Pua: What will new 1MDB Board do about latest SR leak?

It's part of the directors’ roles and responsibilities to investigate cases of fraud and report them.

KUALA LUMPUR: The question now is whether 1MDB’s new Board of Directors appointed on 31 May 2016, led by Treasury Secretary-General Mohd Irwan Serigar, will do a proper job, said Petaling Jaya Utara MP Tony Pua in a statement.

Together with the other two new Board Members, Kamal Mohd Ali and Norazman Ayub, he asked, was Irwan going to demand answers to new explosive allegations and act on them. “This includes but was not limited to filing police reports.”

It’s part of the directors’ roles and responsibilities to investigate cases of fraud and report them accordingly to ensure the interest of the taxpayers were fully protected, added Pua who is also DAP National Publicity Secretary.

It cannot also be ruled out that just as it was the case with its predecessor, warned the MP, the new Board may similarly turn a blind eye on indisputably, the single largest case of financial fraud in Malaysia’s history.

For starters, he pointed out, the Sarawak Report (SR) has exposed an outrageous round-tripping fraud involving USD1.22 billion.

SR first exposed the banking documents on 11 July. It showed that 1MDB Global Investment Limited (1MDB GIL) transferred USD1.28 billion, between September and November 2014, to the fraudulent Aabar Invesment PJS Limited which was incorporated in the British Virgin Islands (Aabar BVI).

SR leaked more explosive sections from the Auditor-General’s (A-G) Report relating to transactions between Brazen Sky Limited, another 1MDB subsidiary which held 1MDB’s controversial investments with a little-known Cayman Islands investment fund, and 1MDB GIL.

SR concluded, based on the additional information from the classified report, that 1MDB clearly concocted a round-tripping exercise to give the impression that it had successfully redeemed cash from the Cayman Islands investment. “The fraudulent transactions were apparently so convincing that 1MDB’s auditors, Deloitte Malaysia, happily signed off the company’s audited accounts,” lamented Pua.

Assuming the leaked copy of the A-G’s Report was genuine, this remains a massive allegation because for the first time hard evidence was shown to incriminate 1MDB officials as parties colluding with the owners of the fake Aabar (BVI) who were Mohamed Al Husseiny and Khadem al Qubaisi.

Those incriminated include Shahrol Halmi, the former 1MDB CEO who was instrumental in 1MDB’s investment in the Cayman Islands fund; Mohd Hazem Abdul Rahman, who was the CEO when the round-tripping transactions took place and Arul Kanda Kandasamy, the current 1MDB President who is covering up the shenanigans.

The expose by SR would hugely complicate 1MDB’s case in the arbitration proceedings brought by International Petroleum Investment Corporation (IPIC) against 1MDB involving USD6.5 billion, continued Pua.

IPIC is the parent company of Abu Dhabi’s Aabar Investment PJS, both of whom have officially denied that Aabar (BVI) was ever related to the group.

1MDB’s knowing participation with Aabar (BVI), to defraud both IPIC and the Malaysian Government, argued the MP, would certainly compromise its claims that it was an innocent victim to IPIC’s then employees, Al Husseiny and Al Qubaisi.

What was more immediately important however, was what the new 1MDB Board of Directors going to do about new information, now that it has been made public, stressed Pua.

He reminded that the previous Board of Directors led by Chairman Lodin Wok Kamaruddin was forced to resign in shame after the Public Accounts Committee (PAC) condemned them in its report on 1MDB to the Parliament. “The Directors failed miserably to carry out their fiduciary duties and responsibilities with any degree of diligence.”

The recent expose by SR also showed that the previous board blindly signed a retrospective approval of the USD1.2 billion payments by 1MDB GIL to Aabar (BVI) more than a year after these fraudulent transactions took place.