MP SPEAKS Responding to the police report lodged against 1Malaysia Development Bhd (1MDB) by Batu Kawan Umno division vice-chairperson, Khairuddin Abu Hassan, Deputy Finance Minister Ahmad Maslan pointed out how 1MDB made profits for four years consecutively.

 

“They only recorded losses last year. I am sure the company has no big problems except for the negative perception made by the police report lodged by Khairuddin,” Ahmad told a press conference yesterday.

 

Ahmad’s ( right ) reputation is already in tatters after being forced to apologise and retract his answer in Parliament, where he denied the existence of a US$3 billion “letter of support” issued to secure a loan for 1MDB.  

Now, if the above assurance is the most convincing response which one can elicit from the deputy finance minister ( right ), then he is certainly doing the worst possible job in defending 1MDB.

 

It has been repeated umpteen times that 1MDB has made consecutive years of profits from 2010-2013 only as a result of revaluation of assets and properties, and not as a result of any tangible operating profit!

In 2010, 1MDB made a “profit” of RM424 million on the back of a revaluation of its unlisted shares in joint venture investment of US$200 million (RM660 million).

 

Subsequently, 1MDB recorded paper profits of RM544 million, RM44 million and RM778 million on the back of revaluation of its properties of RM827 million, RM570 million and RM2,736 million respectively in 2011, 2012 and 2013.  These properties were acquired at rock-bottom prices from the federal government.

If not for the massive asset revaluation...

 

If not for the massive asset and property revaluation, 1MDB would have made consecutive losses of RM236 million, RM273 million, RM526 million and RM1,964 million from 2010 to 2013.

 

Even in 2014, when it reported losses of RM665 million, that was despite recording a property revaluation of RM897 million. This means that without the revaluation, 1MDB would have lost another RM1,562 million.

 

In total, over the five years, 1MDB which has taken more than RM42 billion to date, has incurred a staggering cumulative loss of RM4.56 billion.

 

Earlier in November, Ahmad Maslan also attempted to assure the Parliament that 1MDB is in good financial health by claiming that the company has “never missed a debt repayment deadline” and is “financially strong”.

Ahmad could not be further from the truth.  1MDB has, not for the first time, missed the deadline to repay an outstanding debt. On Nov 30, 2014, 1MDB was due to repay a RM2 billion debt but has failed to do so to date.  

Instead, it has asked for an further extension from the financiers. This sum was part of a debt which was due in November 2013, which has already been restructured and extended multiple times.

 

Worse, the “financially strong” 1MDB is practically insolvent without the injection of new funds because it is now unable to execute the multi-billion ringgit projects it has secured from the government.

Coal-fired power plant that failed to kick-off

 

For example, despite being awarded a RM11 billion coal-fired power plant project located at Negeri Sembilan in February 2014, 1MDB has failed to kick-off the project because it doesn’t have any funds to do so!  

At the same time, an attempt to raise RM8.4 billion in November failed and had to be postponed - which in all likelihood is due to the reluctance of investors and financial institutions to lend more money to 1MDB.

 

Believing in 1MDB’s innocence, Ahmad has asked the company to “clear the air” with the public over the various controversies.  This is a move which we would wholly agree with.  

Therefore, we call upon Ahmad to recommend that 1MDB testifies before the Parliamentary Public Accounts Committee (PAC) and the Auditor-General carries out an audit on it to dispel all accusations of financial shennigans and impropriety, as well as to restore confidence in its state of financial health.  

If not, then clearly the deputy finance minister is just putting up a fake front to hide the real truths behind the RM42 billion 1MDB scandal.

TONY PUA is MP for Petaling Jaya Utara and DAP national publicity secretary.