Now, the first concern is about PM Najib Tun Razak - that is the allegation of corruption. Already shown, and never denied, is that large amounts of money (RM2.6 Billion or more) have been paid to Najib Razak in his personal account. These facts itself is sufficient for Najib to be charged in court under the MACC Act as it stands now. In court, Najib will have to prove that the money was not corruptly received...
Now, the 2nd concern is 1MDB - which is a government-owned (government-linked company). The issue here, amongst others, are
a) Whether there has been hanky-panky in 1MDB that directly or indirectly affects Malaysians, financially or otherwise. It is our money, and Malaysians are the ultimate owners of 1MDB, all government-owned companies, and all government linked companies(GLCs). So, like any 'shareholder' or owner, we want to know...We want to know about the profits and the debts.
b) The other issue, is whether Malaysian government through 1MDB, had acted in a manner inconsistent with our laws, including the Constitution provisions of 'equality'. Has 1MDB received preferential or 'special' treatment?
c) The third issue, is whether Malaysia acted inconsistent with the various trade agreements and international commitments? This would be the concern of other nation states, multi-national corporations and businesses from other other countries. Now, the essence of many of these agreements is 'free trade'. Now, following the WTO Agreements, several decades ago. Malaysia can no longer even give preferential treatment for Malaysian companies and business (I believe the only exception remaining may be with regard the automobile Industry). In fact, Malaysia also now cannot even impose requirement for 'knowledge/skill/expertise transfer' or requirement for usage of a certain percentage of local content anymore. Now, there may be more provisions that allow for 'greater liberalization' of the market for businesses.
When our attention is drawn to 1MDB - then naturally attention is drawn to all GLCs including also MAS - Has there been a thorough investigation of MAS? Who is responsible for the failure of MAS? Has action been taken against the entire Board of Directors for the failure of MAS?
Below is something from former Prime Minister's blog on 1MDB for your reading pleasure...
THE 1MDB STORY
1. From the comments on my blog and the questions I have been asked
by people while shopping, it is clear that many do not know much about
1MDB. They know enough that Najib has done something wrong with the
RM42 billion borrowed money, but are not clear about what is so wrong
that I should call upon him to resign.
2. So I think I need to explain why 1MDB is wrong in stages.
The Terengganu Investment Authority
3. Firstly the attempt to hijack the Terengganu Investment Authority (TIA) money. Petronas pays 5% of its gross earnings to the Terengganu Government. Over the years their royalty has grown quite big.
4. Jho Low persuaded Najib to make the TIA into a sovereign fund for investment like the Kuwait Investment Fund but under Najib’s control. Appointments of staff were made by Najib without Terengganu’s knowledge. Terengganu agreed at first but when Najib decided to raise through bonds RM5 billion using Terengganu oil wells as collateral, the istana and the Government thought it was not right.
5. Terengganu requested that the issuance of the bonds be deferred. Najib went ahead. Terengganu accordingly withdrew as it cannot let its’ oil wells be put at risk.
6. Jho Low then advised Najib that the Federal Government should guarantee the loan. Strictly speaking such a matter should be discussed and approved by Cabinet. There is no evidence that a cabinet paper was prepared and presented for approval despite the amount being unusually big. In fact for a long time Cabinet was not aware of the activities of 1MDB.
7. To avoid scrutiny by officials, the loan was classified as off – budget i.e. outside the annual budget presented to and approved by Parliament. Off – budget spending can be made but usually only limited in amount. RM5 billion have never been borrowed by Government or any of its agencies. It should not be off-budget. It should get Cabinet approval first and then presented to Parliament. None of these procedures were followed.
8. It is not clear whether any Government department or agencies have scrutinised the terms of the loans. But the terms were very unfavourable to 1MDB and the Government.
9. Goldman Sachs which was entrusted with raising the loan was given;
i) Commission of 10%
ii) The interest rate was fixed at 5.9%
10. What this means is that of the RM5 billion borrowed 1MDB would get only RM4.5 billion. Goldman Sachs would get RM500 million as commission, an inordinately large sum.
11. But 1MDB would pay 5.9% interest on the whole of RM5 billion. Since it gets only RM4.5 billion the rate of interest on this amount would be 6.6% plus. Goldman Sachs need not pay interest on the RM500,000,000/- it got as commission.
12. Loans taken by Government or guaranteed by Government would normally carry 3% interest or less. But the 1MDB loan cost almost 7% interest i.e, about RM350 million a year or almost RM1 million per day.
13. Who approved such terrible terms for a loan to a government owned company? We would like to know who. There must be some documents with the signature of the approving authority. If not somebody needs to answer for this stupidity. Or is it abuse of authority.
14. But more loans were raised from local as well as foreign banks. In all RM42 billion were borrowed. It is not clear what the terms are. But interest on RM42 billion must come to almost RM3 billion a year. Unless the investment yield fantastic returns, the interest burden would sink 1MDB. In fact as everyone knows Ananda Krishnan had to make available RM2 billion to pay the interest. Is it a loan or a free gift? Later 1MDB had to sell shares or properties for USD1 billion (RM3.7 billion) in order to settle short term loan from a German bank.
15. 1MDB is effectively headed by the Prime Minister who is also the Minister of Finance. When loans of more than 100 million are raised for investment overseas Bank Negara has to approve. But the final approval must come from the Minister responsible. And the Minister responsible is also the effective head of 1MDB.
Investments
16. The best known investments by 1MDB were in the purchase of power plants and Government land as well as private land.
Power Plants
17. RM18 billion was spent to purchase IPP belonging to Ananda Krishnan, Genting Sanyen Power (now known as Kuala Langat Power Plant) and Jimah Energy.
18. The prices paid for Genting Sanyen and Ananda’s IPP were well above market price. 1MDB also paid RM6 billion for unpaid loans. The Jimah IPP was to put up another power plant. But 1MDB had no money to build this plant
19. Genting Sanyen and Tanjung Energy (now known as Powertek Energy Sdn Bhd) were nearing expiration of their licenses. Had 1MDB waited until the licenses expired, the price would be next to nothing.
20. Why 1MDB did not wait until the expiry of the license is a mystery. Genting and Ananda clearly made more money than they were entitled to. One estimate is that the high price netted the sellers an extra RM3 billion. Besides they are relieved of the loan of RM6 billion.
21. So not only is the borrowing costly but the high cost of investments will mean low returns. Why is 1MDB so stupid.
22. As stated above 1MDB is unable to get the IPP listed again. Who would want to own overpriced and obviously unprofitable power plant.
Purchase of Land
23. The land along Jalan Tun Razak was actually meant for an agency to build shops etc for Bumiputras. But instead the Government sold the 70 acres to 1MDB for RM320 million i.e. at RM 60/- psf. Land close by had been sold at RM7000 /-psf. 1MDB should pay at least RM3000 to RM4000 /- psf.
24. Government lost a huge amount of money from the sales. The question is why did the Government sell at such a low price. One cannot help thinking it is because the PM ordered the sale. If so it is wrong and it constitutes abuse of authority. The full value should be paid to the Government now.
25. Then 1MDB decides to sell a small part of the land at the price it bought the whole 70 acres of land. Payment was made by Tabung Haji even before the transfer of ownership was completed. Apparently 1MDB needed the money immediately.
26. The directors of 1MDB and Tabung Haji are the same people. They claim that they abstained from voting. But obviously it was not an arms– length deal.
27. If the Government could sell to 1MDB at RM60 /- psf, it should also sell at the same price to TH. But effectively it has used money saved by intending pilgrims to give enormous profit to 1MDB.
28. It is the same with the Sungai Besi airport land. 1MDB acquires it at the ridiculously low price of RM90 /- psf. The value of the land is at least RM2000 /- psf.
29. But 1MDB bought private land in Penang at a much higher price. Yet the land is not at the centre of the city, has more than 1000 squatters and has not obtained the Penang Government approval for development. Seems like 1MDB had overpaid the seller for useless land. Why?
Assets
30. 1MDB claims it has assets worth RM52 billion.
31. So far no explanation has been given as to how these assets are valued. How much is the value of all the power plants. And how much are the prices of land worth?
32. Future values after development may be big but billions of Ringgits must be invested before the property can be sold. After deducting cost, the return cannot be very big. The power plants and the land cannot be worth RM52 billion.
33. Even if this money is used to repay debts, the disappearance of billions of Ringgit must be recovered, or 1MDB should be charged for the loss. - Dr Mahathir's Blog
2. So I think I need to explain why 1MDB is wrong in stages.
The Terengganu Investment Authority
3. Firstly the attempt to hijack the Terengganu Investment Authority (TIA) money. Petronas pays 5% of its gross earnings to the Terengganu Government. Over the years their royalty has grown quite big.
4. Jho Low persuaded Najib to make the TIA into a sovereign fund for investment like the Kuwait Investment Fund but under Najib’s control. Appointments of staff were made by Najib without Terengganu’s knowledge. Terengganu agreed at first but when Najib decided to raise through bonds RM5 billion using Terengganu oil wells as collateral, the istana and the Government thought it was not right.
5. Terengganu requested that the issuance of the bonds be deferred. Najib went ahead. Terengganu accordingly withdrew as it cannot let its’ oil wells be put at risk.
6. Jho Low then advised Najib that the Federal Government should guarantee the loan. Strictly speaking such a matter should be discussed and approved by Cabinet. There is no evidence that a cabinet paper was prepared and presented for approval despite the amount being unusually big. In fact for a long time Cabinet was not aware of the activities of 1MDB.
7. To avoid scrutiny by officials, the loan was classified as off – budget i.e. outside the annual budget presented to and approved by Parliament. Off – budget spending can be made but usually only limited in amount. RM5 billion have never been borrowed by Government or any of its agencies. It should not be off-budget. It should get Cabinet approval first and then presented to Parliament. None of these procedures were followed.
8. It is not clear whether any Government department or agencies have scrutinised the terms of the loans. But the terms were very unfavourable to 1MDB and the Government.
9. Goldman Sachs which was entrusted with raising the loan was given;
i) Commission of 10%
ii) The interest rate was fixed at 5.9%
10. What this means is that of the RM5 billion borrowed 1MDB would get only RM4.5 billion. Goldman Sachs would get RM500 million as commission, an inordinately large sum.
11. But 1MDB would pay 5.9% interest on the whole of RM5 billion. Since it gets only RM4.5 billion the rate of interest on this amount would be 6.6% plus. Goldman Sachs need not pay interest on the RM500,000,000/- it got as commission.
12. Loans taken by Government or guaranteed by Government would normally carry 3% interest or less. But the 1MDB loan cost almost 7% interest i.e, about RM350 million a year or almost RM1 million per day.
13. Who approved such terrible terms for a loan to a government owned company? We would like to know who. There must be some documents with the signature of the approving authority. If not somebody needs to answer for this stupidity. Or is it abuse of authority.
14. But more loans were raised from local as well as foreign banks. In all RM42 billion were borrowed. It is not clear what the terms are. But interest on RM42 billion must come to almost RM3 billion a year. Unless the investment yield fantastic returns, the interest burden would sink 1MDB. In fact as everyone knows Ananda Krishnan had to make available RM2 billion to pay the interest. Is it a loan or a free gift? Later 1MDB had to sell shares or properties for USD1 billion (RM3.7 billion) in order to settle short term loan from a German bank.
15. 1MDB is effectively headed by the Prime Minister who is also the Minister of Finance. When loans of more than 100 million are raised for investment overseas Bank Negara has to approve. But the final approval must come from the Minister responsible. And the Minister responsible is also the effective head of 1MDB.
Investments
16. The best known investments by 1MDB were in the purchase of power plants and Government land as well as private land.
Power Plants
17. RM18 billion was spent to purchase IPP belonging to Ananda Krishnan, Genting Sanyen Power (now known as Kuala Langat Power Plant) and Jimah Energy.
18. The prices paid for Genting Sanyen and Ananda’s IPP were well above market price. 1MDB also paid RM6 billion for unpaid loans. The Jimah IPP was to put up another power plant. But 1MDB had no money to build this plant
19. Genting Sanyen and Tanjung Energy (now known as Powertek Energy Sdn Bhd) were nearing expiration of their licenses. Had 1MDB waited until the licenses expired, the price would be next to nothing.
20. Why 1MDB did not wait until the expiry of the license is a mystery. Genting and Ananda clearly made more money than they were entitled to. One estimate is that the high price netted the sellers an extra RM3 billion. Besides they are relieved of the loan of RM6 billion.
21. So not only is the borrowing costly but the high cost of investments will mean low returns. Why is 1MDB so stupid.
22. As stated above 1MDB is unable to get the IPP listed again. Who would want to own overpriced and obviously unprofitable power plant.
Purchase of Land
23. The land along Jalan Tun Razak was actually meant for an agency to build shops etc for Bumiputras. But instead the Government sold the 70 acres to 1MDB for RM320 million i.e. at RM 60/- psf. Land close by had been sold at RM7000 /-psf. 1MDB should pay at least RM3000 to RM4000 /- psf.
24. Government lost a huge amount of money from the sales. The question is why did the Government sell at such a low price. One cannot help thinking it is because the PM ordered the sale. If so it is wrong and it constitutes abuse of authority. The full value should be paid to the Government now.
25. Then 1MDB decides to sell a small part of the land at the price it bought the whole 70 acres of land. Payment was made by Tabung Haji even before the transfer of ownership was completed. Apparently 1MDB needed the money immediately.
26. The directors of 1MDB and Tabung Haji are the same people. They claim that they abstained from voting. But obviously it was not an arms– length deal.
27. If the Government could sell to 1MDB at RM60 /- psf, it should also sell at the same price to TH. But effectively it has used money saved by intending pilgrims to give enormous profit to 1MDB.
28. It is the same with the Sungai Besi airport land. 1MDB acquires it at the ridiculously low price of RM90 /- psf. The value of the land is at least RM2000 /- psf.
29. But 1MDB bought private land in Penang at a much higher price. Yet the land is not at the centre of the city, has more than 1000 squatters and has not obtained the Penang Government approval for development. Seems like 1MDB had overpaid the seller for useless land. Why?
Assets
30. 1MDB claims it has assets worth RM52 billion.
31. So far no explanation has been given as to how these assets are valued. How much is the value of all the power plants. And how much are the prices of land worth?
32. Future values after development may be big but billions of Ringgits must be invested before the property can be sold. After deducting cost, the return cannot be very big. The power plants and the land cannot be worth RM52 billion.
33. Even if this money is used to repay debts, the disappearance of billions of Ringgit must be recovered, or 1MDB should be charged for the loss. - Dr Mahathir's Blog
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