Dr M: Govt will honour 1MDB debts

By P PREM KUMAR / Pic By AFIF ABD HALIM

The government will honour the debt obligations of 1Malaysia Development Bhd (1MDB), which were guaranteed by the previous administration.

Prime Minister Tun Dr Mahathir Mohamad said the government is compelled to ensure the government-guaranteed debt of 1MDB be paid accordingly, to avoid repercussions on the country’s fiscal health and economy.

“We have to…if it implicates the government, the government has to pay. If not, it can lead to bankruptcy,” he told a media conference from his base at Perdana Leadership Foundation in Putrajaya.

“I spoke to the auditor-general and we are getting to know more and more about 1MDB now. The offences are more than what you and I know,” he added.

Dr Mahathir said he had met with “what remains of 1MDB key management personnel” to address the debt issue.

In a declassified audit report on 1MDB released on Tuesday, the National Audit Department (NAD) revealed that the previous government had guaranteed RM5.8 billion of 1MDB’s loans and had issued letters of support for borrowings worth RM13.56 billion.

The report stated that 1MDB would need around RM42.26 billion to pay off the principal cost and interest of loans maturing between November 2015 and May 2039. The NAD said 1MDB would also need to provide massive funds to pay off high commitments on several years: RM4.88 billion on 2016, RM14.74 billion on 2023, and RM5.14 billion on 2039.

It said that 1MDB would also need RM1.52 billion each year between November 2015 and May 2024 to pay off its loans.

The department found that as of Oct 31, 2015, the balance of 1MDB Group’s loan or investment principal was RM55 billion, compared to its asset of RM58.6 billion.

Last month, 1MDB CEO Arul Kanda Kandasamy was quoted in media reports that 1MDB has assets of close to US$11 billion (RM43.64 billion) and debts of US$7.75 billion. He said cashflow from the disposal and transfer of its assets would be used to retire the debts and that 1MDB remains confident with its ability to meet all its debt obligations.

Dr Mahathir said Malaysia would also reach out to Switzerland, the US, Singapore and Luxembourg to return any 1MDB funds they may have seized.

“The focus on corruption is important because we need to get back the money which are still in Switzerland, the US, Singapore and maybe Luxembourg. For this, we will contact the governments of the countries to recover the money there.”

The prime minister said at this time, the government cannot ascertain the exact amount of funds, but insisted that in the US alone, the sum could reach over US$4.5 billion.

“We will need the money to help pay some of our existing debts,” he added.