PKR lawmaker said two motions, "hidden" in the order paper at the Dewan Rakyat today, revealed that Putrajaya intends to "write-off" the RM876 million debt of two of its subsidiaries by turning them into equity shares.
Rafizi Ramli (PKR-Pandan, pic) said it involved the RM400 million loan to Malaysia Debt Ventures Bhd (MDV) and RM475.59 million loan to Prasarana Malaysia Bhd by the Federal government.
He pointed out that while the loans were converted into equity as these companies were unable to pay up, Putrajaya would still have to service the debts it raised through the issuance of bonds to raise the monies to lend these subsidiaries in the first place.
"These companies' debts owed to the Federal government are completely written off while the government has to service the loans they took initially.
"This indicates that MDV and Prasarana can't pay the debts, and if the government is converting the debts to shares in the company, there is the additional risk of owning these businesses, the government will continue to be exposed to future losses and liabilities," he added.
He said that MDV was set up in 2002 to give out loans to IT start-ups and projects, and its inability to pay back the government also indicated that MDV was unable to collect payments from the IT companies it lent money to.
"So these IT companies which had benefited from loans from MDV have defaulted, and are getting away scot free as well," Rafizi said, adding that these were bound to be well-connected companies.
Rafizi said the debt owed by Prasarana was even more worrying as it meant that the company was unable to run the public transportation business profitably.
"I strongly object to Datuk Seri Najib Razak's frequent practice of hiding the cancellation of huge debts by converting them into equity shares," Rafizi said.
He added that the government had done the same thing before with SRC International, a subsidiary of 1MDB two years ago, which was supposed to buy mines in Mongolia.
According to Rafizi, SRC had taken a loan of RM4 billion from Kumpulan Wang Amanah Pencen (KWAP), which ran into problems.
But instead of trying to get the money back from SRC, the government bought over the company, which is now wholly-owned by the Federal government, he added.
He said that it could be expected that in a few years time, the RM4 billion would also be converted into equity.
"But the problem with SRC is there is nothing, there are no mines in Mongolia, it is just paper," he added.
As such, he said that Putrajaya's move in going after study loan defaulters, removing subsidies when it was discreetly trying to convert debts into equity was bound to test the patience of the people.
Datuk Johari Abdul (PKR-Sungai Petani) agreed with Rafizi, saying that the government's role was not to do business but to regulate and facilitate the development of entrepreneurs.
He added that the practice of the government taking over the debts of certain companies also proved the close relationship of the personalities in these companies with Putrajaya.
"Otherwise, the government will not be converting their debts to equity," he said.
He also pointed out that when the government was further indebted and had to honour its debts, taxpayers money would be used to pay up.
"The government should not be in the business of doing business.
"But you see them involved in many things these days, even mining in Mongolia when there are no mines." he added. TMI
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