KUALA LUMPUR: Previous remarks by Malaysian Finance Minister Lim Guan Eng about a 1Malaysia Development Berhad (1MDB) "bailout" are misleading, the country's former prime minister Najib Razak said on Friday (May 25).
"The new minister of finance has made allegations that under the previous government, MOF (Ministry of Finance), Khazanah and Bank Negara Malaysia had to 'bail out' 1MDB debts, to the tune of 7 billion ringgit," said Najib in a Facebook post.
"Not only is this misleading, it is a politically motivated attempt to obscure the facts."
Lim had previously said that Malaysia has been "bailing out" 1MDB's debt obligations since April 2017.
On Thursday he confirmed reports that funds from deals with the central bank and sovereign wealth fund Khazanah were used by Najib's government to meet some of the state fund's liabilities.
The finance ministry has so far made payments amounting to RM6.98 billion (US$1.7 billion) due to 1MDB’s inability to pay, according to Lim.
However on Friday, Najib said that it was "wrong" of Lim to "only highlight the debts of 1MDB".
All of the fund's "valuable and strategic real estate assets have been transferred to other companies owned by MOF Inc", in accordance with recommendations of the Public Accounts Committee, said Najib.
"Over time, these prime real estate assets can be worth up (to) more than 30 billion ringgit."
However, the fund's debt or liabilities remained in the company, Najib said.
He wrote: "Accordingly, the arrangement, as I can confirm, is for MOF Inc to service 1MDB debts, but in return for taking over the assets.
"Put another way, had those assets remained in 1MDB, it could have developed and sold the assets on its own, and used the proceeds to pay its debt."
In order to fulfil its obligations, the finance ministry can use methods such as the sale of land to Bank Negara Malaysia or the collection of debt repayments from Khazanah, said Najib.
He said there was "nothing wrong" with such transactions, as each had been approved by the "relevant governance frameworks".
"Therefore, the question of MOF or BNM or Khazanah bailing out 1MDB does not arise at all," he said.
Referring to Lim's comments that the new government would act on principles of "competency, accountability and transparency (CAT)", Najib added: "The Minister of Finance must ‘walk the talk’ on CAT. He has to be transparent to tell the full story and not just half a story in order to deceive."
Najib's comments came just hours after he had put up a post, charging that Malaysia's new Prime Minister Mahathir Mohamad had spooked the country's stock market.