From FMT News

Appointment of new boss aimed at calming Qatar, Abu Dhabi, Kuwait says paper.

KUALA LUMPUR: The problems of 1Malaysia Development Berhad and questions about Malaysia’s credit ratings have raised the alarm at two of its Middle Eastern investment partners, the Qatar Investment Authority and Abu Dhabi’s Aabar Investment, according to the Gulf Times newspaper.

Aabar has US3bn in a 50:50 venture with IMDB to develop the multi-billion-ringgit Tun Razak Exchange financial centre at the site of the former Sungai Besi air force base.

Qatar has pledged US5bn as a partner in the 200-hectare Bandar Malaysia integrated urban development also in Kuala Lumpur.

Gulf Times, an English-language newspaper based in Doha, Qatar, said both projects were way behind schedule, and the Middle East partners have reportedly become displeased with the lack of transparency in sharing 1MDB’s plans and strategies with investors, as well as with delays that are causing financing costs to rise.

Qatar and Abu Dhabi are considering stepping back from the projects, as is an Islamic bank from Kuwait, reportedly Kuwait Finance House, and US-based Insurance company Prudential, the newspaper said, quoting Malaysia media reports.

1MDB has come under fire from critics of prime minister Najib Razak, who conceived of 1MDB as a government-investment vehicle, and questions have been raised about 1MDB’s finances and its deposits in offshore tax havens such as the Cayman Islands.

A loan-repayment of US$563mn due at the end of December to Maybank and RHB Bank caused further concerns. 1MDB has since said that the funds had been repatriated from the Caymans.

Gulf Times said “it is quite obvious” that 1MDB’s appointment of Abu Dhabi-based Malaysian investment banker Arul Kandasamy was driven by 1MDB’s strategic partners in the Gulf after rumours of a possible default of 1MDB started spreading.

The newspaper said 1MDB’s critics argued that the debt-ridden investment fund has become a “threat” to Malaysia’s entire financial system where 45 per cent of sovereign debt was held by foreign creditors, mainly in sukuk and other Islamic financial instruments.

It said 1MDB’s problems posed a threat to Malaysia’s sovereign credit rating of the country, its continued refinancing problems or even a bailout by the government, would be a huge embarrassment for Najib, who is also chairman of 1MDB’s board of advisers.

For more on this story go to: http://www.freemalaysiatoday.com/category/nation/2015/01/17/1mdb-woes-causing-jitters-in-mideast/

Related story:

1MDB says has redeemed in full US$2 billion invested in Cayman Islands

From Maylasia Insider

Sovereign fund 1Malaysia Development Berhad (1MDB) has redeemed in full the US$2.318 billion (RM8.24 billion) invested by the company in a Cayman Islands registered fund, according to its newly-minted president and group executive director Arul Kanda.

In a statement, 1MDB said it had previously redeemed US$1.215 billion, which is 60% of the funds invested, and has now taken back the remaining US$1.103 billion.

“Following a commitment made by the chairman of the board of directors in a statement dated December 23, 2014, 1MDB can confirm that it has now redeemed in full the US$2.318 billion invested by the company in a Cayman Islands registered fund,” he said.

“These funds originated from the repayment of a loan provided to PetroSaudi in 2011, in the form of Murahaba notes, following the termination of an earlier agreement to enter into a JV with the company. The notes, which were paid back in full – with interest, were subsequently invested in a fund under the regulatory supervision of the Cayman Monetary Authority.”

Arul, who is into his second week of his new job at the controversial and debt-ridden fund, had previously told The Malaysian Insider that more time was needed to bring back the remaining funds in the Cayman Islands due to the portfolio’s size and nature of investments.

He also revealed that the strategic development firm had begun operations to repatriate the money.

“I understand that it was originally stated these funds would be redeemed by the end of the year that has just concluded but as a former banker, I can tell you that – with investments of this size and nature – it takes a while to wrap them up,” he said.

1MDB had earlier invested US$2.32 billion in a “segregated portfolio fund” in 2013, and it was later revealed that the money was being managed by a fund manager in the Caymans, a move which drew intense scrutiny and criticism from the opposition and former prime minister Tun Dr Mahathir Mohamad.

Many, including former finance minister Tun Daim Zainuddin, also questioned the secretive nature of the fund’s investment in the Cayman Islands.

DAP’s Petaling Jaya Utara MP Tony Pua had questioned the delay in getting the funds back, despite pledges from Putrajaya and the company that all the money would be repatriated by the end of 2014.

He said the delay had not only raised questions about 1MDB but also threatened the stability of Malaysia’s financial system.

On November 6, 2014, Deputy Finance Minister Datuk Ahmad Maslan had said in parliament that 1MDB had repatriated part of the funds in the Caymans and would bring back the balance by the end of the year.

The company’s financial statements for the year ending March 2014 which were filed in October 2014 had also stated that the US$1.23 billion would be received in full before the end of November last year.

Last month, however, 1MDB chairman Tan Sri Lodin Wok Kamaruddin had said that 1MDB only “expects to redeem the remaining amount in the coming months”.

Lodin added that repatriating the funds to Malaysia would have exposed the money to fluctuations on the foreign exchange market.

This follows the 10-month decline of the ringgit to RM3.55 against the US dollar. – January 13, 2015.
IMAGE: Arul Kanda, newly-appointed president and group executive director of Malaysia’s state investor 1Malaysia Development Bhd, said 1MDB had fully redeemed the funds parked in Cayman Islands. – Reuters pic, January 13, 2015.
For more on this story go to: http://www.themalaysianinsider.com/malaysia/article/1mdb-says-has-redeemed-in-full-us2-billion-invested-in-cayman-islands#sthash.uEZUjXXY.dpuf
See iNews Cayman related story published January 12 2015 “More time needed to bring back Caymans funds, says new 1MDB chief” at: http://www.ieyenews.com/wordpress/more-time-needed-to-bring-back-caymans-funds-says-new-1mdb-chief/