Pua: Disclose recipients of fees for 1MDB paper

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KUALA LUMPUR: DAP national publicity secretary Tony Pua wants Prime Minister Datuk Seri Najib Razak to disclose the list of recipients who were paid a combined RM1.536 billion in “certain commission, fees and expenses” for bonds raised in 2012 and 2013 by 1Malaysia Development Bhd (1MDB).

Pua was referring to the cover story of The Edge weekly (Oct 27-Nov 22) titled “1MDB’s habit of overpaying to raise money”, which said the sovereign fund, chaired by Najib, had paid out hundreds of millions of ringgit in commissions when raising US$4.75 billion in bonds in 2012 and 2013.

In May 2012 and March 2013, 1MDB raised two 10-year loans of US$1.75 billion and US$3 billion respectively, Pua told reporters at the Parliament yesterday, quoting the figures from the news report.

“Why is 1MDB overpaying in commission and why should the commission be so large? Who were paid these commissions?” he asked.

“What was shocking was the fact that US$196 million (RM630 million) and US$283 million (RM906 million) were deducted for certain commission, fees and expenses. These amounts work out to a staggering 11.2% and 9.4% of the funds raised,” he said.

Pua, the Petaling Jaya Utara MP, ticked off the government and Najib for overpaying financiers and said they should have sourced other avenues or even banks offering standard fees payable to investment bankers that are much lower, between 0.1% and 2%.

He also reasoned that any small and medium-sized company out in the market would only charge a commission for services rendered of between 2% and 3%.

“I have done fundraising exercises before and ran public listed companies and raised loans and equities but the fees have never exceeded 2% and 3%.

“How is it that 1MDB, a wholly-owned government subsidiary chaired by none other than Prime Minister Najib himself, has to incur [such] scandalous costs to raise funds? What was interesting was the fact that Goldman Sachs was the sole arranger for both the fundraising exercises,” he said.

1MDB told The Edge in the report that it had worked directly with Goldman Sachs for the above-mentioned bond transactions, as well as its lawyers, and that it had not involved any third party nor provided any economic benefit to any third party other than Goldman Sachs and its lawyers. Goldman Sachs, when contacted by the weekly, had declined to comment.

Pua questioned if 1MDB was really “so idiotic” as to pay such high fees or if Goldman Sachs “was so unethical that it was charging 1MDB more than 10 times its average market rates”.

Reiterating that 1MDB had accumulated massive debts in excess of RM36 billion over a short span of time from 2009 to 2013, Pua said Najib, who is also the finance minister, must come clean and be accountable for these commissions and not hide behind a veil of secrecy and evasive language.

Pua also challenged Najib to prove critics like himself wrong by disclosing, with a detailed breakdown, the specific receipients of the combined RM1.536 billion, adding that Malaysians deserve to know the truth as the government is using hundreds of millions of ringgit in taxpayer money to pay these commissions.

 

This article first appeared in The Edge Financial Daily, on October 28, 2014.