Pua has 10 Questions for Arul Kanda to ponder

The MP says that he would like to offer the 1MDB Chief the heads up while waiting for the much anticipated face-off.

KUALA LUMPUR: Petaling Jaya Utara MP Tony Pua believes that the biggest winners of his proposed live discussion with 1MDB Chief Arul Kanda Kandasamy will be the people of the country. “They have been frustrated, perplexed and perhaps confused by the shenanigans which appear to have taken place in 1MDB.”

“Arul Kanda, during his press conference on Saturday, informed the people that ‘I will meet YB Tony Pua for a live discussion, or talk show, or debate, without any condition’.”

Pua, who is also DAP National Publicity Secretary and DAP Selangor Chairman, has ten questions which he will pose to Arul Kanda during the “live discussion, talk show or debate”.

All of the questions are financial in nature, he added. “None of the questions are political. No confidential Public Accounts Committee (PAC) information has also been utilized to raise the questions. All information is derived from publicly available sources.”

“Hence this is not a case of scoring political points but one which is meant to expose the truth since Arul Kanda has consistently insisted that 1MDB has ‘nothing to cover up’.”

Explaining the ten questions, Pua said that he would like to offer Arul Kanda the heads up while waiting for the much anticipated face-off, so that he can prepare the necessary answers whether during replies or debate speech. “This way, he cannot feign ignorance or pretend that the documents were unavailable with him to provide the necessary answers.”

He delves into the ten questions:

First, the MP wants to know why Bank Negara withdrew its approval for 1MDB to transfer more than USD1.8 billion overseas? Was it because most of the funds were transferred to an account which is unrelated to the 1MDB joint venture project with Petrosaudi International Limited as revealed in the leaked Board meeting minutes which Arul Kanda has acknowledged to be true? “How much was transferred to this unrelated account? Did this unrelated account belong to Good Star Limited and who owns or controls Good Star Limited?” asked Pua.

Second, is it true that 1MDB had invested the initial USD1 billion cash to acquire 40 per cent of 1MDB-Petrosaudi while Petrosaudi only needed to invest its rights to certain oil reserves in the Caspian Sea and in Argentina for its 60 per cent stake? In addition, asked Pua, were the rights to the Caspian Sea oil reserves terminated by Petrosaudi within two months after the signing of the joint venture agreement, which meant that Petrosaudi secured their 60 per cent stake without investing anything significant?

Third, is it true that 1MDB had proceeded to sign the joint venture agreement with Petrosaudi in a rush, without securing the necessary Board of Directors approval at that point of time as revealed in the same Board minutes?

Fourth, 1MDB Financial Statements dated 31 March 2013 and 2014 stated that USD1.4 billion was held as a deposit by International Petroleum Investment Corporation (IPIC) as a condition for IPIC to guarantee 1MDB’s USD3.5 billion bond issue. However, the IPIC Financial Statements dated December 2013 and 2014 audited by Ernst & Young did not disclose any such condition for the provision of the guarantee. The balance sheet of IPIC also did not reflect any such refundable deposit received or held. “Why hasn’t 1MDB asked IPIC to clarify where the money has gone?” asked Pua.

Fifth, did 1MDB pay USD993 million from the USD1.22 billion it partially redeemed from the Cayman Islands investment fund AND another USD975 million borrowed from a Deutsche Bank-led consortium to terminate options 1MDB granted to Aabar Investments as part of another condition by IPIC to guarantee 1MDB’s USD3.5 billion bond issue? “What exactly is the total sum paid and payable to Aabar or IPIC? “asked Pua. “Why is it that IPIC disclosed in its December 2014 Financial Statements that 1MDB still owes IPIC a sum of USD481 million for the said termination?”

“In addition, if the USD993 million from the USD1.22 billion redeemed from Cayman Islands was not paid to Aabar or IPIC, where did the money go?”

Sixth, said Pua, it has been disclosed in 1MDB’s financial statements, parliamentary replies and media releases that 1MDB Global Investment Limited borrowed USD3 billion in March 2013 for the purposes of investing in a 50:50 joint venture with Aabar Investments Limited where the joint venture will invest in the development of Tun Razak Exchange. “The question: How come more than USD1.5 billion of the borrowings have been utilized for purposes other than specified as disclosed in the March 2014 Audited Accounts, particularly since the joint venture has yet to be activated to date?”

Seventh, Arul Kanda had earlier informed Malaysians and 1MDB Directors, according to the above leaked minutes, that the balance of the Cayman Islands investment amounting to USD1.108 billion was fully redeemed and was held in cash in BSI Bank Singapore, recalled the MP. “However, the 1MDB Chief has since admitted that the redeemed amount was not cash but they were ‘fund units’ worth USD940 million.”

Why are these ‘fund units’ which were redeemed from the Cayman Island fund still in the form of ‘fund units’ and not in cash or, raw assets like property and shares?” asked Pua. “If they were in ‘fund units’, doesn’t it mean that the Caymans fund was never redeemed in the first place?”

Eight, Arul Kanda announced the “debt for asset-swap” deal with IPIC where the latter assumes some RM16 billion of 1MDB’s debts in exchange for 1MDB’s assets, reminded Pua. “IPIC has already advanced more than USD1 billion in the deal. Where is 1MDB going to produce these RM16 billion worth of assets to transfer to IPIC by 30 June 2016?”

The Ministry of Finance (MoF) has also indemnified IPIC in the “debt for asset-swap” arrangement, pointed out Pua. “Does it mean that if 1MDB fails to produce the necessary RM16 billion worth of assets by 30 June 2016, the MoF would have to compensate IPIC accordingly?”

Nine, Arul had declared that the disposal of its subsidiary Edra Energy will allow it to remove RM16 to RM18 billion of 1MDB’s debt, said Pua. “However, the total debts associated with 1MDB’s energy arm amounts to approximately RM36 billion, comprising USD3.5 billion bonds, RM5.7 billion direct loans and more than RM8 billion inherited loans.”

Hence, said the MP, reducing up to RM18 billion of debt via the disposal of Edra Energy will still leave 1MDB with more that RM18 billion of outstanding debt associated with its energy acquisitions. “Therefore how will the sale of Edra solve 1MDB’s cash flow problem since there will be no assets left to pay the balance of the RM18 billion debt?”

Finally, Pua wants to know whether the Federal Government issued a “letter of support” in May 2015 to Bank EXIM to borrow USD150 million (RM600 million) where the funds was utilized by 1MDB to pay for its land acquisition from Tadmax Resources Bhd for approximately RM300 million. “If so, what was the balance of the proceeds from the borrowing used for?”

Kulai and Serdang MPs, Teo Nie Ching and Ong Kian Ming, will represent Pua in discussions with the team from 1MDB to finalise the format and details of the proposed “live discussion, or talk show, or debate” between Arul Kanda and himself, the MP indicated.