Highlight Putrajaya extends nearly RM1 bln loan to 1MDB a fortnight ago - S'pore BT

by **Cals** Thu 12 Mar 2015, 00:55

Highlight
Putrajaya extends nearly RM1 bln loan to 1MDB a fortnight ago - S'pore BT

By Anita Gabriel / Singapore Business Times | March 11, 2015 : 11:26 AM MYT

SINGAPORE (March 11): Amid allegations of improprieties levelled against [size=14]1Malaysia Development Bhd (1MDB) over its business dealings, which have triggered a high-level probe into its books, the Malaysian government has extended a nearly RM1 billion (S$373 million) loan to the debt-ridden firm.

The Business Times understands that the loan was provided by the Ministry of Finance, 1MDB's shareholder, to deal with the firm's cash flow woes as it is saddled with huge interest payments.

The firm has racked up debts of some RM42 billion with worries of a potential default weighing on Malaysia's sovereign rating and currency.

When contacted, a spokesman of 1MDB declined comment.

The loan of some RM970 million, according to a source, was disbursed following a cabinet meeting a fortnight ago to deliberate and decide on a cash injection plan for 1MDB. It is understood that the Malaysian cabinet had set certain conditions for 1MDB before the funds were disbursed.

Market watchers say that the cabinet decision underscores the pressure that the Malaysian government is facing as a result of the furore involving 1MDB, whose board of advisers is chaired by Prime Minister Najib Razak, who is also the country's Finance Minister.

A week ago, his deputy Muhyiddin Yassin issued a strong statement that public funds should not be used to bail out 1MDB and that the board should prepare to face legal action if allegations of improper business deals were uncovered.

Mr Muhyiddin's public remarks may have appeased some critics who fear a cover-up but contrasted with Mr Najib's statement a few days earlier - the Prime Minister's Office had issued a statement that the cabinet was confident that there was no wrongdoing by 1MDB after the firm and its auditor Deloitte briefed the cabinet last Wednesday.

One observer expressed incredulity about the latest development. "Where have you heard of an audit firm briefing the cabinet about the veracity of a firm's accounts? Mr Najib should have waited to clear 1MDB only after the Auditor-General's audit."

The string of accusations in recent weeks on alleged misuse of public funds involving 1MDB that was reported by London-based whistleblower site Sarawak Report and the UK's The Sunday Times and Malaysia's The Edge publication had stunned Malaysians.

That and the relentless pressure from opposition politicians had led Mr Najib to instruct the Auditor-General to probe the firm and pass its findings to Parliament's bipartisan Public Accounts Committee (PAC).

A newly set up special task force comprising members of the police, anti-corruption agency and the A-G's chambers is also investigating possible criminal breach of trust and cheating involving the firm.

In an unprecedented development involving a sitting premier in Malaysia, the country's top cop Khalid Abu Bakar, according to news reports, said on Tuesday that Mr Najib will also be among those investigated.

At the heart of the scrutiny is 1MDB's tie-up with PetroSaudi International - the first deal was inked by the firm in 2009, not too long after its inception as a "strategic development firm" with the goal of galvanising economic activity and drawing foreign money into the country.

Based on numerous e-mail messages and documents related to 1MDB's transactions obtained by Sarawak Report - which is run by activist journalist Clare Rewcastle Brown, the sister-in-law of former British premier Gordon Brown - the blog alleged that Malaysian financier Low Taek Jho, better known as Jho Low, was involved in the 1MDB-PetroSaudi transactions.

Both 1MDB and Mr Low have previously denied his involvement in the firm. When contacted by BT, a spokesman for Mr Low said that when the joint venture was formed, he was "invited by PetroSaudi to provide his views in the dialogues, given his insight into the Middle East and Asia".

"Mr Low has no decision-making authority or the ability to compel 1MDB or PetroSaudi to do anything.

"It is unfortunate that he has been unnecessarily drawn into the political crossfire in Malaysia which is exacerbated by misinformation."

Meanwhile, it has been reported that PetroSaudi had lodged a police report with the city of London Police Action Fraud unit a week ago and denied the allegations by Sarawak Report, stating that all the funds from 1MDB went to its own entities and that any other inference was false.

IMDB president Arul Kanda has claimed that the attacks were politically motivated and said that he "welcomes" Mr Najib's call for an audit.

The 1MDB uproar has turned into a political hot potato for Mr Najib, whose ratings has skidded to a fresh low of 44 per cent in January. Mr Najib has vowed that the "law will be enforced without exception" if any wrongdoing is proven.
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