NAME THE CRONIES, NAJIB! Who earned the SHOCKING RM1.52 BIL fees from 1MDB bond sale ?

Who did 1MDB pay hundreds of million of ringgit in commission to when raising US$4.75 billion (RM15.2 billion) of bonds in 2012 and 2013?

The 1Malaysia Development Berhad (1MDB) is infamous for its massive debt in excess of RM36 billion accumulated over a short span of only 4 years. Despite the sheer size of the debt, the company which is a wholly-owned subsidiary of the Ministry of Finance has been perpetually late in the submission of its financial accounts and has changed auditors twice since its inception in 2009.

What is lesser known is the fact 1MDB has also consistently overpaid financiers and unnamed intermediaries to raise these funds.

In the latest issue of The Edge, the weekly highlighted “1MDB’s habit of overpaying to raise money.”

In May 2012 and March 2013, 1MDB raised a 10-year loan of US$1.75 billion (RM5.6 billion) and a US$3 billion (RM9.6 billion) respectively.

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

As demonstrated in the story, the standard fees payable to investment bankers for other entities and governments ranges only between 0.1% and 2%. Tenaga Nasional, for example, raised US$350 million by paying only 2% in fees and expenses. For larger fund-raising exercises such as by Penerbangan Malaysia Bhd, US$1 billion was raised with only 0.5% in fees and expenses. The Mexican and Uruguayan governments on the other hand, issued bonds amounting to US$3.9 billion and US$2.0 billion by deducting only 0.2% and 0.1% for fees and expenses respectively.

How is it that 1MDB, a wholly-owned Government subsidiary, chaired by none other than the Prime Minister, Dato’ Seri Najib Razak himself, have to incur such scandalous cost to raise these funds?

What was interesting was the fact that Goldman Sachs was the sole arranger for both the fund-raising exercises. A quick look at other fund-raising exercises for Equisar International Inc, Apple Inc and the Mexico Government where Goldman Sachs was involved showed that the fees and expenses amounted to 1.3%, 0.3% and 0.2% respectively.

Hence was 1MDB so idiotic then to be paying fees of 11.2% and 9.4%? Or was Goldman Sachs so unethical that it was charging 1MDB more than 10 times its average market rates? I would certainly like to think that 1MDB cannot be so idiotic, and neither could Goldman Sachs be so unethical.

Hence the question then arises, who where paid these “certain commissions” as stated in the fund-raising document?

Malaysians deserves to know the truth of the matter as these hundreds of millions of ringgit in commissions paid were from 1MDB which is wholly-owned by the Government. Dato’ Seri Najib Razak, who is also the Finance Minister must certainly come clean and be accountable for these “certain commissions” and not hide behind a veil of secrecy and evasive language.

In fact, we would like to challenge Dato’ Seri Najib Razak to prove the critics like us wrong, by fully disclosing the detailed breakdown of the specific receipients of the combined RM1.536 billion of “certain commission, fees and expenses” to prove that the above transactions are entirely above board.

Tony Pua is MP for PJ Utara