1MDB tells Mahathir: Stop slamming power-plant deal

Malaysia's former prime minister Mahathir Mohamad during an interview at his office in Petronas Towers, Kuala Lumpur on Oct 22.
Malaysia's former prime minister Mahathir Mohamad during an interview at his office in Petronas Towers, Kuala Lumpur on Oct 22.PHOTO: REUTERS

KUALA LUMPUR • Malaysian state investment firm 1MDB took issue with former prime minister Mahathir Mohamad yesterday, saying of the "retired and former politician" that he "has failed in his numerous attempts to politicise the 1MDB issue".

Responding to "false allegations" by Tun Dr Mahathir about the sale of its power assets, 1MDB said the sale of Edra Global Energy will help the state investor achieve a debt reduction of RM17 billion (S$5.6 billion), allowing it to "break even" in its energy investments.

This was despite having to sell the assets "while under sustained and misleading attacks from the opposition and Tun Mahathir".

The former PM has been a leading critic of Prime Minister Najib Razak, who started 1MDB in 2009 soon after he became prime minister.

1MDB racked up debts of RM42 billion in its first five years of existence through overseas energy ventures and the purchase of 13 power plants now parked under Edra. PM Najib is chief of 1MDB's advisory board.

1MDB announced last week that the China General Nuclear Power Corporation will pay in cash RM9.83 billion for Edra, and take over RM7.43 billion of the Malaysian company's liabilities.

Edra controls five power plants in Malaysia and eight others in Bangladesh, Egypt, Pakistan and the United Arab Emirates.

Dissatisfied with the terms of the sale, Dr Mahathir, in his popular blog last Saturday, said 1MDB could not have made a good deal because it bought the power plants when the ringgit was at a stronger value, of around RM2.80 per US dollar, compared to RM3.20 last week.

"If 1MDB had borrowed in USD (US dollars), it stands to lose one ringgit for every dollar borrowed. In other words, what 1MDB gets from the sale would not be able to pay fully the debts in USD raised by 1MDB," he wrote.

1MDB's retort yesterday: "We regret that Tun Mahathir persists in issuing misleading and wrong statements on 1MDB, which is then reported in an irresponsible manner, without analysis or journalistic enquiry, by certain online media portals."

The state investor said that its publicly available audited financial statements showed that its debts comprise RM19.82 billion in Malaysian currency, and another RM22 billion in United States currency.

"Accordingly, there is more than enough RM-denominated debt to be settled from the RM9.83 billion Edra sale cash proceeds".

1MDB said to reduce its US dollar debts, it has signed a debt-for-asset swap with the Abu Dhabi fund, International Petroleum Investment Company (IPIC).

Under this deal, IPIC is taking over 1MDB's US$3.5 billion worth of bonds - or about RM11 billion in ringgit terms - in exchange for 1MDB assets, namely US dollar cash deposits and US dollar fund units.

It ended its long statement saying: "1MDB requests that Tun Mahathir use facts and figures in his arguments and to stop his misleading and wrong political attacks on 1MDB.

"We further urge the online news media to also properly analyse and use critical analysis prior to publishing such wrong and misleading statements by this retired, former politician."

A version of this article appeared in the print edition of The Straits Times on November 30, 2015, with the headline '1MDB tells Mahathir: Stop slamming power-plant deal'. Print Edition | Subscribe