With Najib overseas, DPM Muhyiddin leads Cabinet in discussing PM's beleaguered 1MDB sovereign fund

The controversy-ridden 1Malaysia Development Bhd (1MDB) was discussed at this week's Cabinet meeting chaired by Deputy Prime Minister Tan Sri Muhyiddin Yassin after a minister brought up the issue, sources confirmed today.

The country's second sovereign wealth fund has been under the spotlight for its debts and inability to submit accounts on time, attracting criticisms from opposition lawmakers and even former prime minister Tun Dr Mahathir Mohamad.

Prime Minister Datuk Seri Najib Razak is away on an official visit to South Korea this week and did not attend the Cabinet meeting.

The Malaysian Insider understands that several ministers were concerned that they were in the dark about the 1MDB and could not give a clear explanation about the property-to-power investment company.

1MDB is now in the process of listing its power assets and is also involved in the Bandar Malaysia and Tun Razak Exchange property development in Kuala Lumpur.

1MDB is Malaysia's second sovereign wealth fund after Khazanah Nasional Bhd.

Critics have long questioned the fund's heavy debts, its use of money and its opaque operations.

In just five years of its operations, the fund had accumulated RM38 billion in debts but concerns over its financial health were brushed aside by its chairman Tan Sri Lodin Wok Kamaruddin who had said that its assets stood at RM51.4 billion, about RM2.5 billion more than its liabilities of RM48.9 billion, as of March 31 this year.

Under fire for its investments in the Cayman Islands, a base for hedge fund operations, Putrajaya had announced that 1MDB would bring back all its funds by year end, despite registering a return of 6% to 7% as of end of last year.

Dr Mahathir had continuously criticised 1MDB, pointing out that there was no need for the sovereign fund as it only added to the country's debt.

"1MDB is said to be a sovereign wealth fund, but it is not. It is money that we have borrowed. When we borrow, we have to pay back. This is not wealth.

“In my opinion, even if there is no 1MDB it would be fine,” the statesman was quoted as saying in news reports when he was asked whether the fund should be shut down.

Opposition lawmakers DAP's Petaling Jaya Utara MP Tony Pua and PKR's Pandan MP Rafizi Ramli had also shone the spotlight on the fund's irregularities, including its failure to submit its accounts on time.

Last month, Najib, who is also 1MDB chairman, sent a letter of demand to Pua over the lawmaker’s alleged defamatory remarks against him about 1MDB, which had resulted in “tremendous stress and embarrassment”.

Najib’s lawyer, Datuk Mohd Hafarizam Harun, had demanded that Pua publish a retraction and apology in two national newspapers, or face legal action for his speech recorded in the November 3 video, “Tony Pua: Najib is creating the biggest scandal ever in the history of Malaysia”.

Pua was also told to remove the video from the Internet, stop further defamatory statements, and pay Najib for the damages over his remarks.

This prompted DAP veteran leader and Gelang Patah MP Lim Kit Siang to urge Najib to make a ministerial statement on the scandal-ridden fund to prove that he was not trying to shutter public queries and parliamentary debates on the financial health of the state sovereign fund. – TMI