Dr Mahathir’s latest commentary on 1MDB (English translation)

Below is the translation I’ve made of Dr Mahathir Mohamad’s commentary on 1MDB featured today in his blog Chedet.

The translation from Dr M’s original write-up in Malay is my voluntary effort in the public interest and is not authorised by Tun.

1. Umno held a closed door briefing which was attended by some of the party division chiefs on March 8. According to press reports, the meeting had concluded with full support expressed for the party President.

2. The topic of 1MDB is one that is being widely discussed by the public. However, the explanations provided by the Umno President (to the division chiefs) concerning the 1MDB controversy have not been publicly revealed. It is not enough to merely dismiss this matter as having been brought up by political opponents and hence to regard talk of it as slander. This is not a valid excuse for people to reject the allegations concerning 1MDB.

3. The rakyat are still dissatisfied in respect of 1MDB. They (continue to) discuss the subject everywhere. If they are not satisfied and do not support Barisan Nasional in the next polls, it follows that BN may lose the general election. And if the BN is rejected, then support for the President by the Umno division leaders is no longer meaningful.

4. The 1MDB debts are extraordinary unlike the more usual Government debt that amounts to only hundreds of million. 1MDB has debts running into the billions. Although 1MDB is not the Government, it is nonetheless a body that was established by the Government with a capital of 1 million ringgit, and is fully owned by the Government. There is also a guarantee by the Government for some of the 1MDB debts. Therefore the Government cannot claim that it is a problem confined to the company and not the Government’s problem.

5. The Government has appointed the Auditor General to inspect the 1MDB accounts. But this will still not answer a lot of questions that have been raised and hotly discussed by the people.

6. Allegations against 1MDB are not reckless charges. They are accompanied by concrete facts, that is, the amount of debt, who facilitated the transactions, who received the billions of ringgit, where the investments were parked, where the money was deposited and in what form.

7. The name ‘Jho Low’ is mentioned time and time again as well as the names of the companies he owns. Allegations are also made in respect of the purchase of luxury homes by him in London, New York and Hollywood. The home(s) was/were then sold to the Prime Minister’s stepson for hundreds of million ringgit. This will surely not be mentioned in the 1MDB accounts to be inspected by the AG.

8. At first, Riza Aziz’s money is said to be the inherited wealth of Tun Razak’s family. This claim is later denied. The thing is, if not from Tun Razak then from where does that much money come from? Is it from business? If so, what business or businesses, where? Has the income tax been paid? To which Government?

9. From where does the investment of hundreds of millions pumped into the film The Wolf of Wall Street by Riza Aziz, Dato Seri Najib’s stepson come? The film did not make profit. It is not possible that this film funded the luxury homes purchased at the cost of hundreds of million ringgit or US dollars.

10. All these details will not be included in the accounts of 1MDB. But people want to know nonetheless because it involves Jho Low. And Jho Low’s name is implicated in the public talk with regard to the management of USD700 million from the 1MDB.

11. It is mentioned the Petro Saudi received an injection of hundreds of millions of dollars from the 1MDB. Is it true that Petro Saudi has concessions for oil and gas in Argentina, in Turkmenistan, etc.? Where’s the proof? Is it also true that a joint venture was made with Petro Saudi before due diligence was conducted? It is said that while 1MDB had invested USD1 billion in the JV with Petro Saudi, the Saudi company nonetheless did not itself invest a single sen. It is unclear what happened to 1MDB’s money through the JV.

12. Why is more than 6 billion ringgit (dollars) kept in the Cayman Islands? The Government has never kept our money in other countries with the exception of bonds. What bond was purchased (by 1MDB)? What is the outcome?

13. It is said that money amounting to USD1 billion has been brought back from the Cayman Islands and kept in a Singapore bank. Bank Negara purportedly poses a hindrance because the process of keeping that much money has to go through complicated procedures. Can Bank Negara clarify why there is trouble in doing this when 1MDB is a Government company under the control of the Finance Ministry? If it is easy to do in Singapore, why is it so very hard in Malaysia?

14. Government dealings can be kept confidential. But the question of paying back debts is public knowledge (open to public scrutiny). People want to know if Ananda Krishnan had loaned RM2 billion to pay for the loan servicing. What is the interest rate charged by Ananda? How is Ananda going to be repaid? 1MDB is said to have made profits. If so, why is it unable to meet the RM2 billion payment?

15. It is also known to the public that 1MDB had recently requested a 3 billion loan from the Government. Did the Cabinet approve this humongous sum? What are the conditions imposed? How will this debt be repaid by 1MDB?

16. Government land in Jalan Tun Razak and Sungai Besi Airport was bought by 1MDB. What was the purchase price? Are these lands the touted 1MDB assets? How were the land prices assessed? The Government is entitled to a commensurate return when its land is sold to anyone. What was the price per square foot? Land nearby was sold at RM7000/-per sq ft. 1MDB also bought land in Penang. At what price? What type of development was proposed? Has the project begun?

17. If these lands have become 1MDB assets, does the high value of these assets derive from the increase in their value (as a result from revaluation to match the high market price) after buying cheap?

18. 1MDB borrowed more than 10 billion ringgit to buy some power stations. The price paid was higher than the market price. The licences of these stations will expire soon. Why not wait until their licences expire before buying? Once the licenses have expired, the stations can be bought at low prices. Buying them at a high price before the expiry of their licenses is a loss-making venture.

19. The money to buy the power stations even had to be borrowed. Reports show that a commission of more than 10% was paid to Goldman Sachs to manage the bond sale.

20. If the commission is 10%, then 1MDB would only be left with 90% of the amount raised. Interest, however, must be paid on 100% of the total debt. This (decision of 1MDB) is most perplexing!

21. Usually a debt guaranteed by the Government bears an interest rate of 3%. The loan managed by Goldman Sachs bears an interest rate of 5.9%.

22. 1MDB’s total debt has reached 42 billion ringgit. Interest on this amount, even if only at 5%, will amount to 2.6 billion ringgit a year. This is an enormous sum.

23. On the other hand, the profit from investing in power stations will not be sufficient to pay the interest. Similarly the investment in land in Kuala Lumpur and Penang will not yield any returns before the lands are developed and the development (projects) sold.

24. Indeed, many questions arise about the purpose of 1MDB and its administration. And its cost is also very high. People are entitled to feel suspicious with the way such an enormous sum of public money is being spent.

25. It is not persuasive nor convincing (for the Government) to simply deflect the allegations as defamation. Those who claim that there are irregularities in the management of 1MDB have dared to make public statements against the Government and certain individuals even when they face exposure to libel suits. They claim to have clear evidence such as e-mail, letters of agreement and other information. Dates and names have been given without any concealment. Are their allegations then lies?!

26. To date the Government has not responded rationally to the various queries. For example, it claims that 1MDB does not have a problem because of the company has assets exceeding debt. Yet 1MDB does not even have the money to pay an interest of 2 billion and is therefore unable to close its accounts on schedule. Instead it is forced to borrow in order to pay interest on its debt.

27. Ever since Arul Kanda Kandasamy took office as CEO, he has made many unreasonable or illogical statements. The money in the Caymans has been brought back, supposedly. But then again, this money cannot be brought into Malaysia. They’ve brought it back but are keeping it in Singapore.

28. A regular audit of the account books will not suffice. What is required is a forensic investigation by the police on the allegations made against several individuals involved with the management of 1MDB’s money.

29. If this is not done and done as soon as possible, declining support for the BN – which had already shown a decrease in the 2008 and 2013 general elections – will be further reduced. There is a big likelihood that BN will lose in 2018 despite the acceptance and endorsement by Umno leaders for the explanations provided on 1MDB. Remember that the vote of Umno people alone is not enough to win an election.

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Note:

Tun’s blog appears to be still under suspension or blocked.

You can however read his (copypasted) 1MDB commentary in Malay @ https://helenang.wordpress.com/2015/03/13/is-chedet-being-blocked-interfered-with-for-his-1mdb-commentary/