PETALING JAYA: Tony Pua has countered Second Finance Minister Johari Abdul Ghani’s argument that Putrajaya had not taken over 1MDB debts by saying that it is not possible that the debts of wholly-owned subsidiaries are not also the debt of the parent company.
Pua, who is also Petaling Jaya Utara MP, said Johari’s claim that the RM3.2 billion was an “operating debt” of the real estate companies that had been taken over by the finance ministry did not hold muster.
“No finance minister worth his salt would argue that the ‘operating debts’ of a wholly-owned subsidiary does not belong to the parent company’s accounting books,” Pua said.
Thanking Johari for his explanation yesterday, the DAP national publicity secretary said he was also pleased the minister had confirmed the facts stated in his own statement.
“The minister confirmed that real estate owned by the government was sold to 1MDB at ‘nominal’ prices. Johari concurred that the 1MDB real estate companies took loans amounting to RM800 million from Socso and another RM2.4 billion worth of sukuk for Bandar Malaysia.
“The minister also confirmed that the above debts amounting to RM3.2 billion are no longer under the books of 1MDB as they have been assumed by the finance ministry,” Pua said, questioning how else could one describe the above transactions other than a bailout.
Yesterday, Bernama reported Johari as saying that there was a clear distinction between 1MDB debts, which would not be taken over by MoF Inc, and the Bandar Malaysia Sdn Bhd (BMSB) and TRX City Sdn Bhd (TRXC) project company operating debts.
“The BMSB and TRCX project company operating debts were part of their assets and liabilities which would be serviced from the project cash flows,” the minister had said.
The DAP national publicity secretary also highlighted the most glaring discrepancy in Johari’s explanation as being that none of the proceeds from the sale of 30.5 acres of TRX and 40% of Bandar Malaysia had gone towards the settlement of debts.
“Johari failed to mention the fact that 1MDB sold 30.5 acres of TRX and 40% of Bandar Malaysia for RM3.5 billion and RM7.8 billion, respectively, where the proceeds are due entirely to 1MDB.
“However, none of it went towards the settlement of these debts. So, why is it that 1MDB gets to keep all the astronomical profits, while the finance ministry is left to carry all the liabilities in their entirety?” Pua said.
He added that both the Auditor-General and the parliament’s Public Accounts Committee (PAC) have discovered that the bulk of the money raised from the borrowings did not go towards the real estate projects.
“The net proceeds from the sukuk were ‘advanced’ to the 1MDB parent company for other purposes as well as to refinance previous borrowings, which were also utilised for non-real estate purposes.
“Even 1MDB CEO Arul Kanda had confessed to the PAC that due to cashflow difficulties within the 1MDB group, these funds were ‘diverted’ from their intended purposes.”
Pua said this proves that while the intent of the RM3.2 billion of borrowings was perhaps “operational” as emphasised by Johari, in reality, the overwhelming bulk of the borrowings was brazenly utilised for “non-operational” purposes. – FMT