2.318 billion investment in a Cayman Islands-registered fund.

1MDB had previously redeemed US$1.215 billion, representing 60% of the funds invested, and has now redeemed an additional US$1.103 billion, representing the remaining balance of the total US$2.318 billion that was originally invested.

At a press conference in the Parliament lobby yesterday, Pua questioned why 1MDB was not able to use cash available in the Singapore bank to service its debt, as well as a Singapore news report that the federal government has injected nearly RM1 billion into the company.

“It means that 1MDB does not have money to pay interest generated by its debts ... don’t [even] talk about its RM42 billion debt, they can’t even pay the interest of the loan and needed the government’s help for this.

“There is something very fishy about the money in BSI Singapore. Is it encumbered, tied down, got cash but cannot take, [because it’s tied] to a particular issue that we don’t know about?” he asked.

The Singapore Business Times reported yesterday that RM970 million was issued to 1MDB after the Cabinet met two weeks ago on a proposed cash injection.

Pua also questioned the legitimacy for the government to keep US$1.103 billion claimed by 1MDB in a bank in Singapore.

There is no reason to keep the money in Singapore, unless 1MDB is trying to evade Bank Negara Malaysia, said Pua.

“It is intentional and they are trying to avoid BNM regulations, that is why they are keeping it offshore.

“I cannot understand why the government’s wholly-owned investment fund that has the finance minister as its adviser would have problems getting approvals from BNM?” he asked.

PKR vice-president Rafizi Ramli, who was also present at the media briefing, claimed yesterday that Umno division leaders were briefed on an injection of RM900 million of fresh cash into debt-ridden 1MDB at a meeting on March 8.

“It was presented during the meeting that 1MDB had cash flow problems and that the government had agreed to inject RM900 million,” he said.

According to the informant, said Rafizi, some RM300 million of the RM900 million have already been channelled to 1MDB, which is wholly-owned by the Finance Ministry.

It was reported that Najib, who is Umno president to the more than 154 divisional chiefs, had attended the meeting held at the party’s headquarters.

Rafizi said he was puzzled that the financial issues faced by 1MDB were brought up by the government during the meeting and also in the Cabinet recently.

He added that any speculation or reports of abuse must be investigated.

Rafizi also asked Najib to reveal the minutes of the Cabinet meeting where the injection of funds into 1MDB was discussed.

On Feb 23, The Edge Financial Daily reported that 1MDB may require a cash injection of as much as RM3 billion from the Finance Ministry to settle its RM2 billion debt to banks, but this was later rejected by the Cabinet.

This article first appeared in The Edge Financial Daily, on March 12, 2015.