Bank Negara was today urged by Pandan MP Rafizi Ramli to turn down state investment company 1Malaysia Development Bhd’s (1MDB) application to extend the deadline for its loan repayment.
 
This follows a Bloomberg report yesterday that 1MDB is supposedly seeking a third one-month extension to repay its RM2 billion loan.
 
The report quoted two anonymous sources as saying this is to allow 1MDB more time to sell its stake in a subsidiary company, Edra Global Energy Bhd.
 
Rafizi warned that if the loan repayment to Maybank and RHB is extended, it could signal trouble for the rest of the market at a time when the value of the ringgit is already plummeting.
 
“1MDB’s delays in repaying the RM2 billion loan would signal that 1MDB’s debt poses a high risk to the country’s financial and banking system and would cause foreign investors to withdraw their investments from the system.
 
“This would cause the value of the ringgit to fall further,” Razifi said in a statement today.
 
Rafizi (left), who is also the PKR vice president, urged Bank Negara governor Zeti Akthar Aziz to invoke her powers under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 to confirm several questions regarding 1MDB.
 
These are: Whether the US$2.32 billion (RM8.24 billion) that 1MDB had previously parked at Cayman Islands has returned to Malaysia; names of the financial institutions where the money is now placed, and; whether 1MDB has the funds to repay the RM2 billion loan.
 
“If Bank Negara cannot confirm these simple questions, it would strengthen speculation that the RM7 billion parked at Cayman Islands had never been brought back to Malaysia,” he said.
 
'Fully redeemed'

The funds parked at Cayman Islands previously amounted to about RM7 billion, but is now over RM8 billion due to the falling value of the ringgit against the US dollar.
 
1MDB had announced on Jan 13 that the funds have been “fully redeemed”, but this only prompted critics like Rafizi, Petaling Jaya Utara MP Tony Pua, and former Prime Minister Dr Mahathir Mohamed to question where the money is now.
 
Yesterday, Zeti (left) had declined to comment on 1MDB saying that Bank Negara does not comment on individual entities, but assured that Bank Negara would not allow any individual entity to pose a systemic risk to Malaysia’s financial system.
 
Separately today, Pua slammed 1MDB over Bloomberg’s report that the loan extension application is to buy more time to hammer out a deal with billionaire T Ananda Krishnan to buy a stake in Edra Global.
 
Pua said this is scandalous because 1MDB had already “overpaid” Ananda when it spent RM8.5 billion to buy his power assets in 2012.
 
“Now Ananda holds the trump card to potentially buy a strategic stake in 1MDB’s energy division at a fire-sale price because 1MDB has a RM2 billion sword hanging over its head,” he said in a statement today.
 
He questioned why 1MDB did not repay the loan to ease pressure on 1MDB and be in a stronger negotiating position with Ananda.
 
He also pointed out that since 1MDB is having trouble repaying the RM2 billion loan, it shows the company is in serious financial trouble since it is only a small part of its RM42 billion debt.