Money used to pay off US$500 million owed by 1MDB to International Petroleum Investment Co (IPIC) PJSC last December came from a land deal involving Bank Negara Malaysia (BNM), The Wall Street Journal (WSJ) has reported.
In a report published today, WSJ reported, “In its final months in office, the government of former Malaysian Prime Minister Najib Razak turned to the nation’s central bank to pay off US$500 million in debt owed by the troubled state investment fund 1Malaysia Development Bhd.”
The Malaysian fund had said in December that it raised the money from an “ongoing rationalization program” that involved selling off holdings like power plants and land.
“Instead, the people familiar with the transaction said, the money came from a land deal involving the central bank — raising new questions about the use of state assets to support a fund the US Justice Department says is mired in fraud.
“Najib, who was voted out of office earlier this month, didn’t respond to a request for comment,” WSJ reported.
On Jan 5, The Edge Financial Daily reported that BNM bought a 22.5ha piece of land in Kuala Lumpur from the government for RM2 billion to be used primarily for the relocation of its Global Islamic Finance University and the International Shari’ah Research Academy for Islamic Finance.
BNM had said the completion of this transaction was the culmination of several months of discussions with the government.
On Feb 5, The Edge Financial Daily quoted BNM Governor Tan Sri Muhammad Ibrahim as saying that the purchase was “an arm’s length deal”.
He was quoted as saying: “It was purchased at market value and it was an arm’s length transaction.
“And, to be clear about it, it was not the government that wanted to sell the land to us. We actually approached the government many months ago to buy the land.”
When he was asked to comment on market speculation that the government had used the cash from its sale of the land to BNM to make the payment to IPIC, Muhammad said: “That is the government’s business [on how it uses the proceeds]. It’s best to ask the government, not us. As far as we are concerned, we wanted to buy the land for our own development.”
Moving to quell the speculation, he went on to add: “We are basically the one who requested the government to sell the land to us …[It was] not the government who wanted to sell the land to us. We had been trying to convince the government for many, many months [to sell us the land], and it so happened that last November or December, the negotiations between us came to fruition, [and] we are quite happy to acquire the land at that price.”
On Dec 27 last year, 1MDB had said that the cash it paid IPIC was from the proceeds of its ongoing rationalisation programme. However, it did not reveal details, such as whether they were assets or investment units that it sold to raise cash for the payment. – http://www.theedgemarkets.com/
Najib’s Malaysia govt used funds from central bank land deal to pay 1MDB dues – sources
KUALA LUMPUR- The government of former Malaysian Prime Minister Najib Razak used funds from a central bank deal to pay for some of the liabilities of beleaguered state fund 1Malaysia Development Berhad (1MDB), two sources with knowledge of the matter told Reuters.
Funds from a land sale made by the government to the central bank for about 2 billion ringgit ($502.51 million) were used to pay for 1MDB’s obligation to Abu Dhabi state fund IPIC, the sources said.
The ministry had made use of government assets to make several payments to bail out 1MDB, one source said.
The sources did not want to be identified as they were not authorized to talk to media.
The payment from the central bank was first reported on Wednesday by the Wall Street Journal.
The central bank and the finance ministry did not immediately respond to requests for comment.
The news comes as Malaysia’s new finance minister said this week that Najib’s government had deceived the public and parliament over the country’s financial situation and 1MDB.
The previous government has been bailing out debt-burdened 1MDB since April 2017, paying a total of 6.98 billion ringgit so far, Lim Guan Eng said, adding that 1MDB directors confirmed the fund was insolvent.
1MDB had agreed to pay $1.2 billion to IPIC as part of a settlement agreement reached in April 2017 after 1MDB defaulted on its bonds.
The total settlement amount was to be paid to IPIC over two instalments – one by the end of July, which 1MDB paid in August – and another by December.
1MDB said on Dec. 27 that it had paid the second tranche and that the entire settlement amount was paid through funds raised by an “on-going rationalisation” programme.
However, the sources said the second instalment to IPIC was paid by the ministry of finance through funds from the land sale agreement with the central bank.
Bank Negara Malaysia said on Jan. 4 that it had agreed to purchase a plot of land from the Malaysian government for about 2 billion ringgit after several months of discussions.
1MDB is the subject of money-laundering investigations in at least six countries, including the United States, Switzerland and Singapore. In civil lawsuits, the U.S. Justice Department has alleged that about $4.5 billion was misappropriated from 1MDB.
The Malaysian fund has denied any wrongdoing and Najib, who founded 1MDB, has denied all allegations of corruption against him.
He was defeated in a general election earlier this month and was succeeded by Mahathir Mohamad, who immediately opened investigations into the state fund and barred Najib from leaving the country. ($1 = 3.9800 ringgit) – https://www.reuters.com
Bank Negara says has handed details of land purchase to MACC
KUALA LUMPUR — Malaysia’s central bank said today that it has handed details of a transaction to purchase land from the government to the anti-graft agency, after reports that funds from the deal may have been used to pay dues of troubled state fund 1MDB.
The government of former Malaysian Prime Minister Datuk Seri Najib Razak used funds from the deal to pay for some of the liabilities of beleaguered state fund 1Malaysia Development Berhad (1MDB), two sources with knowledge of the matter told Reuters.
“The transaction complied with all the governance requirements and relevant laws that govern the Bank,” Bank Negara Malaysia said in a statement, adding that information on the transaction had been passed to the Malaysian Anti-Corruption Commission (MACC). — Reuters
THE EDGE / REUTERS
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