Najib must be held 'responsible and accountable' for 1MDB scandal: Lim Guan Eng

Najib must be held 'responsible and accountable' for 1MDB scandal: Lim Guan Eng

SINGAPORE: Former Malaysian prime minister Najib Razak must account for billions in missing funds, the country's finance minister Lim Guan Eng said on Sunday (May 27).

In a media release headed "Najib Razak must be held responsible and accountable for the 1MDB corruption scandal", Lim gave details of the RM6.98 billion worth of payments that his ministry had made on behalf of 1MDB to date, describing it as the single largest bailout by the Malaysian government in history.

Najib in a Facebook post had argued that it was wrong of Lim to say the government had bailed out 1MDB.

In response, Lim said: "Essentially, (Najib) argued that 1MDB had transferred all of its real estate assets including Tun Razak Exchange (TRX) and Bandar Malaysia to the MOF (Ministry of Finance) as recommended by the Public Accounts Committee (PAC). 

"Hence, he claimed these payments should be rightly construed as ‘compensation’ to 1MDB. Najib Razak could not be more wrong in making the presumption."

The finance minister went on to say that firstly, the transfer of these assets back to the finance ministry in April 2017 was not a "sale and purchase transaction".

"The PAC had found that 1MDB had neither the financial means, nor the ability to develop, or even to sell these parcels of land," he said. "Hence, the MoF needed to take over these projects in order to ensure their continued viability."

He said that the parcels of land had originally been sold by the government to 1MDB at "bargain basement prices" between 2010 and 2012.

"Why should the MOF compensate 1MDB to the tune of tens of billions of ringgit as asserted by Dato’ Seri Najib Razak, when 1MDB has hardly carried out any development on the land?" he asked.

TRX City came attached with an RM800 million loan due in 2020, while Bandar Malaysia came attached with an RM2.4 billion sukuk (Islamic bond) to be repaid from 2021 to 2024, said Lim.

These borrowings were not used for "their intended purposes, i.e. they were not used for the development of the above projects", said Lim, referencing a report on 1MDB by the Auditor-General.

"Hence, if anything, MOF should be claiming compensation from 1MDB for also assuming these liabilities, not the other way around."

The finance ministry has already made additional payments to or on behalf of the fund with regard to these projects, said Lim. 

The state fund had also sold two additional parcels of TRX land to government-linked entities, making "ludicrous profits" in the process, added Lim.


However, the RM6.98 billion paid by the finance ministry on behalf of 1MDB was in relation to borrowings "completely unrelated" to the real estate projects previously mentioned, said Lim.

Instead, these payments were made for servicing coupon interest for various bonds - from which the money raised has contributed to what Lim called "financial holes".

For example, US$3.5 billion worth of 10-year bonds were issued in May and October 2012, intended for the acquisition of power plant assets. The assets have since been disposed and their proceeds "completely utilised", said Lim. However, the bonds remain outstanding in 1MDB.

In addition, US$3 billion worth of 10-year bonds were issued in March 2013, intended to fund the development of TRX. However, the funds raised were never utilised to develop TRX, as reported by the Auditor-General, said Lim.

"Given all of the above facts and figures, there could be no other description for the RM6.98 billion worth of payments by MoF on behalf of 1MDB to date, other than to describe it as the single largest bailout in history carried out by the government of Malaysia," said Lim.

He called on Najib to instead explain where the US$3.5 billion raised to acquire power plants and the US$3 billion raised to invest in TRX had gone.

Source: CNA/nc