ZETI MUST EXPLAIN: 1MDB obtained loan extension from Bank Negara - pro Dr M editor

The controversial state investment body 1Malaysia Development Berhad (1MDB) had sought an extension period for its non-performing loans (NPL) from Bank Negara, veteran newsman A Kadir Jasin claimed today in a blog posting, quoting "sources".

Kadir claimed that Bank Negara governor Zeti Aktar Aziz had in a recent meeting allegedly agreed to the request despite being unhappy with 1MDB's large borrowings, as not doing so could seriously impact the banking system.

"If it (the extension) was not given, there would have been a massive default and Tier 1 banks that extended the loans would have to make huge provisions," Kadir wrote.

"This could lead to the downgrading of the local banking system."

Kadir also claimed that some "very harsh words" were traded during the meeting between 1MDB top officials and Bank Negara.

Non-performing loans are loans that are in default or are close to being in default.

1MDB had so far accrued a RM49 billion debt against RM51.4 billion in assets.

'Dr M grilled 1MDB top guns'

In that same meeting, Kadir claimed 1MDB chairperson Lodin Wok Kamaruddin had offered to step down.

"One source said at the meeting with Bank Negara, Lodin had offered to resign immediately. But that is not the concern of Bank Negara," Kadir said.

"Lodin was appointed by the Prime Minister (Najib Abdul Razak). If it is true that he offered to resign, he should tell that to Najib," he added.

He said that 1MDB sought to extend the NPL period from three to six months, and its ability to keep the extended period will depend on whether it “can or will” bring home the RM7 billion it had controversially parked in a Cayman Islands fund.

Kadir also said that in a recent meeting, former premier Dr Mahathir Mohamad (right), who had openly criticised 1MDB, had "grilled" top 1MDB officials.

"Sources said Dr Mahathir grilled the 1MDB team on the company’s modus operandi," he said.

"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 added.

Malaysiakini has contacted 1MDB over the claims and is awaiting their response. - M'kini