Pua: 1MDB cannot explain ‘missing’ USD2b
By Shane Fuentes From FMT News
1MDB executives may have carried out a fraudulent round-tripping exercise to pay off terminated options.
KUALA LUMPUR: 1MDB’s failure to be transparent will only lead to justifiable speculation that nearly USD2 billion is now “missing” i.e. USD1 billion allegedly paid to the International Petroleum Investment Corporation (IPIC) but not acknowledged in the latter’s accounts, and USD1 billion apparently redeemed from Cayman Islands which immediately vanished, said Petaling Jaya Utara MP Tony Pua in revisiting the trouble-stricken company’s accounts.
“Now, even as 1MDB has failed to explain where the ‘missing’ USD993 million dollars went to if not to IPIC, the question also needs to be asked where the USD993 million came from.”
Pua, also DAP National Publicity Secretary, said the question that must also be asked: Did 1MDB executives carry out a fraudulent round-tripping exercise to use the undisclosed USD975 million to pay off the terminated options, pretending that the funds were sourced from the redeemed investment in Cayman Islands?
“Was this an audacious cover up exercise as nothing tangible was ever redeemed from Cayman Islands because the money previously “invested” with Petrosaudi has been lost?” asked Pua. “In an attempt to hoodwink both the auditors and the public that the Caymans investment was real, it was claimed that USD1.22 billion was redeemed but was ‘substantially utilized’ immediately with the excuse to buy back the Aabar options.”
As the multi-billion ringgit Aabar options controversy gets bigger, warned Pua, 1MDB needs to explain not only where the USD993 million allegedly paid to IPIC went, since the company did not receive the funds as reported by the Wall Street Journal (WSJ). “1MDB must also provide a clear and direct explanation as to why the Deutsche Bank consortium loan was never disclosed to their auditor, how much was actually paid out in total for terminating the options and the actual source of fund for the payment i.e. whether from the Deutsche Bank loan or from the Cayman Islands redemption.”
Again, Pua reiterated, 1MDB must explain if its failure to disclose the Deutsche Bank consortium’s USD975 million loan in the March 2014 Financial Statements was to cover up the round-tripping exercise to pay off nearly USD1 billion to terminate the options granted to IPIC.
Last week, the WSJ reported that the USD993 million which was allegedly paid to IPIC by 1MDB to buy back the latter’s options has not been properly accounted for. The payment was not reflected in the audited accounts of IPIC. Instead, IPIC’s books showed that 1MDB still owes an additional USD481 million to the former for the termination of the options as at December 2014.
These options were granted to IPIC’s subsidiary, Aabar Investment PJS in 2012 to acquire up to 49 per cent of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for USD3.5 billion of 1MDB bonds.
1MDB claimed in its March 2014 Financial Statements that in November 2014, it redeemed USD1.22 billion from its USD2.318 billion “invested” mysteriously in the Cayman Islands. However, the proceeds was instantly and “substantially utilized to pay debt interest, Aabar options, working capital”.
It is been presumed that the USD993 million would have come from the USD1.22 billion redeemed from Cayman Islands. 1MDB’s USD2.318 investment in Caymans was in turn derived from its exit from its controversial investment with Petrosaudi International Limited in September 2012.
However, the Singapore Business Times and other media outfits had previously reported that 1MDB secured a USD975 million loan from a Deutsche Bank-led consortium of six banks in October 2014 also for the purposes of buying back the options granted to IPIC.
Based on a cursory understanding, it would mean that 1MDB would have paid nearly a whopping USD2 billion to IPIC to terminate the options which were granted to secure a guarantee for the former’s USD3.5 billion bonds.
However, a closer look at the March 2014 audited accounts of 1MDB would reveal that the USD975 million loan from the Deutsche Bank consortium was never disclosed as a “subsequent event”. This is despite the auditors, Deloitte Malaysia signing off the financial statements only on 5 November 2014.
The failure of 1MDB to disclose the USD975 million loan to Deloitte Malaysia, and the disclosure instead that the USD1.22 billion redeemed from Cayman Islands was immediately and “substantially utilized”, to pay for Aabar options rings new and deafening alarm bells.
IMAGE: tony-pua-1mdb
For more on this story go to:
http://www.freemalaysiatoday.com/category/nation/2015/09/23/pua-1mdb-cannot-explain-missing-usd2b/
Related story:
Tony exposes 1MDB double-whammy: 1MDB accused of taking Deutsche bank loan to pay IPIC the $ 1 bil which IPIC ‘never received’
By Tony Pua From Malaysia Chronicle
Last week, the Wall Street Journal (WSJ) shed light on US$993 million which was allegedly paid to International Petroleum Investment Corporation (IPIC) by 1MDB to buy back the latter’s options have not been properly accounted for. The above payment was not reflected in the audited accounts of IPIC. Instead, IPIC’s books showed that 1MDB still owes an additional US$481 million to the former for the termination of the options as at December 2014.
These options were granted to IPIC’s subsidiary, Aabar Investment PJS in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
Now, even as 1MDB is failing to explain where the “missing” US$993 million dollars went to if not to IPIC, the question also needs to be asked where the US$993 million dollars came from.
1MDB claimed in its March 2014 Financial Statements that in November 2014, it redeemed US$1.22 billion from its US$2.318 billion of funds mysteriously “invested” in the Cayman Islands. However, the proceeds was instantly and “substantially utilised to pay debt interest, Aabar options, working capital”.
It is been presumed that the US$993 million would have come from the US$1.22 billion redeemed from Cayman Islands. 1MDB’s US$2.318 investment in Caymans was in turn derived from its exit from its controversial investment with Petrosaudi International Limited in September 2012.
However, the Singapore Business Times and other media outfits had previously reported that 1Malaysia Development Bhd (1MDB) secured a US$975 million loan from a Deutsche Bank-led consortium of 6 banks in October 2014 also for the purposes of buying back the above options granted to IPIC.
Based on a cursory understanding of the above, it would mean that 1MDB would have paid nearly a whopping US$2 billion to IPIC to terminate the options which were granted to secure a guarantee for the former’s US$3.5 billion bonds!
However, a closer look at the March 2014 audited accounts of 1MDB would reveal that the US$975 million loan from the Deutsche Bank consortium was never disclosed as a “subsequent event”. This is despite the auditors, Deloitte Malaysia signing off the financial statements only on 5 November 2014.
The failure of 1MDB to disclose the US$975 million loan to Deloitte Malaysia, and the disclosure instead that the US$1.22 billion redeem from Cayman Islands was immediately and “substantially utilised”, to pay for Aabar options rings new and deafening alarm bells.
The question must now be asked if 1MDB executives have carried out a fraudulent round-tripping exercise to use the undisclosed US$975 million to pay off the terminated options, pretending that the funds were sourced from the redeemed investment in Cayman Islands.
Was this an audacious cover up exercise as nothing tangible was ever redeemed from Cayman Islands because the money previously “invested” with Petrosaudi has been lost? However in an attempt to hoodwink both the auditors and the public that the Caymans investment was real, it was claimed that US$1.22 billion was redeem but was “substantially utilised” immediately with the excuse to buy back the Aabar options.
As the multi-billion ringgit Aabar options controversy gets bigger, 1MDB needs to explain not only where the US$993 million allegedly paid to IPIC went to, since IPIC did not receive the funds as alleged by the WSJ. Now, 1MDB also must provide a clear and direct explanation as to why the Deutsche Bank consortium loan was never disclosed to their auditor, how much was actually paid out in total for terminating the options and the actual source of fund for the payment – whether from the Deutsche Bank loan or from the Cayman Islands redemption.
The failure to be transparent will only lead to justifiable speculation that nearly US$2 billion is now “missing” – US$1 billion allegedly paid to IPIC but not acknowledged in the latter’s accounts, and US$1 billion apparently redeemed from Cayman Islands which immediately vanished.
Tony Pua is MP for PJ Utara
For related iNews Cayman story with links published September 10 2015 “WSJ: Auditor only closed 1MDB’s books after UAE firm guaranteed US$2.32b in Caymans” at: http://www.ieyenews.com/wordpress/wsj-auditor-only-closed-1mdbs-books-after-uae-firm-guaranteed-us2-32b-in-caymans/
