ST claims sources reliable, defends 1MDB reporting

By MARK RAO / Pic By TMR

The Straits Times (ST) has defended its recent news piece on 1Malaysia Development Bhd (1MDB) amid criticism by Tony Pua, the Damansara MP and political secretary to Finance Minister Lim Guan Eng.

ST editor Warren Fernandez said the paper stood by its reporter as the news piece was based on documents and information from highly placed and reliable sources.

ST’s regional correspondent Leslie Lopez, who wrote the article, noted  that lawyers representing the Malaysian government are in the dark over the settlement agreement between 1MDB and International Petroleum Investment Co (IPIC) as they are unable to source the documents related to the deal.

The London lawyers appointed by the Malaysian government have been instructed to look into the possibility the notes cited in the IPIC announcement that could be tied to 1MDB, Lopez added.

The Singaporean newspaper article earlier this week stated that 1MDB’s debt owed to IPIC may have doubled to US$6.89 billion (RM28.25 billion) after Abu Dhabi’s state-owned IPIC proposed to transfer some US$6.89 billion in liabilities to its parent company, Mubadala Development Co PJSC, in an exercise announced on Oct 1 this year.

Pua said the ST report was inaccurate as IPIC did not state that the US$6.89 billion in liabilities were owed by 1MDB to IPIC.

Instead, the announcement by IPIC to the London exchange noted an additional US$3.5 billion in liabilities from two 1MDB bonds will be assumed by Mubadala, Pua said.

IPIC said it owes US$6.89 billion in liabilities from six separate notes, which it plans to transfer to Mubadala. A further US$3.5 billion in obligations co-guaranteed by 1MDB will also be transferred to the latter.

It is unclear who the US$6.89 billion in liabilities is owed to.

In 2012, IPIC agreed to guarantee two bonds worth US$1.75 billion each that were issued to 1MDB units — namely 1MDB Energy (Langat) Ltd and 1MDB Energy Ltd.

The bonds were intended for the financing of two power plant purchases and both were guaranteed by 1MDB and IPIC’s subsidiary, Aabar Investment PJS.

Malaysia’s state-owned investment fund 1MDB defaulted on the interest payments for the bonds in 2016, resulting in IPIC seeking court action against the former.

As a result, 1MDB paid US$1.2 billion to IPIC as part of a settlement agreement following court proceedings in London which concluded last year.

The current administration in Putrajaya is faced with billions worth of liabilities related to 1MDB including those owed to IPIC.

On May 31, the Ministry of Finance paid RM143.75 million in interest payments to IPIC, while a further RM810.21 million in interest is reportedly due between September and November this year.