Anwar warns Najib's RM15 bil 1MDB could sink Malaysia

Anwar Ibrahim

Wong Choon Mei, Malaysia Chronicle

Amid growing concerns about the country’s wealth being wiped out by corruption, Opposition Leader
Anwar Ibrahim has warned against a whopping RM15 billion bond issued to 1Malaysia Development Fund Bhd, which was personally initiated by Prime Minister Najib Razak and has been linked to Jho Low – a young millionaire friend of his wife Rosmah Mansor.

"Ever since 1MDB, which was formerly known as the Terengganu Investment Authority Berhad, was introduced by Najib, many questions arose on the role of 1MDB, its investments and related developments, particularly its link to PetroSaudi and millionaire Jho Low,” Anwar, a former Finance minister, said in a statement on Monday.

'What is Jho Low's role in 1MDB, specifically in the redevelopment of the Sungai Besi air base? PetroSaudi only became public knowledge after it formed a joint-venture company with 1MDB with a capital of RM8.5 billion."

A close friend of Rosmah's son

Jho arranged Monaco holiday for Najib,Rosmah

Jho Low aka Low Taek Jho has been in the headlines – both internationally and locally – for his extravagant lifestyle and wild parties with Hollywood celebrities such as Paris Hilton. He is a close friend of Rosmah's son from her first marriage,Riz Aziz.

Jho runs three funds and recently announced plans to make a major Hollywood movie in Malaysia within the next 12 months.

“I have three funds – one for entertainment, movies and fashion, another for real estate and hospitality and the third for general investment. I will be introducing foreigners to invest in Malaysia’s property and heavy industries,” the Star reported Jho as saying.

But it is not in this sort of diversionary small investments that have sparked grave concern amongst the investing community, alarmed at the way the Malaysian economy has taken a turn for the worse.

Not only has foreign direct investment shrunk 81 percent in 2009, whistle-blowers have come forward on a shocking series of dubious mega-deals. These include the RM8 billion in losses at national airline MAS that implicates former premiers Mahathir Mohamad and Abdullah Badawi.

Najib himself is not unscathed and has been accused of delaying on a Letter of Intent to a Chinese construction firm CREC for a billion-ringgit double-tracking railway project in favour of another firm CHEC so that he can negotiate fresh terms and perks for himself.

The deal that may bankrupt Malaysia

But according to Anwar, 1MDB may end up the mother of all dubious deals, exceeding even the RM12.5billion Port Klang Free Zone flop.

He pointed out that 1MDB was allocated RM5 billion in 2009 via government bonds, and is expected to be issued another RM10 billion loan through state-backed bonds, for a grand total of RM15 billion in liabilities held by the company by 2013.

"This is four times the value of bonds issued for the PKFZ, which are valued at around RM3.685 billion," Anwar pointed out.

He compared 1MDB with ValueCap, which was armed with RM10 billion in 2002 ostensibly to rev up the stock market but it was so covertly run with little disclosure on where it invested its funds, there is widespread fear the money has been used to bail out crony companies.

Anwar said there was now speculation that the auditor handling 1MDB's accounts has refused to sign its financial reports especially because of a gaping hole in its balance sheet amounting to RM610 million.

"Why is it that 1MDB can gain unappropriated profit of RM121.79 million This becomes a question when it's non-current liability is only at RM4.39 billion and not RM5 billion as announced by 1MDB. What happened to the remaining RM610 million?," he said.

Slew of irregularities

Najib, Rosmah with Prince Albert during their recent holiday

Anwar also questioned why “Other Income” reported by 1MDB was so high, totalling RM439.83 million, when the bulk of its earnings should come from investments.

Also ‘missing’ from 1MDB’s accounts was the RM100 million set aside for Yayasan 1MDB, which was formed in January 2010, to carry out social welfare programmes, Anwar said.

He further questioned why the company wanted to apply for a RM37 million loan when its deposits in banks and other financial institutions are valued at RM782.12 million. If 1MDB’s charter barred it from using its deposits to make payments, then how will it pay a separate sum of RM99.43 million already owed to other institutions, he asked.