The government is being "half truthful" in claiming that it is not liable for a majority of 1Malaysia Development Berhad (1MDB)'s debts, as it had issued "support letters" that are not listed as official guarantees, a DAP MP said.

 

Petaling Jaya Utara MP Tony Pua said that the government's claim, in a written answer to Lim Guan Eng (DAP-Bagan), did not mention the number of support letters it had issued to back 1MDB's fundraising efforts.

 

The Finance Ministry in a parliamentary answer said that the government only guaranteed RM5.8 billion out of 1MDB's total debts reaching RM38 billion.

 

But, this did not include a letter of support the government issued for 1MDB Global Investments to borrow RM9.6 billion in March last year, Pua ( left ) pointed out.

 

The letter, exposed in a recent report by The Edge , revealed that the government had in the support letter, given an undertaking that it would step up and pay if 1MDB is unable to fulfill its financial undertakings.

 

"The letter of support has effectively guaranteed a debt. The difference between a guarantee and a support letter is purely semantics," he said.

 

'No clue'

He said that while guarantees are listed in the government's contingent liabilities, the same does not apply for support letters.

 

"Malaysian and international analysts have no clue how much the Malaysian government is financially exposed via these shady letters," he said.

 

He also pointed out that during the height of the Port Klang Free Zone (PKFZ) scandal in 2009, the four letters of support issued by the Transport Ministry for Kuala Dimensi Sdn Bhd to raise funds, were considered to be "tantamount to a guarantee" by the attorney general.

 

"In this case, we know now that out of some RM38 billion of 1MDB debt, RM15.4 billion is guaranteed," he said.

 

He demanded that Prime Minister Najib Abdul Razak "categorically" state that the government will not bail out 1MDB if the company is unable to fulfill financial obligations.

 

The investment arm has come under the spotlight recently and has continued raking up debts by raising bonds.

However, the government has defended the company, stressing that 1MDB's financial situation is still "solid".

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