The 1MDB bail-out involves billions of dollars (and a growing number of ringgit each day as the exchange rate falls) yet the company has now shed utter confusion about what if anything has been agreed.
After the sensational story emerged this morning that Abu Dhabi’s IPIC are minded to extract themselves from a shadowy deal conducted by fired former CEO Mohammed al-Husseiny to pay off 1MDB’s debts, the Malaysian development fund issued denials knotted in self-contradictions.
Singapore’s Business Times had quoted an unnamed source linked to IPIC, who had told the newspaper “The deal is as good as off”.
This brought the rapid ‘denial’ from 1MDB’s own CEO Arul Kanda, who has been all over the news in recent weeks telling Malaysia that the bail out deal was a solid, signed solution to the company’s woes.
But, the wording of today’s ‘denial’ can only sound alarm bells for Malaysians worried about 1MDB’s inability to fund its liabilities, now totalling a shocking US$11 billion:
“We note a speculative article carried by The Singapore Business Times this morning which relies on a conversation with an unnamed source to suggest that 1MDB’s binding agreement with IPIC is ‘as good as off’” [stated 1MDB].
“1MDB strongly denies this unproven allegation and in fact confirm that 1MDB remains engaged in discussions with IPIC, to conclude the transaction per the terms as officially announced by IPIC to the London Stock Exchange on June 10 2015,”
The statement continued sanctimoniously:
“1MDB is disappointed that a hitherto respectable and licensed publication such as the Singapore Business Times appears to carry a story based solely on unproven remarks by an unnamed individual. Such speculative reporting, which has no grounding in the facts, is clearly unprofessional and unnecessary.”
Why should 1MDB, which has a track record of lying and mismanagement, expect people to accept their ticking off of this “hitherto respectable publication”, particularly since Kanda’s statement blatantly contradicts itself?
Either 1MDB has a “binding agreement” with IPIC or the two remain “engaged in discussions” — how can it be both?!
A Term Sheet is not an agreement
Examination of the evidence plainly reveals the actual situation.
A “binding term sheet” is not “a binding agreement” as Mr Arul Kanda has so blatantly claimed and as a senior businessman engaged in these negotiations he must know the technical distinction painfully well.
Our research has clarified that what was announced in June was merely the standard precursor to an agreement, which needs to be made public for listed companies.
A term sheet contains the binding details that are agreed in advance of further negotiations over whether or not to actually proceed with a deal under those terms. These terms do not bind either side to actually sign the agreement, which happens at a later stage.
This means that for the last two months and more Mr Arul Kanda has been going round assuring Malaysians that a bail out deal had been achieved for 1MDB, when this was plainly not the case.
In his key TV ‘tell all’ interview on August 12th Kanda informed audiences that his deal with IPIC, which he described in technical sounding jargon had already “guaranteed” 1MDB’s debts:
“In June, 1MDB signed a term sheet agreement with IPIC of Abu Dhabi. IPIC, a company owned by the Abu Dhabi government, is valued at US$60 billion. And the term sheet is for IPIC to take over 1MDB’s debts, which actually have bveen guaranteed by IPIC. The principal and debts come to about US$3.5 billion.
IPIC has also paid US$1 billion, which we have used towards the debt settlement”[transcript]
What Arul Kanda meant by “term sheet agreement” remains part of the general muddle of his many confusing remarks, but what today’s development has now made very clear indeed is that 1MDB is still in fact in the negotiating phase of this deal with IPIC, because Kanda has admitted it:
“…. 1MDB remains engaged in discussions with IPIC, to conclude the transaction per the terms as officially announced by IPIC to the London Stock Exchange on June 10 2015“
This key sentence confirms that the deal is NOT guaranteed, as previously stated and suggested by 1MDB.
It also means that the doubts reported by the hitherto respectable Singapore Times are entirely possible and probable and indeed far more reliable than anything announced by 1MDB.
After all, in the intervening period IPIC has sacked the very CEO who was the architect of this controversial deal, which is hardly a comforting sign.
Last week Sarawak Report detailed why Al-Husseiny’s links to 1MDB can only have provoked extreme concerns in Abu Dhabi and are therefore the most likely reason he was dismissed so suddenly.
For example, it was Al-Husseiny who signed all the controversial deals between Aabar and 1MDB in 2012/2014 which are now the subject of global scrutiny.
He was also the Chairman of the Board of IPIC/Aabar’s Falcon Bank at the time it processed the US$681 million transfer into Najib Razak’s own private bank account.
And it was none other than Al-Husseiny who finally identified himself as the funder of Najib Razak’s step son Riza’s US$100 million Hollywood blockbuster, Wolf of Wall Street.
Al-Husseiny’s former boss and co-player in the various earlier Aabar deals with 1MDB, which cost Malaysia so much money, was of course Khadem al Qubassi, whom IPIC had already sacked in March of this year following reports by Sarawak Report on his irregular social and business activities involving Najib Razak’s business proxy Jho Low.
With both men sacked, who is pushing for this murky deal to be completed at IPIC/Aabar Malaysians are entitled to be asking?
Does Abu Dhabi really wish to become further enmeshed in 1MDB’s growing list of scandals and financial investigations, involving regulators across the globe or might they indeed exercise their options to withdraw from the negotiations on these terms of agreement?
What the world has learnt today therefore is that the 1MDB bail out is not yet a bail out and it may very well fail.
We have also learnt that Arul Kanda’s denial is a non-denial and that once again this senior public official has lied on a crucial matter.
No one will be very surprised at this deception. In March Kanda was also forced to retract his statement that 1MDB had US$1.13 billion stored in cash in BSI bank Singapore, after Sarawak Report exposed a report by the Singapore authorities confirming it was all untrue.
No wonder hundreds of thousands will be taking to the streets to demand transparency in KL this weekend. - medium.com
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