Malaysia’s incoming finance minister Lim Guan Eng (pictured) says the previous administration of Najib Razak deceived voters “about certain hot-button issues, especially 1MDB”.
“It is clear that the previous government conducted an exercise of deception to the public… and even misrepresented the financial situation to parliament,” Lim told the media after his first day in the role.
He said the previous government paid almost RM7 billion (US$1.8 billion) of debt accumulated by the state-run 1MDB investment fund.
1MDB has US$6.5 billion of dollar bonds outstanding, as well as ringgit debt, and has been the subject of international probes in Switzerland, the US and Singapore into alleged misappropriation.
The finance ministry owns the fund and serviced the debt since April last year with almost RM144 million due in interest this month.
Lim said “the public suspicion [had been confirmed] that 1MDB had essentially deceived Malaysians by claiming that they have been paid via a ‘successful rationalisation exercise’”. He referred to the sale of assets, including prime real estate and power stations, to service the debt.
The US Department of Justice reported that more than US$4.5 billion was diverted from 1MDB’s accounts through a series of offshore transactions.
Last December, 1MDB said a payment to Abu Dhabi’s International Petroleum Investment Company (IPIC) was “from proceeds of the ongoing rationalisation programme”. But Lim said the finance ministry had stepped in to pay IPIC over RM5 billion in four instalments.
“[The fund’s CEO] Arul Kanda has to date insisted that 1MDB is fully able to service its debt obligations,” he said.
“I have instructed the officers to study in detail the debt and liabilities of 1MDB and propose measures to resolve the crisis created by the scandal,” Lim said.
Arul has reportedly been called to the ministry this week to explain how 1MDB will settle the interest payment due before the end of May.
Lim said the finance ministry and auditor general’s office were denied details of specific accounts and data and, as a consequence, Malaysia’s debt was far larger than previously reported.
“There were also complaints that certain ‘red’ files were accessible only to certain parties, which impeded officials and auditors from carrying out their responsibilities,” Lim added.
The fund’s US$3 billion 4.4-per-cent dollar bonds due 2023, issued in 2013, apparently came with a letter of support from the Malaysian government.
Meanwhile, Malaysia’s first female deputy prime minister Wan Azizah Wan Ismail, also the women and family development minister, announced that the government would not scrap the Permata education programme founded by Rosmah Mansor, the wife of Najib. The ministry would, however, conduct an audit into the scheme, which the opposition had previously questioned for receiving RM85 million in the 2017 federal budget.
Lim Guan Eng at a campaign rally. Picture credit: Wikimedia
