Police report lodged against 1MDB CEO

He is alleged to have misled 1MDB creditors by making false statements about funds available to the company.

KUALA LUMPUR: Police have been asked to investigate 1MDB CEO Arul Kanda Kandasamy for allegedly making false statements about funds available to the company and had thereby misled its creditors.

A police report against Arul was lodged at the Dang Wangi police station today by Khairuddin Abu Hassan, the same Umno divisional official who has made police and MACC reports seeking investigations into 1MDB’s management of its funds.

Referring to a statement by Arul that 1MDB had redeemed funds it had invested in the Cayman Islands and quoting a subsequent Bloomberg report about the company seeking to delay repayment of a loan, Khairuddin said: “It does appear that Arul has made false statements in the execution of his duties as CEO of 1MDB and, in doing so, has misled 1MDB’s lenders, who include Malayan Banking Bhd, RHB Bank and others, all of whom are likely to have suffered material losses as a consequence.”

Last January 13, Arul released a media statement saying, “1MDB can confirm that is has now redeemed the US$2.318 billion (RM7 billion) invested by the company in a Cayman-Islands-registered fund.”

On January 27, Bloomberg reported that 1MDB was”planning to seek another one-month extension” on its RM2 billion loan “to give it more time to sell a stake in its energy unit”. If the report turns out to be true, this will be the third extension the company is seeking, having missed repayment deadlines in November and December last year.

“It is inconceivable that 1MDB would delay repayment of a very large loan when it claims it has cash in hand of at least RM7 billion,” said Khairuddin in a press release announcing his police report.

He also referred to news reports that 1MDB was seeking a RM2 billion loan from tycoon T Ananda Krishnan in order to meet its loan obligations to the banks.

“It is obvious therefore that 1MDB does not have even RM2 billion, let alone RM7 billion, in cash and cash equivalents,” he said.

If the funds from the Cayman Islands had indeed been redeemed, he added, then it was obvious that they were somehow unavailable for the repayment of 1MDB’s loans.

He urged police to investigate Arul under the Penal Code for “framing an incorrect record or writing with intent to save a person from punishment or property from forefeiture” and for criminal breach of trust.

He said the facts he had cited provided “evidence of very large amounts of public monies being mishandled to the point of where they must be considered lost to the nation”.