The past fortnight had been a disastrous two weeks for the Prime Minister Datuk Seri Najib Razak and his close ally Penang billionaire Jho Low’s brainchild, the 1MDB Malaysia sovereign fund but it has been downright nightmarish for Malaysia in confirming the country as among the world’s top scandal-ridden nations.
The Public Accounts Committee (PAC) Report on 1MDB, meant to be the centerpiece of a media scam by Najib’s strategists to create the myth that it had exonerated Najib from any wrongdoing in the RM50 billion 1MDB and RM4.2 billion “donation” twin mega scandals proved to be a dud.
In a matter of four days, the media scam was thoroughly exposed and discredited when firstly, detailed reading showed that the PAC Report had not made any such conclusion or finding to exonerate Najib, and secondly, when the Abu Dhabi-state owned International Petroleum Investment Company (IPIC) in a statement to London Stock Exchange on 11th April stated that neither it nor or its subsidiary Aabar Investments PJS had any links or received US$3.5 billion which 1MDB had paid to the phoney British Virgin Islands-incorporated Aabar Investments PJS Limited (Aabar BVI) .
This was followed by the desperate attempt to salvage the situation by enlisting the Saudi Foreign Minister Adel Al-Jubeir to declare that the billions of ringgit deposited into Najib’s personal banking accounts were “a genuine donation” from Saudi Arabia “with nothing expected in return”.
This ploy did not have a long life-span either, especially when there was no explanation for Al-Jubeir U-turn statement only two months earlier that he did not think the RM2.6 billion deposited in Najib’s personal bank accounts was a political donation, or that it originated from the Saudi government. Al-Jubeir had then said the money was from an unspecified “investment”, saying that it was from “a private Saudi citizen”.
What is worse, a video then surfaced which demonstrated that Al-Jubeir never admitted that Saudi Arabia government was the “donor” whether RM2.6 billion or RM4.2 billion in Najib’s personal banking accounts.
I had seen the video of Al-Jubeir Q & A several times.
He was asked: “Your Excellency, are you aware of the background and details about the issue on the donation to the Prime Minister of Malaysia?”
Al-Jubeir answered: “We are aware of the donation and it is a genuine donation with nothing expected in return and we are also fully aware that the Attorney General of Malaysia had thoroughly investigated the matter and found no wrongdoing so as far as we are concerned the matter is closed.”
What a distortion in this second media scam! Al-Jubeir never made any admission or declaration that the donation came from Saudi Arabia government, only that he is aware of Najib’s claims that they were donations which came from Saudi Arabia – which is a world of a difference from declaring that the billions in Najib’s personal bank accounts were donations from Saudi Arabian government.
But these media scam faux pas pale into insignificant when IPIC made a second statement to London Stock Exchange yesterday that 1MDB had defaulted on US$1.1 billion it owed, raising the spectre of Malaysian market turmoil if 1MDB is unable to dig out from under its huge debts.
IPIC had agreed in 2012 to guarantee US$3.5 billion in 1MDB bonds, lend it more than a billion dollars, and make interest payments on the bonds.
In its statement, IPIC said 1MDB and its owner, Malaysia’s Finance Ministry, had failed to pay back more than US$1.1 billion they owed. “As a result, 1MDB and MOF are in default.”
Following IPIC’s announcement, Malaysia’s Finance Ministry issued a statement noting the “dispute” over the loan but sought to reassure markets.
“The MOF wishes to make clear that it will continue to honour all of its outstanding commitments in the financial markets,” it said.
The long and short of IPIC’s second statement to London Stock Exchange and the MOF statement is that Malaysians are presented with a sudden financial crisis which would involve a RM14 billion bail-out by the Finance Ministry following 1MDB’s default of a multi-billion-dollar financial assistance arrangement.
There are serious implications for the Malaysian government in the 1MDB-IPIC feud, as a default on the US$3.5 billion bond issue was likely to trigger so-called cross-defaults on the 1MDB’s other commitments, which stand at about US$5.1 billion.
In countries where accountability, integrity and good governance practices are taken seriously in public life, the Prime Minister and Finance Minister presiding over such a mega financial scandal would have resigned.
It is time for Malaysia to have a new Prime Minister and a new Finance Minister to clean up the Augean Stables in the government treasury caused by Najib’s twin mega global scandals.