“The Prime Minister and Finance Minister can no longer afford to remain silent on this issue without further eroding the confidence of the financial markets.”
KUALA LUMPUR: A week after the last deadline to repay a RM2 billion over-due debt, there has been “pin-drop silence” as to whether the controversy-dogged 1Malaysia Development Board (1MDB) has been able to repay this loan.
“Such silence only leads to the inevitable speculation that despite all the rhetoric coming from the Government and 1MDB, the company has once again failed to meet the deadline,” said Petaling Jaya Utara MP Tony Pua in a statement.
This is despite the fact that 1MDB claimed that it had already fully “redeemed” its controversial investment in the Cayman Islands, amounting to US$1.1b or RM3.9b, at the current exchange rate, added Pua who is also DAP National Publicity Secretary. “Nobody appears to know where the money is, and for those who do know, they have refused to be publicly accountable for the company’s actions.”
“If it defaults on the RM2 billion loan, then the entire outstanding RM42 billion debt of the company becomes due immediately.”
Under such circumstances, he continued, the Malaysian financial system faces systemic risks given the enormous stress while the Government’s credit ratings are bound to take a massive hit.
Pua noted that the RM2 billion loan was part of a rescheduled and restructured debt that 1MDB couldn’t pay in November 2013. The Edge Financial Daily then reported that Bank Negara Malaysia had summoned key executives of the company over the issue and warned them of dire consequences should they fail to meet the next deadline at the end of January.
“The Malaysian financial markets have been jittery over the ability of 1MDB to repay this debt because the deadline for repayment of the debt has not only been extended, but twice since November 2014,” he said. “Also, to reiterate, the company has actually total outstanding loans exceeding RM42 billion.”
“Hence, the ability of 1MDB to repay this loan has become a irrefutable public interest issue which must be addressed, whether by the company itself or the Finance Ministry in a timely manner.”
Over the past three weeks there has been intense speculation as to how 1MDB will repay the debt, he noted. “Such speculation included that 1MDB will officially seek another extension for its loans, or that 1MDB will receive an emergency loan from tycoon Ananda Krishnan to temporarily settle the debt.”
“Prime Minister and Finance Minister Najib Abdul Razak can no longer afford to remain silent on this issue without further eroding the confidence of the financial markets,” said Pua. “His Deputy Finance Minister, Ahmad Maslan, has consistently insisted that 1MDB was in sound financial health and never had any problems settling their debt obligations.”
Such empty assurances or even outright untruths, he warned, “can no longer hoodwink the concerned Malaysian public”.
The Government must immediately come clean on the debt situation in 1MDB, he stressed. “It has even become a laughing stock in the international financial press including the Wall Street Journal and Financial Times.”
Pua reiterated his earlier calls for Najib to urgently instruct a special audit of the controversy-dogged 1Malaysia Development Board (1MDB) by the Auditor-General or a reputable independent auditor “to uncover its financial shenanigans”.
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