NAJIB & 1MDB UNDER SUSPICION: Until probe outcome, 1MDB should be barred from executing MAJOR deals

KUALA LUMPUR - 1Malaysia Development Bhd (1MDB) should not be allowed to undertake major business decisions such as the land sale to Lembaga Tabung Haji while the state-owned investor remains under investigation, Singapore’s Business Times said today.

In an editorial piece on the furore here over 1MDB’s sale of property in the Tun Razak Exchange to the Muslim pilgrims’ fund, the business paper said the controversy was due to the unallayed suspicion that continues to surround the firm.

Noting that both the Auditor General and the Public Accounts Committee’s investigations have yet to yield information into the allegations of abuse involving 1MDB, the BT questioned the ethics in allowing the firm to execute major deals in the meantime.

“The reality is that when it comes to 1MDB and for as long as trust remains broken and the outcome of the probe is not yet known, commercial merits on their own are insufficient grounds to embark on any deals, in whatever shape and form, involving the firm and public funds,” the paper said in a piece titled For 1MDB, it cannot be business as usual.

“If 1MDB had aspired for a business-as-usual backdrop to conduct its strategic review, then it should have stepped up its response to the controversy and put the allegations to rest without having to wait for the outcome of the investigations. But it hasn’t done this,” the paper added.

Aside from the “unsettling” lack of progress in the probes ordered in March, the BT further noted that aside from the change of chief executives — with Arul Kanda replacing Mohd Hazem Abdul Rahman — 1MDB’s board now is the same one that oversaw its reported amassing of RM42 billion in debt since 2009.

None has also been implicated in the allegations of impropriety and misuse of funds in 1MDB, it said, despite the firm’s inability to convincingly dismiss the claims.

It also pointed out the perceived conflict of interest in the LTH deal with Tan Sri Ismee Ismail being both the pilgrim fund’s CEO and 1MDB board director, although it was clarified on Saturday that he abstained from voting on the deal.

Aside from Ismee, the BT added that Tan Sri Irwan Siregar, the secretary-general of the Finance Ministry that owns 1MDB, is both a director with LTH and advises the state-investment firm.

According to the BT, the 1MDB controversy also marked a redrawing of battle lines in Malaysian politics amid demands for Datuk Seri Najib Razak to resign as prime minister, with his deputy, Tan Sri Muhyiddin Yassin, and senior Umno ministers now openly criticising the firm.

Following criticism of the deal exposed by an anonymous blog, LTH on Saturday said it is selling the land it bought from 1MDB for RM188.5 million within the week.

Speaking on the issue in Sabah yesterday, Najib said the sale was a sound commercial decision as it would earn LTH millions of ringgit overnight and denied claims that the land purchase itself was a bailout for 1MDB.

1MDB was incorporated in 2009, after the prime minister announced the decision to turn the Terengganu Investment Authority state fund into a federal agency.

Since then, 1MDB has been dogged by negative publicity over its finances and debt, and most recently cash flow problems that saw it struggle to meet a RM2 billion loan payment. - Malay Mail