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Tuesday, October 6, 2015

Pua: Attempts to cover up missing funds now exposed

The March 2015 Financial Statement of 1MDB would have shown the USD2.318 billion purportedly parked in Cayman Islands in 2012 was fraudulent.
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KUALA LUMPUR: The question that arises now regarding 1MDB, stressed Petaling Jaya Utara MP Tony Pua in a statement, is why Deloitte Malaysia was never allowed to commence its audit on the company for the financial year ending March 2015. As a result, 1MDB failed to lodge its financial statements with the Companies Commission of Malaysia (CCM) by 30 September 2015 as required by law.
According to media reports, he noted, 1MDB has been given a very generous six months’ extension to perform the necessary submissions. “The extension was obviously to allow 1MDB to buy time to figure out how to cover up, via the disposal of whatever assets left in the company, the billions of ringgit fraudulently missing in 1MDB,” charged Pua who is also DAP National Publicity Secretary.
However, given the scale of the scandal and the size of the sums defrauded from 1MDB, the company will in all likelihood also miss the new deadline of 31 March 2016, he warned. “In fact, I will not be surprised at all if 1MDB plans never to lodge another financial statement again with CCM.”
“The March 2015 Financial Statement of 1MDB would have shown that the entire USD2.318 billion of investment parked in Cayman Islands in 2012 was fraudulent and was never ‘redeemed.’.”
The recent exposés by The Wall Street Journal, particularly on the USD993 million of payments to Abu Dhabi’s International Petroleum Investment Corporation (IPIC) have allowed a few more pieces of the jigsaw puzzle in the 1MDB mystery to be put in place, continued Pua.
He reminded that he wrote two weeks ago that 1MDB executed a fraudulent round-tripping exercise to cover up part of the USD2.138 billion which was invested in a fund located in the Cayman Islands.
The March 2014 financial statements audited by Deloitte Malaysia stated that USD1.22 billion was redeemed from this controversial investment in November 2014, and the proceeds had been “substantially utilized” to buy back the options granted to IPIC or its subsidiary, Aabar Investment PJS, he recalled. “The USD993 million was presumably derived from this sum received by 1MDB.”
However, he alleged, the auditors were never informed of another loan amounting to USD975 million which 1MDB obtained from a consortium of banks led by Deutsche Bank in October 2014. “This loan was used for the very same purpose to buy back the options from IPIC.”
Hence, he estimates, unless 1MDB actually paid a ridiculous USD2 billion to IPIC to terminate the option, the payment to terminate the options came from Deutsche Bank and not from the partial redemption of the Cayman Islands fund. “The USD1.22 billion stated in the 2014 audited accounts was never redeemed, as the cash proceeds were never received or repatriated by 1MDB.”
Subsequently on 13 January 2015, 1MDB President Arul Kanda also happily announced that the balance of the funds in Cayman Islands amounting to USD1.103 billion was also successfully redeemed, he lamented. “Arul even told The Singapore Business Times on 7 February 2015 that ‘the cash is in our accounts and in US dollars. I can assure you… I have seen the statements’.”
He claimed that this was discovered to be a monstrous lie when further exposés by The Sarawak Report proved that the USD1.103 billion of proceeds purportedly parked in BSI Bank in Singapore was basically paper assets with indeterminate value. “The Prime Minister who is also Finance Minister, Najib Abdul Razak, was then forced to admit, in response to my parliamentary question that the sum purportedly redeemed from Cayman Islands was not cash.”
Until today, said Pua, neither the Finance Minister nor Arul Kanda had been able to explain what these paper assets, which have been described as “units”, really are. “The 1MDB President has also failed to explain how he could confuse these ‘units’ of indeterminate value with cold hard cash amounting to USD1.103 billion deposited with BSI Bank.”
The USD2.318 billion parked in the Cayman Islands fund had originated from its disposal of its controversial investment with Petrosaudi International Limited in 2012, said Pua. “Arul Kanda had even boasted that the sum included a USD488 million profit from the Petrosaudi investment.”
However, he said, if the recent “redemption” of USD1.22 billion and USD1.103 billion are put together, “we can safely conclude that nothing was ever redeemed from so called funds in Cayman Islands”.
These monies, which were sourced entirely from borrowings, substantially guaranteed by the Federal Government, can now be confirmed “missing”, he alleged. “The previous attempts to cover up for the missing funds via cleverly disguised financial manoeuvres are now fully exposed.”

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