'SOMEBODY IS GOING TO JAIL': 1MDB about to implode?

THE 1Malaysia Development Berhad’s saga took a sensational and potentially dangerous twist today when an Umno deputy divisional leader from Penang lodged a police report against it.

The Batu Kawan Umno deputy divisonal chief (Datuk Seri) Khairuddin Abu Hassan made the complaint at the Dang Wangi police station in Kuala Lumpur. Read at Apanama.

Khairuddin speaking to the Press after making the report.

Sources say a similar complaint with the Malaysian Anti-Corruption Commission may follow.

1MDB, in a statement, welcomes the police report. It says: “We are aware that a police report concerning 1MDB was filed earlier today by a politician in Penang. We have not seen any documentation related to this, so are unaware of the nature of the complaint.

"However, we are confident that it will have no legal basis. We welcome any investigation into our affairs and the opportunity to rebut malicious allegations.”

The Implications

A veteran lawyer who represented Umno and the government in many legal and constitutional cases said such a complaint is likely to be investigated under the purview of criminal breach of trust (CBT).

I am not sure how the “bangang” bloggers would react to the report. “Bangang” (stupid) was the term used by Umno President and Prime Minister, Mohd Najib Abdul Razak, to describe Umno-sponsored bloggers who attacked Umno leaders instead of the opposition.

The police report is the culmination of weeks of controversies surrounding the so-called sovereign fund.

On Dec 4, the company’s top-level delegation led by its Chairman, (Tan Sri) Lodin Wok Kamaruddin was said to have been grilled by (Tun) Dr Mahathir Mohamad. Others in the delegation were board member (Tan Sri) Ismee Ismail and Chief Operating Officer, Mohd Hazem Abdul Rahman. Ismee is also Executive Director and CEO of Tabung Haji.

Just over a week later, on Dec 10, the cabinet in its weekly meeting chaired by Deputy Prime Minister, (Tan Sri) Muhyiddin Mohd Yassin, also discuss the 1MDB issue. Mohd Najib was away on official visit to South Korea..

Sources said Dr Mahathir grilled the 1MDB team on the company’s modus operandi. He is said to be curious about the way the company funds its businesses, bearing in mind that it has a paid-up capital of only US$1 million (about RM3.4 million).

As of March this year, it has amassed assets worth RM51.4 billion and in the process piled up liabilities – mostly borrowings – totalling RM49.1 billion.

It registered a loss of RM665.3 million for the same period mainly due to staggering finance costs of RM2.4 billion compared with RM1.6 billion the previous financial year.

The Overpriced Penang Purchases

They were also asked about the price of two pieces of land in Penang for which the company was said to have paid way over the market price. Six days before last year’s General Elections, 1MDB bought the land for about RM1.4 billion from two Chinese tycoons.

Reports say, the land they purchased for RM400 million from Farlim Berhad are currently occupied by squatters and may be costly to resettle.

Penang Chief Minister, Lim Guan Eng, was quoted as saying that 1MDB paid way above market rate. He asked: “Why was the purchase price at RM1.38 billion – 95pc higher than what some of the land was valued at, just two years earlier in December 2011?”

The company is also said to have purchased a third and final piece of land on September 23.

The source said Dr Mahathir feels obliged to take up the matter with 1MDB and to speak openly on the subject because many parties had come to see him to inform him about the goings-on in the company.

He was disappointed that issues surrounding 1MDB was not seriously discussed by delegates at last month’s Umno General Assembly.

How could they when Umno President and Prime Minister is the man behind 1MDB and resolutions on the economy were drafted for the debaters?

Prime Minister’s right hand man, (Tan Sri) Jamaluddin Jarjis inspired the speeches. The debaters were literally ordered to read the texts he and his team - including key officers from Khazanah Nasional Berhad – wrote.

A Meeting With The Governor: Banking sector will be hit if 1MDB defaults

Other sources told me that the 1MDB team also had a meeting with the Bank Negara Governor, (Tan Sri) Zeti Aktar Aziz) about the company’s borrowings.

But when my reporter asked an officer in the bank’s strategic communication department, she said they do not have a clue about the meeting, insisting that they do not know anything.

The sources said 1MBD had requested Bank Negara to extend it non-performing loan (NPL) period from three to six months and was agreed to.

It is understandable. No matter how unhappy Zeti might have been with 1MDB borrowing, an extension is needed. If it was not given, there would have been a massive default and Tier 1 banks that extended the loans would have to make huge provisions. This could lead to the downgrading of the local banking system.

1MDB’s ability to keep to the extended period, according to one source, depends largely on whether it will or can bring home the RM7 billion it parked in the Cayman Islands before the last GE.

The New Straits Times today reported that 1MDB has postponed the sale of up to RM8.4 billion sukuk (Islamic) bonds to next year. It said the delay came as the company is seeking an extension of two months on the construction of the US$3.2 billion (RM11.2 billion) power plant it won with partner, Mitsui & Co. earlier in the year.

Sources said some very harsh words and frightening warnings like “somebody is going to jail” were uttered at the meetings. One source said at the meeting with Bank Negara, Lodin had offered to resign immediately. But that is not the concern of Bank Negara. Lodin was appointed by the PM. If it is true that he offered to resign, he should tell that to Mohd Najib. - http://kadirjasin.blogspot.com/