1MDB will become shell company, says its president

The site of the Tun Razak Exchange financial district, which is owned by 1MDB, in Kuala Lumpur. The troubled state investor also has a 40 per cent stake in Bandar Malaysia, another property project in the capital.
The site of the Tun Razak Exchange financial district, which is owned by 1MDB, in Kuala Lumpur. The troubled state investor also has a 40 per cent stake in Bandar Malaysia, another property project in the capital.PHOTO: BLOOMBERG

KUALA LUMPUR • Malaysia's troubled state investor 1Malaysia Development Berhad (1MDB) will become a shell company once its rationalisation plan is fully implemented, according to its president and group executive director Arul Kanda Kandasamy, reported Bernama news agency.

"Based on the rationalisation plan and Public Accounts Committee's (PAC) suggestion that its subsidiaries are removed (from under the company's control), 1MDB will be a shell company," Mr Arul was quoted on Thursday as saying.

"There will be no daily operation and 1MDB will serve its debts through cash flow derived from the rationalisation plan."

In a report tabled to Parliament on Thursday, the PAC said all of 1MDB's assets and subsidiaries should be handed over to the Ministry of Finance Incorporated (MOF Inc) for tighter supervision.

Mr Arul said discussions on deciding the status of 1MDB would be made with MOF Inc soon.

NO DAILY OPERATION

Based on the rationalisation plan and Public Accounts Committee's (PAC) suggestion that its subsidiaries are removed (from under the company's control), 1MDB will be a shell company. There will be no daily operation and 1MDB will serve its debts through cash flow derived from the rationalisation plan. ''

MR ARUL KANDA KANDASAMY, 1MDB president and group executive director.

1MDB owns the Tun Razak Exchange financial district in downtown Kuala Lumpur.

It also has a 40 per cent stake in Bandar Malaysia, another property project in the capital.

The PAC said the board of 1MDB had failed to carry out its responsibilities and its former chief, Datuk Shahrol Halmi, must be further investigated.

It added that senior management at 1MDB withheld crucial information from the board and made transactions without its knowledge or approval.

Members of the 1MDB board offered to resign on Thursday following the release of the parliamentary report.

Mr Arul said the move was not a ploy to escape blame.

"In fact, the move allows more space for the authorities to conduct further and transparent investigations on 1MDB," he said.

THE STAR/ASIA NEWS NETWORK, REUTERS

A version of this article appeared in the print edition of The Straits Times on April 09, 2016, with the headline '1MDB will become shell company, says its president'. Print Edition | Subscribe