Directors confirm 1MDB ‘insolvent’, says finance minister

By AZREEN HANI / Pic By TMR

Finance Minister Lim Guan Eng (picture) has revealed what many people have been saying all this while — the scandal-plagued 1Malaysia Development Bhd (1MDB) is insolvent and can never own up to its debt commitments.

The fund, which has debt commitments of over RM900 million in the next few months, was created to create value to the country. But billions have been misappropriated through a web of intricate money transfers.

Lim in a statement yesterday said 1MDB directors have confirmed that the fund is “insolvent” and unable to repay its debts. One of the fund directors, the minister said, even described 1MDB’s investments as “a scam”.

Lim, who held two meetings with 1MDB management to determine the company’s financial status yesterday, also said that 1MDB former CFO Azmi Tahir had written to the Finance Ministry in March 2018 to state that 1MDB will not able to service its interests due in April and May 2018.

“I then asked the board of directors as to what had happened to the US$940 million (RM3.74 billion) worth of investment ‘units’ previously held in BSI Bank Ltd in Singapore, as well as the US$1.56 billion worth of overseas investment funds belonging to 1MDB Global Investments Ltd.

“Together, these investments are worth purportedly some RM9.8 billion, which if redeemed, would be more than sufficient to meet 1MDB’s financial obligations for the next few years.

“The board of directors, who would be supplying the ministry with 1MDB’s board meeting minutes, claimed they have repeatedly disputed the value and even the existence of these investments during the monthly board meetings.

“This is because the 1MDB management has repeatedly failed to supply the board with any evidence over the existence of these investments over the past two years.”

Lim claimed that board member Datuk Kamal Mohd Ali had called these investments as “a scam”. Azmi also informed that these “investments” existed even though BSI Bank had been wound up.

During the meeting, Lim was told by Azmi that fund managers refused to communicate with 1MDB in writing because of the ongoing investigations by the US Department of Justice.

Lim also questioned 1MDB president Arul Kanda Kandasamy’s over his knowledge of the fund’s financial health.

“Arul Kanda, on the other hand, claimed that all financial matters were handled strictly by the company CFO, and he is absolutely uncertain as to what the value of these ‘investments’ are, or whether they even exist in the first place,” Lim said.

Following the explanation, Lim had instructed the Finance Ministry’s legal advisors to review Arul Kanda’s position as 1MDB president. The minister also instructed the Treasury to take steps to appoint PwC to conduct a special position audit and review on 1MDB.

“We would then be able to determine the cost of the shenanigans to the tax payers. We will submit the PwC report to the 1MDB Special Committee set up by the prime minister once it is completed.”

Also present at both meetings were three deputy treasurer generals — Datuk Siti Zauyah Md Desa, Datuk Ahmad Badri Mohd Zahir and Datuk Asri Hamidon.

The first meeting was held with 1MDB directors Datuk Norazman Ayob and Datuk Kamal Mohd Ali.

The second meeting was held with Arul Kanda, Azmi and the company’s former general counsel, Ivan Chen.