Najib met Dr Mahathir over 1MDB, say sources

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KUALA LUMPUR: Datuk Seri Najib Razak met Tun Dr Mahathir Mohamad to discuss the former prime minister’s criticism of national strategic investor 1Malaysia Development Bhd (1MDB), said sources.

The prime minister met Dr Mahathir last Saturday but details of the meeting have not been revealed.

“It was cordial. The PM is satisfied with the meeting,” a source told The Malaysian Insider. The meeting comes after the country’s longest-serving prime minister repeatedly raised questions about the heavy debt and use of funds at 1MDB, as well as its operatons, in his blog and at various media conferences.

It also comes amid the ringgit’s slide against the US dollar, which caused a ballooning of part of 1MDB’s debts which are in the greenback. Yesterday, The Edge Financial Daily reported that the depreciating ringgit would hurt 1MDB, which has a sizable chunk of its total RM42 billion in debt denominated in US dollars.

This chunk, which amounted to RM22.25 billion according to 1MDB’s financial statements for the financial year ended March 31, 2014, has now grown to about RM25.7 billion, an increase of about RM3.96 billion, due to the ringgit’s decline by 6.5% in the past nine months.

The former prime minister, in a posting in September, had noted that 1MDB had spent billions of ringgit buying power plants from the Genting Group and tycoon T Ananda Krishnan, and had paid above market prices for them. He also lamented that 1MDB is heavily indebted. It has a debt of around RM38 billion after just five years in operation as the country’s sovereign wealth fund.

“The money for 1MDB is not from the country’s surpluses. It is debt, billions of ringgit of debt that has added to the already high national debt,” Dr Mahathir wrote.

The former prime minister, who in an earlier posting had said he was withdrawing support for Najib, said as the government was already facing a deficit budget problem, it would not be able to help pay 1MDB’s debt.

He also noted that a large part of the money raised from the issue of debt paper by 1MDB has been sent to the Cayman Islands, a move which many had questioned.

Critics have complained about the lack of transparency in how the money is managed out of the Caymans. It is estimated that at least RM18 billion of 1MDB’s money is parked there. 1MDB is Malaysia’s second sovereign wealth fund after Khazanah Nasional Bhd.

Dr Mahathir also questioned why the Umno annual general assembly in November failed to discuss a public interest issue like 1MDB. — The Malaysian Insider


This article first appeared in The Edge Financial Daily, on December 23, 2014.