Much more to 1MDB than finance minister's one-sided narrative

I refer to a press statement dated May 27, 2018 by the Finance Minister Lim Guan Eng.

In his attempt to assign blame on Najib Abdul Razak for 1MDB, he has, once again, only shared half the story. 

In March 2015, barely a month or so after certain allegations were made relating to past 1MDB transactions, the cabinet, under the leadership of Najib, requested the auditor-general's department to conduct a special audit on 1MDB and to present its findings to the bi-partisan Public Accounts Committee (PAC).

In July 2015, the police conducted a raid on 1MDB premises and seized substantially all company documents. The PDRM investigations are still ongoing.

The auditor-general highlighted many issues to the PAC, for example, weak governance, poor record keeping, no verification of fund investments, etc.

In April 2016, the PAC highlighted, amongst others, excessive use of debt by 1MDB and potential wrongful actions by previous 1MDB management.

The police were asked to further investigate Shahrol Halmi and the relevant past 1MDB management.

It is clear therefore that the previous government, under Najib, had already commenced investigations on 1MDB, which are still ongoing.

At the same time, despite the issues at 1MDB and the ongoing investigations by the police, there was still a need to service debts and keep key projects such as TRX and the relocation of Sungai Besi airbase, on track.

Whilst the finance minister listed a series of 1MDB-MOF transactions in his statement, he did not explain the basis nor rationale behind the decisions made by the MOF.

For example, the finance minister did not explain, from a legal and accounting perspective, why would 1MDB transfer prime real estate assets to MOF at a nominal sum, whilst the debts remain on 1MDB’s balance sheet?

The only logical answer, of course, is that MOF has agreed to assume those liabilities, which provides stability, and gives certainty for 1MDB to pay its debts.

The TRX project was well advanced, with committed local and international investors, by the time it was transferred to MOF on March 31, 2017.

MOF commenced payment of 1MDB liabilities only in April 2017, that is, after the asset transfer.

The Bandar Malaysia project was also transferred to MOF on March 31, 2017. The deposit sum of RM720 million paid by the former joint venture partner, was in fact substantially utilised for the Sungai Besi airbase relocation project and related expenses, to expedite vacant possession of the land for development.

Accordingly, when MOF, as the new project owner, made a decision in early May 2017, to terminate the joint venture arrangement, it was only correct for it to repay the deposit, as it benefited from the work paid for by the former joint venture partner.

As can be seen from the above, there is much more to the 1MDB story than the one-sided narrative by the finance minister.

Accordingly, I fully agree with the statement issued by Najib. Given the half stories by the finance minister, it is best that the investigations on 1MDB continue per due process, and not be subject to a trial by media. 

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LOKMAN NOOR ADAM is the former director of communication for the finance ministry. -Mkini