Tun Dr Mahathir Mohamad slams 1MDB and listed down his reasons for claiming that everything about the troubled investment firm was wrong from the beginning. ― Picture by Choo Choy MayKUALA LUMPUR, April 23 ― Tun Dr Mahathir Mohamad took aim again today at 1 Malaysia Development Berhad (1MDB), his biggest pet peeve of the Najib administration, this time taking pains to list down his reasons for claiming that everything about the troubled investment firm was wrong from the beginning.
“Why has the 1MDB become controversial? What is wrong with 1MDB? From the beginning it was wrong,” he wrote in his latest blog entry.
For a start, Dr Mahathir pointed out that the now debt-laden firm had not been put before Parliament at its inception.
Next, he said the bonds raised by US-based investment bank Goldman Sachs had cost more than usual for government borrowings with an interest rate of 5.9 per cent.
“Government loans usually attract about 3 per cent or below,” he pointed out.
Furthermore, Dr Mahathir noted that 10 per cent in commissions were paid to Goldman Sachs for raising the bonds, which meant that 1MDB only got 90 per cent of the money borrowed.
As 1MDB still had to furnish interest payments on 100 per cent, Dr Mahathir estimated that the interest rate would have gone up to 6.6 per cent.
An average annual interest of 6 per cent for borrowings amounting to RM42 billion comes up to a sizeable RM2.5 billion, he continued.
“Since 2009 there has been no income from all the assets,” he pointed out. “And 1MDB had to borrow RM2 billion to pay the interest. The loan is now RM42 billion.”
Dr Mahathir then went on to list down how 1MDB had spent its borrowings “as far as can be ascertained” and listed down the firm's power deals as examples, including the purchase of Tanjong Energy, Genting Sanyen Power and Jimah Energy.
Other purchases include 1MDB's land deals, including the purchase of 70 acres of land in Jalan Tun Razak, 495 acres in the former Sungai Besi TUDM airport and 234 acres in Penang's Air Itam.
From its land investments, Dr Mahathir estimated that 1MDB lost at least RM5 billion from the TRX purchase and a staggering RM20 billion from the Sungai Besi deal.
The Penang land, he said, is of “poor quality” and has more than 1,000 squatters.
“Yet, 1MDB paid RM1.3 billion i.e at RM135 psf,” he said.
In total, Dr Mahathir said the power plant projects and land deals only adds up to some RM14.7 billion, which he said meant there was approximately RM27 billion left to 1MDB’s RM42 billion borrowing.
“Where is the rest of the money?” he asked.
He raised question again on 1MDB's Cayman Islands investment and asked why, when redeemed, the second tranche of funds worth US$1.1 billion (RM4 billion) was deposited in a Swiss bank in Singapore and not repatriated to Malaysia.
“Why is this money not used to pay the RM2 billion interest. Why did Bank Negara allow the first tranche to be repatriated to Malaysia and not the second tranche?” he asked.
“Now the Swiss bank has told the Singapore authorities that the document did not originate from them and does not represent a true account of the assets of 1MDB. So where is the money said to be registered in the Cayman Islands and is now brought back?” he asked.
“It is this disappearance of a huge amount of borrowed money by 1MDB and the inability to answer questions regarding what happened to the funds that disqualifies Najib from being Prime Minister of Malaysia,” he said, referring to Datuk Seri Najib Razak.
- See more at: http://www.themalaymailonline.com/malaysia/article/in-continued-diatribe-dr-m-lists-down-the-alleged-wrongs-of-1mdb#sthash.j4hJQwrI.dpuf
