In a one two publicity move, an explanatory statement and TV appearance was used to explain the RM42 billion borrowing of 1MDB that allegedly "lesap". Or it was not allegation but merely question?
Arul Kanda released a short press statement together with two charts to account for the RM42 billion borrowing. The statement below:
Media statement by Arul Kanda, 1MDB President and Group Executive DirectorIt was followed at night by a TV appearance by Minister of Finance 2, Dato Husni Hanadzlah on RTM 2 at 9:00 PM.
Issued on 3 June 2015
For immediate publication
RM42 Billion All Accounted For.
“In recent weeks, there has been much speculation about the use of RM 42 billion of debt raised by 1MDB, and more specifically that RM 27 billion of debt proceeds are alleged to be "lost" or "missing".
We provide a summary of what the RM42 billion debt has been used for, information that is fully disclosed in 1MDB's audited and publicly available accounts from 31 March 2010 to 31 March 2014.
We trust this clarification will help to clear any confusion on this matter.”
Those in touch with the issue and some understanding of corporate finance should have some picture of 1MDB side of the story.
He used the 45 minutes program to explain issues and deny allegations raised by the pro-opposition online media and social media. More important Husni stressed that 1MDB has to address the RM42 billion debt. If not, it is the government that has to bear the debt burden and that could stiffle the budget for RMK 11.
Explained also was the urgency of Arul Kanda to meet the fund provider and Banker for solution to the cashflow problem to meet 1MDB financial commitment.
Denied that PM had bullied cabinet into resignation for not giving supporting on the principle of collective agreement to Dato Najib on the 1MDB issue [read Mkini MB here].
However, there was a reluctance by Husni to answer the twice asked question of Taek Jho Loh. Malaysiakini highlighted his reply as Jho Loh does not need to be glamourised [read here the BM version].
One member of our WA group described Jho Loh as a financial intermediary that earn commission or fee from deals. He has no official role thus legally difficult to implicate him. There is the likelihood his commission or fee is paid from the Middle East side.
However, Jho Loh may have assisted in the dealmaking but the deal still need to be tabled to the Board of Directors for approval, get endorsement from the Board of Advisory and as Rafizi pointed out, M&A require Najib to give final approval. How to pin him?
Unless EO and ISA is put back in place, only then could Jho Loh be held on the basis of economic security.
The two responses serve to supplement this blog's cautious explanation made April 29th, more than a month earlier [read here].
The audited account had accounted for everything and to say it is untrue tantamount to another Enron II scandal in the making that could see the demise of one or two more big four accounting firms.
The Edge issue dated May 25-May 31 attempted to debunk that line of argument.
Earlier there have been preemptive attempts to dispute the ability of the Auditor General (AG) team to uncover anything. Maybe right and maybe wrong, Husni argued that AG annual report are seldom used by opposition to criticise government.
Dato Hishamuddin Hussein Onn was also in the same line of argument when he asked that Price Waterhouse - Coopers be appointed to do forensic investigation. Politically, it raises a question but operationally. among the big 4, it is only PWC that had not done work for 1MDB.
Tun Dr Mahathir's had expressed the opinion that PAC is better suited to investigate. [This blog took a contrary position here.] Tun is still adamant to criticise but he is right to say that the cabinet failed to manage the "1MDB test" [Mkini here].
Tony Pua remain critical as he described the explanation by Arul Kanda as half-baked and does not clear confusion. It is only expected of a DAP leader. There should be no complain for it is their job to never admit they are wrong and others they attacked are right. [read MI here]
Now that the solution and explanation to the RM42 billion debt are given, one can expect the attack will take cue from BNM latest statement:
Ref. No.: 06/15/01
For immediate release
Statement on 1MDB
As the nation’s Central Bank, Bank Negara Malaysia is entrusted to promote the stability and integrity of the financial system and the sustainability of our economy. Widespread news reports and commentaries regarding 1MDB have raised questions on whether the Central Bank has continued to uphold the trust that has been placed on the Bank.If any indiscretion done, it will look bad on government.
The purpose of this statement is to provide clarity on the role of the Central Bank with respect to any resident entity, including 1MDB, that makes investments abroad or obtains offshore borrowings under Section 214 of the Financial Services Act 2013 and under the Exchange Control Act 1953 that was in force prior to 2013. All investments that exceed RM50 million per calendar year and any offshore borrowings that exceed RM100 million by resident entities require the Central Bank’s approval. In relation to this, all submissions that were made by 1MDB have had to comply with the same approval criteria that is applied to submissions by other business entities. If the criteria is not met, the submission will be rejected. No leniency or special exceptions were accorded to 1MDB.
In accordance with the legislation administered by the Bank, the following developments will trigger formal investigations:
• When monies for which approvals are given are not used for the purpose indicated in the submission;
• When incorrect or false information are provided in the submission; and
• Failure to comply with the conditions in the approval.
As part of an investigation process, the Bank will issue a legal directive requiring information pursuant to the relevant Acts that the Central Bank administers. This will require the Board and Management of the entity to provide the information within a specified time frame. Under the Financial Services Act 2013, the penalty for failure to meet this request can result in a fine of up to RM50 million or up to 10 years in prison or both.
In relation to cross border movements of funds, the Bank also relies on financial intelligence authorities in the foreign jurisdictions to bring to our attention irregular or suspicious transactions made in their jurisdiction. Such arrangements for information sharing must conform to international protocols. The arrangements require that the information be kept confidential and any breach will lead to the termination of such arrangements. These arrangements also provide for the Bank to share the information with relevant domestic investigation authorities after securing the permission of the foreign authorities.
The scope provided under the Central Bank’s legislation does not provide powers for the Central Bank to investigate in areas such as fraud, tax evasion, corruption, cheating and criminal breach of trust. These will need to be pursued by other law enforcement agencies.
With respect to 1MDB, a formal enquiry has commenced to examine any contravention of the Central Bank’s rules and legislation. This has involved the issuance of a legal directive requiring information from the entity. The Central Bank is also taking statements from individuals involved in the governance process and obtaining information from other relevant domestic and foreign parties. In addition, Bank Negara Malaysia has forwarded information received from foreign authorities to the relevant investigation agencies after obtaining the permission from the foreign authorities.
The Central Bank wishes to emphasise that further disclosure of details of the investigation may undermine the outcome of the investigation. The Central Bank is doing everything within the powers provided under its legislation, including collaborating with other agencies, to contribute towards a swift resolution of the matter.
The rosy side of it is that Central Bank is willing to investigate and there is no attempt by the executive branch of government to stop or cover-up. That should augers well for government.
Doubt Penang state government dare to do this. New environmental controversy on Jinko looming. Observe as Guan Eng turn adversarial and evasive.