Bailout is only way out for 1MDB, says Pua

A bailout is likely the only option for Putrajaya to help 1MDB meet its debt obligations to Abu Dhabi's International Petroleum Investment Company (IPIC), said Petaling Jaya Utara MP Tony Pua.

Pua, the opposition's chief critic on 1MDB affairs, said this was because banks around the world would refuse to be involved with the "investment fund units" which 1MDB said would help finance the debt.

In April, 1MDB and IPIC managed to avoid an arbitration process by opting instead for a settlement which would oblige 1MDB to pay US$1.2 billion this year, in two equal payments. 

At the time, 1MDB said: "These obligations will be met by 1MDB, primarily via monetization of 1MDB-owned investment fund units".

Although it is unclear what the "investment fund units" are, it is likely referring to the so-called "Brazen Sky units" which can be traced back to 1MDB's botched deal with PetroSaudi International Ltd in 2009.

It is unclear which bank is the custodian of these "units". 

Pua said that the "units" would repel banks nowadays especially since they are the subject of US Department of Justice (DOJ) investigations.

"This is because the DOJ has stated that these 'units' were fraudulent. 

"They were created to cover-up the more than US$1 billion which was misappropriated by 1MDB to Good Star Limited when the intent was to have invested with PetroSaudi.

"In fact, the Singapore courts also confirmed that the financial analyst from NRA Capital in Singapore was bribed to produce the false valuation report on these investment 'units'," said Pua.

In view of such developments, any institution which facilitates the sale of the "units" might be liable to money laundering charges, alleged Pua.

He pointed out that banks in Singaporeand Switzerland had already been shut down or punished for their involvement with 1MDB. 

"The only way for 1MDB to repay IPIC would be a direct payment by the government of Malaysia to IPIC.

"However, if that were to happen, it would be a direct admission by the government that 1MDB is carrying the fraudulent investment and that billions of dollars have been lost and stolen from the company, which requires a further mega-bailout from the country's coffers," he said.

On Tuesday, 1MDB missed the deadline to pay IPIC US$602 million. The company now has five days to remedy the situation or face more obligations. - Mkini