As posted by Dr. Mahathir Mohamad at Che Det on June 04, 2015
1. The 2nd Finance Minister has presented Cabinet with a restructuring plan for 1MDB which will solve all it’s problems. I would like once again to repeat that repayment of the debt does not absolve the borrowers from responsibility for losing the money in the first place. The money is not lost through bad businesses but has simply disappeared. Somebody knows how the money disappeared and who has the money now. But that somebody is not telling.
2. Now the restructuring process.
3. IPIC is said to have invested 1 billion U.S. dollar in 1MDB. It is not a loan as claimed by the 2nd Finance Minister. Certainly it is not a free gift. What does IPIC get for its 1 billion dollars from 1MDB. It must be the assets of 1MDB.
4. IPIC may be putting in another 3 billion USD. The money which 1MDB gets will be used to repay the German Bank which had lent approximately 1 billion USD The additional 3 billion USD will be for transferring the landed assets of 1MDB.
5. 1MDB had acquired Government land worth between RM4000/- toRM7000/- psf at RM60/- to RM90/- psf. Actually the price paid by1MDB for Government land represents or reflects an abuse of authority. The right thing to do is to pay the market price of the land before it is developed or disposed of.
6. If IPIC pays 4 billion USD to 1MDB, effectively IPIC become owner of the assets of 1MDB.
7. 1MDB actually gets nothing as the money from IPIC will go towards paying the interest and loans of 1MDB to reduce the total loans of RM42 billion to a smaller amount.
8. On this smaller loan 1MDB would still have to pay interest until money is found to pay off the principal.
9. So how does this restructuring benefit 1MDB. It would:
- Lose control of 1MDB to IPIC.
- Any development of the land would accede to IPIC.
- The deal would result in the Malaysian Government losing billions of Ringgit unless market price is paid for TRX and Bandar Malaysian land.
- 1MDB would still have to pay interest on the balance of the loan and eventually billions of Ringgit to settle the loans. Having lost the most valuable part of its assets, how does it raise money.
- 1MDB would still have to sell off the power plants. Since it paid higher than market value for the plants it will not be able to list it or sell at the purchase price. It will have to lose at least 3 billion Ringgit simply to get rid of the plants.
10. So far there is no evidence that money amounting to 4 billion dollars (14 billion Ringgit) from Cayman Islands is in Singapore. That money has disappeared unless 1MDB can show there are “units” with value in money in Singapore. The units must be converted to real money to be credible.
11. The restructuring plan presented by the 2nd Minister of Finance cannot erase the problem of 1MDB, cannot erase the fact that money borrowed by 1MDB has disappeared, that the Government of Malaysia will lose billions of Ringgit. Part of the loan may be redeemed but a very substantial amount will remain. Certainly the restructuring will not result in the lost money being recovered.
12. There are too many evidence of cover-ups by politician and civil servants. When Najib is defeated and I believe he will, in the next election, there will be no stopping the legal actions which must follow.
13. I hope the restructuring will help but unless the lost money is returned, paying off debts will absolve no one.