It is unconventional for the Finance Ministry to return the RM741 million deposit paid for the Bandar Malaysia land, if it insists that the payment deal was breached, said Petaling Jaya Utara MP Tony Pua.
Project owner TRX City Sdn Bhd said it cancelled the contract with the Iskandar Waterfront Holdings-China Railway Engineering Corporation (IWH-CREC) consortium because it did not meet the payment obligations.
TRX City Sdn Bhd belongs to the Finance Ministry, which in March took over the land it had sold to 1MDB for a sweetheart price of RM1.6 billion in 2010.
“The question is, if the contract with IWH has been cancelled, who will reimburse the deposit? Not 1MDB but the Finance Ministry.
“But this is strange. The Finance Ministry said the contract was cancelled because IWH did not fulfil its contractual obligations.
“In conventional contracts, if a contract is breached, the deposit is forfeited. So why should the deposit be reimbursed? They (IWH) did something wrong but we have to repay the deposit?” Pua asked.
He raised the question at a forum on 1MDB in Petaling Jaya last night.
The RM741 billion deposit came into question at the Johor state assembly as IWH is partly owned by the Johor government.
Sold to 1MDB at low price
Pua said the RM741 million deposit is only a portion of the liabilities the Finance Ministry had to foot after taking over the Bandar Malaysia land.
He noted that 1MDB had, upon obtaining the land in 2010, used it as a collateral for a loan of RM2.4 billion.
“The auditor-general’s investigation found that not a single sen of that loan was invested into Bandar Malaysia. So, when the land is returned to the ministry, it is the ministry that foots the debt,” he said.
This is on top of the RM2 billion still owed to a subsidiary of the Armed Forces Fund (LTAT), which was contracted to move the air force base from the Bandar Malaysia land, Pua added.
He said the contract was RM2.7 billion but 1MDB only paid about RM700 million.
“So, in total, the MOF will be footing RM5.2 billion when it takes back the land.”
Pua said the government sold the land to 1MDB at a relatively low price of RM47 per square foot – but the payment was never collected by the MOF.
“I asked the developers if I sold the same land to them for RM250 per square feet, would they buy it? They said ‘I would bite your hands off’…
“We gave the land to 1MDB for free, but when it is returned, it comes with RM5.2 billion in debt,” Pua added.