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Saturday, February 14, 2015

ANANDA - WHITE KNIGHT OR DEVIL? Public has right to know terms of 'private loan' granted by billionaire - Tony Pua

ANANDA - WHITE KNIGHT OR DEVIL? Public has right to know terms of 'private loan' granted by billionaire - Tony Pua
1MDB announced yesterday that the company has finally settled the controversial RM2 billion oustanding loan with the relevant banks. In fact in its official statement, CEO Arul Kanda, he had the cheek to announce that “the loan was settled in advance of the due date”.
Arul Kanda has conveniently forgotten to mention that they were granted 3 extensions since November 2014. This doesn’t take into account the fact that the RM2 billion loan originated from an outstanding RM5.5 billion loan 1MDB couldn’t repay in November 2013, before being restructured into a RM3.5 billion 10-year loan and the existing short-term RM2 billion loan.
Despite widespread market acknowledgement, the new CEO of 1MDB has also failed to highlight the fact that the RM2 billion loan was settled with an extraordinary arrangement with local billionaire, Tan Sri Ananda Krishnan agreeing to extend a RM2 billion loan to help 1MDB cross the immediate debt hurdle.
It must be asked, what was the agreed with Tan Sri Ananda for the RM2 billion loan? As much as Malaysians are a kind, generous and forgiving people, no one could possibly imagine any local billionaire giving a multi-billion ringgit loan to a wholly-owned Government subsidiary without strings attached.
Did 1MDB sign a loan agreement with a white knight or the devil? For example, what is the term of the loan, the interest rates and other relevant conditions? The last time 1MDB secured a loan with a “generous” guarantee given by International Petroleum Investment Corporation of the Abu Dhabi Government, 1MDB had to offer options in their power companies worth at least US$250 million.
CEO 1MDB Arul Kanda
Had 1MDB been a private company, Malaysians would not be interested to know the private arrangements between the borrower and the lender. However, 1MDB is a subsidiary of the Ministry of Finance and Malaysians are certainly right to be worried about the distress in the company.
After all, 1MDB’s woes are far from over after this temporary reprieve. Out of the RM42 billion debt in 1MDB’s books, another US$975 million (RM3.45 billion) will become due in September. This also doesn’t take into account the annual financing cost estimated at RM2.4 billion based on the company’s 2014 financial report.
Hence it is critical that 1MDB remove the veil of secrecy and disclose the salient concessions 1MDB have granted to Tan Sri Ananda Krishnan to desperately secure the RM2 billion.
Since Arul Kanda has openly welcomed “public scrutiny” as “a good thing” that “will only serve to strengthen the company and its governance”, we will certainly look forward to 1MDB’s honesty and transparency in this matter.
Tony Pua is MP for PJ Utara

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