Finance Ministry admits mistake in redeemed 1MDB Cayman funds

The government admits making a mistake in claiming that 1Malaysia Development Bhd (1MDB) had redeemed its investments in the Cayman Islands in cash, which was then transferred to a Singaporean bank, says Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah. – The Malaysian Insider pic, May 21, 2015.The government admitted making a mistake in claiming that 1Malaysia Development Bhd (1MDB) had redeemed its investments in the Cayman Islands in cash, which was then transferred to a Singaporean bank.

Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah told reporters in the Parliament lobby today that only “units” existed in the BSI Bank Limited Singapore account.

“There was a mistake in the sense that, the impression when they (1MDB) said they have redeemed and saved in the Singapore bank, the impression is that there’s cash. Actually, that is savings,” Husni said.

“They are units, backed by sovereign wealth funds. We hope that we can bring it back as soon as possible.”

When asked what form of units existed in the account, he replied: "Units. Just units".

He urged the opposition to wait for the “end of the story” before making any claims about the bank account in Singapore.

In March, Prime Minister Datuk Seri Najib Razak said that the remaining US$1.103 billion (RM4.08 billion) of 1MDB’s investment funds was transferred to its account in BSI Bank to ease the facilitation of transactions.

"The remaining US$1.103 billion (RM4.08 billion) of 1MDB's investment funds managed by the Cayman Monetary Authority has been redeemed in cash and is kept in US currency by the BSI Bank Limited Singapore (BSI Singapore)," the finance minister said in a written reply to a question raised by DAP lawmaker Tony Pua in the Dewan Rakyat on March 10.

But in another reply to the Petaling Jaya Utara MP on Tuesday, Najib said the balance of the investment redeemed by 1MDB were assets in US dollars for the purpose of balancing its liabilities which were also in dollars.

Pua yesterday said that the government’s reply was an “admission that the whole redemption of its investments in Caymans is bullshit”.

"It's paper, not cash. What they did was they shifted the paper assets from Caymans to Singapore," Pua, a strident critic of the state-investment arm, said at the Parliament lobby today.

Pua demanded to know the real value of the paper assets as he believed that it was the reason 1MDB was having problems servicing its debts.

He said this was also the reason why the troubled company had sought loans from tycoon T. Ananda Krishnan's company Tanjong PLC and Putrajaya as it no longer had any money outside of Malaysia.

Tanjong had arranged private investors to come up with RM2 billion as a form of refinancing or rollover to help the debt-laden company, while Putrajaya had approved a RM950 million standby credit facility for 1MDB, of which RM600 million has been used.

Criticism has been mounting over the Finance Ministry wholly owned investment vehicle, established in 2009, which has chalked up debts of up to RM42 billion, backed by Putrajaya.

Scrutiny has grown more intense following news portal Sarawak Report's recent exposes, which piled pressure on Najib and prompted opposition politicians, former and current Umno leaders, including long serving former prime minister Tun Dr Mahathir Mohamad and anti-graft bodies, to demand a thorough investigation into the fund.

The Auditor-General is currently looking through 1MDB's books, with a preliminary report expected to be submitted to the Parliament in June, while the Public Accounts Committee (PAC) started its investigation into the company on Tuesday.

- TMI