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Saturday, January 10, 2015

NEW CHIEF, NEW EXCUSES! More time needed to bring back Caymans funds - 1MDB's Arul

NEW CHIEF, NEW EXCUSES! More time needed to bring back Caymans funds - 1MDB's Arul
More time is needed to bring back the remaining US$1 billion (about RM3.3 billion) in 1Malaysia Development Bhd's (1MDB) funds that are in the Cayman Islands due to the portfolio's size and nature of investments, its newly appointed group executive director Arul Kanda said, adding that the strategic development firm has begun operations to repatriate the money.
"I understand that it was originally stated these funds would be redeemed by the end of the year that has just concluded but as a former banker, I can tell you that – with investments of this size and nature – it takes a while to wrap them up.
"However, the process to do so has already commenced, and I can assure you that we will make an announcement about this as soon as it is done," the 38-year-old head of the controversial and debt-ridden fund told The Malaysian Insider in an email interview.
A total of USD$2.33 billion was parked in the Caymans and 1MDB had brought back part of it.
The company has come under fire for its Caymans investments from opposition federal lawmakers and former prime minister Tun Dr Mahathir Mohamad.
DAP's Petaling Jaya Utara MP Tony Pua had questioned the delay in getting the funds back, despite pledges from Putrajaya and the company that all the money would be repatriated by the end of last year.
He had said the delay not only raised questions about 1MDB but also threatened the stability of Malaysia's financial system.
Last November 6, deputy finance minister Datuk Ahmad Maslan had said in Parliament that 1MDB had repatriated part of the funds in the Caymans and would bring back the balance by the end of 2014.
The company's financial statements for the year ending March 2014 which was filed in October 2014 had also stated that the US$1.23 billion would be received in full before the end of November last year.
Last month, however, 1MDB's chairman Tan Sri Lodin Wok Kamaruddin had said that 1MDB only “expects to redeem the remaining amount in the coming months”.
Lodin had added that repatriating the funds back to Malaysia would have exposed the money to fluctuations on the foreign exchange market.
This follows the decline of the ringgit in the past 10 months to RM3.55 against the US dollar.
Dr Mahathir had repeatedly criticised the company, noting that a large part of the money raised from the issue of debt paper by 1MDB had been sent to the Cayman Islands, a move which many, including the opposition, had also questioned.
Lodin had said there was nothing unusual about companies of 1MDB's size investing their funds in the Cayman Islands, pointing out that it is one of the largest registered funds internationally, with the Cayman Monetary Authority recognised as one of the leading fund regulators in the world.
"Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment," he said.
The Edge Financial Daily had reported last year that the depreciating ringgit would hurt 1MDB, which has a sizeable chunk of its total RM42 billion in debts in the US dollar denomination.
This chunk, which amounted to RM22.25 billion according to 1MDB's financial statements for the financial year ended March 31, 2014, has now grown to about RM25.7 billion – an increase of about RM3.96 billion – due to the ringgit's decline by some 6.5% in 2014. – TMI

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