The Malaysian Insider – 8 hours agoRELATED CONTENT
- Pensions at risk because of loan to 1MDB subsidiary, warns Rafizi
Civil servants should heed the controversies surrounding sovereign wealth fund 1Malaysia Development Berhad (1MDB) as one of its subsidiaries has not been able to service a RM4 billion loan taken from Kumpulan Wang Amanah Pencen (KWAP) which pays government pensions, opposition lawmaker Rafizi Ramli said.
"In case civil servants are dismissing the 1MDB controversy, they should know that their pensions are paid by KWAP," Rafizi said.
"In 2011, KWAP approved a RM4 billion loan to a subsidiary company belonging to 1MDB. The money was ostensibly to create a strategic resource company.
"The purpose of this company was to buy coal and uranium mines in Mongolia. This was so that Malaysia could control the coal and uranium markets," Rafizi said at a forum titled "1MDB: Kemanakah Wang Rakyat?" (1MDB: Where has the people's money gone?) last night.
Rafizi said the subsidiary company of 1MDB which took the RM4 billion loan has since been taken over by Putrajaya, which has assumed responsibility for the loan.
He questioned how the federal government was going to repay the RM4 billion to KWAP, and suggested that Putrajaya would service the debt by cutting fuel subsidies.
"This is why Putrajaya is reducing its expenditure on the people, because it has so many debts to repay," the Pandan MP and PKR secretary-general told an audience of 200 at the Ampang Jaya Municipal Council headquarters in Pandan Indah last night.
The opposition turned the heat on Putrajaya recently for issuing a letter of support to 1MDB, which has racked up debts amounting to RM42 billion.
Rafizi said Malaysia could face a similar situation to Greece and Argentina if 1MDB's massive debts continued to spiral.
As guarantor, Putrajaya would be obliged to pay 1MDB's debts as this was spelt out clearly in the loan agreements.
"If Malaysia were to default on repayment, the creditors have the authority to sue Malaysia in English courts in England," Rafizi said, referring to the terms of the letter of support issued by Putrajaya.
Both Argentina and Greece had required bailouts by the International Monetary Fund (IMF) in 2000 and 2010, respectively, after their economies went into meltdown.
However, both countries paid a heavy price for the IMF bailouts as strict conditions were imposed including austerity measures, structural reforms and privatisation of government assets.
Rafizi described 1MDB as the biggest financial scandal ever in Malaysia, bigger even than the National Feedlot Corporation (NFC) scandal which involved RM250 million of public funds.
Also present at the forum was Petaling Jaya Utara MP Tony Pua of DAP and Sepang MP Mohamed Hanipa Maidin of PAS.
Rafizi said that Barisan Nasional and 1MDB representatives had been invited to attend the forum but none had turned up.
The three lawmakers used the forum to list 1MDB's missteps, including the initial denial by Putrajaya of the government's guarantee for bonds worth US$3.5 billion (almost RM12 billion).
They questioned the 10% commission paid to Goldman Sachs, which is 100 times higher than industry practice, and the interest rate of 13.2% which was absurd.
Pua pointed out that 1MDB had loaned more than US$1.2 billion to PetroSaudi International Ltd and when the latter could not repay the loan, 1MDB gave them more money to repay the earlier loan.
He also highlighted the over-priced cash purchase of Tanjung and Genting Sanyen IPPs (independent power producers).
Another issue was the non-negotiated awards to 1MDB to build two power plants in Malaysia, which were not even required yet to meet energy demands.
1MDB had also obtained prime land from the government at the Sungai Besi airport and at Jalan Tun Razak at below market price, which have now shot up in market value.
The opposition lawmakers also noted with suspicion the resignations of 1MDB's international auditors, Ernst & Young and KPMG, without submitting the accounts in the first two years.
Rafizi said even after all these, 1MDB's funds worth RM7 billion in offshore tax haven, the Cayman Islands, had not yet been taken into consideration.
"As that type of haven is suitable for the Mafia, why is our government putting public funds there as well? What do they have to hide?" he asked.
Rafizi said if this was allowed to continue and 1MDB's debts continued to spiral, Malaysia would be bankrupt by the time Pakatan Rakyat took over Putrajaya.
Pua pointed out that there was a vast difference between Khazanah Nasional Berhad and 1MDB, in the way they operated and invested.
"Khazanah only invests in matured national companies with national strategic importance. But until today, nobody can explain exactly what 1MDB does."
1MDB has drawn a lot of criticism for its heavy debts, its use of money and its opaque operations.
Among its staunchest critics is former prime minister Tun Dr Mahathir Mohamad who had called on Putrajaya to explain how the fund had benefited Malaysians.
"1MDB is said to be a sovereign wealth fund, but it is not. It is money that we have borrowed. When we borrow, we have to pay back. This is not wealth," Dr Mahathir had said.
Pua, meanwhile, has been given a letter of demand by Prime Minister Datuk Seri Najib Razak, who has accused the DAP MP of making defamatory remarks against him.
Pua has been told to publish a retraction and apology or face legal action for his speech in a November 3 video titled “Tony Pua: Najib is creating the biggest scandal ever in the history of Malaysia”.
Najib’s lawyers said in the video, Pua had implied that Najib was an incompetent prime minister, had conspired against the nation; was corrupt; had robbed and misused the people’s monies; and abused his power as a political and party leader.
The forum last night also saw Rafizi drawing laughter from the crowd with jokes about 1MDB, including a pun on its acronym which he said stood for "1Malaysia Dalam Bahaya" (1Malaysia in Danger). – November 28, 2014.
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