Why was RM9.3bil bond issued 3 days before Parliament's dissolution, was Jho Low involved?

VIDEOS INSERTED UPDATE3 PKR head of investment bureau Wong Chen slammed caretaker Prime Minister Najib Razak for the "opaque and suspicious" manner in which government-linked investment fund 1Malaysia Development Bhd (1MDB) had issued a RM9.3billion bond just before the dissolution of Parliament.

The 44-year-old Wong Chen, who is also the PKR candidate for the Kelana Jaya parliamentary seat, pledged to leave no stone unturned investigating the role played by Najib's crony Low Taek Jho, who has been accused of having a hand in 1MDB's bond sales since 2009.

As for the latest bond issuance, Wong Chen said it was raised through private placement on March 29, 2013 or just 3 working days before Parliament's April 3 dissolution.

He warned the bond would dangerously raise the national debt level, making it burdensome for future generations to service.

"We are confident we will wrestle Putrajaya and this will be last questionable financial act by caretaker Prime Minister Najib Razak," Wong Chen told a press conference on Monday.

"This bond issuance piles on further questions on 1MDB's opaque and suspicious modus operandi, which has been lacking transparency since its inception since 2009. On this particular case, one of the questions we will be focusing on is the extent of Low Taek Jho's involvement on the bond issuance of 2009."

No idea what the borrowing would be spent on!

The RM9.3billion or US$3billion bond is the third in the 1MDB series of bond sales, bringing the total issuance to close to RM20bil.

Wong expressed shock that till now, 1MDB had furnished few details on what the latest borrowings would be spent on.

"When asked by the Star (newspaper), the answer they (1 MDB) gave was 'we are looking at options', mostly likely for the Tun Razak Exchange. What is this? They don't seem to know what they want to spend the money on," he said.

"The terms of the RM9.3bil bond remains undisclosed at this juncture. Why was it done through a private placement? We are alarmed by the fact that all 1MDB bond transactions issued so far have been via the private placement route. Why were they not launched publicly, where the pricing of the bonds can be determined (by the market) more efficiently?"

"When we get to Putrajaya, we will publicly disclose the recipients of these private placements. The bonds will be honoured but we will get to the bottom of it and investigate fully without fear or favor."

Was the bond issued just so that someone could cream a huge commission?

Wong suspected the deal could have been rushed through to help "someone" make a lot of money.

He also questioned why the bond arranger Goldman Sachs was "grossly overpaid" US$71million or RM220million in issuance fees. Wong also asked Najib, who is also Finance Minister, and 1MDB to explain why a foreign bank was "brought in" to effect the latest deal and not a local lender that was given the chance to do so.

PKR also intends to scrutinize and bring to book any "corrupt element" involved in 1MDB's bond sales, said Wong, also pointing to past deals hammered through at rates that clearly disadvantaged the agency and set it up to face potential losses.

Indeed, 1MDB's "overpricing" of its bonds have scandalized market practitioners and cast a shadow on the integrity of Malaysia's capital markets.

"Why were the previous bonds issued at such attractive yields," Wong asked.

"The RM5bil 30-year privately-placed bond issued in May 2009 carries an effective coupon rate of 6.71%. The bond is explicitly guaranteed by the Malaysian Government. This is an extremely generous yield. In comparison, Malaysian Government Securities, Cagamas and Khazanah 20-year yields stand at 3.82%, 4.45% and 4.25% respectively. In addition, 30-year yields are unavailable apart from 1MDB's. 1MDB has the longest tenure of any local bond at 30 years. On this particular case, one of the questions we will be focusing on is the extent of Low Taek Jho's involvement on the bond issuance of 2009."

Jho Low-Rosmah tag team?

Low Taek Jho, or better known as Jho Low, is actually a former college mate of Najib's stepson and is close to Najib's wife, Rosmah Mansor.

Jho is also known for hob-nobbing with Arab oil barons and getting them to invest in Najib's 1MDB investment fund, which critics have claimed was specially established to be the PM's own secret slush fund to hold on to political power

In his early thirties, Jho claims to have made his first million before graduating. He achieved notoriety by living the high life with celebrities such as Paris Hilton and Elva Hsiao.

He is also believed to have funded Najib's grand Chinese New Year celebrations organized by the ruling BN coalition where mega-star Psy was invited to Penang island to sing his smash hit Gangnam-style.

"Rosmah's my friend not my godmother," Jho has previously told the press in response to speculation that he had benefited financially from his friendship with the mercurial but extremely influential Rosmah.

Wong Chen, Hannah Yeoh to hold tell-all town-hall series

Wong said he would welcome all questions on the matter from the parties involved or from interested investors. He is due to hold a series of town hall sessions jointly with Subang Jaya assemblywoman Hannah Yeoh on a wide range of political, social and economic issues.

"Please come and engage us in an open Q&A session," said Wong.

April 23 Tuesday 8pm at USJ 4/4 Padang Awam

April 25 Thursday 8pm at SS14/14 Padang Awam

April 28 Sunday 8pm USJ2 Masjid Al-mukminum car park

April 29 Monday 8pm USJ 11/2B Padang Awam

April 30 Tuesday 8pm USJ 14 Padang along Jalan Mulia

Malaysia Chronicle