Long-awaited parliamentary report on 1MDB expected to leave Najib untouched: Sources

Malaysian businessman Low Taek Jho (left) and state investor's first managing director and CEO Shahrol Azral Ibrahim Halmi.
Malaysian businessman Low Taek Jho (left) and state investor's first managing director and CEO Shahrol Azral Ibrahim Halmi.PHOTOS: SOUTH CHINA MORNING POST/ BLOOMBERG

Panel expected to omit more controversial details in findings, leave Najib untouched: Sources

The long-awaited parliamentary review of 1Malaysia Development Berhad (1MDB) is expected to recommend that the troubled state investor's founding management be investigated further over allegations that billions of ringgit had been misappropriated.

The Public Accounts Committee (PAC) will table its findings to Parliament today, after deliberating for nearly a year on questionable dealings that have led to calls for Malaysian Prime Minister Najib Razak, 1MDB's advisory chief, to resign.

However, sources told The Straits Times that the PAC report will omit some of the more controversial details from the Auditor-General's (A-G) review of 1MDB's books, which showed a whopping RM42 billion (S$14.5 billion) of debt as of its last official filings in 2014.

These include the mysterious investment units transferred from the Cayman Islands to Singapore, and the role of Good Star Limited, a company controlled by Malaysian businessman Low Taek Jho, that received money meant for a now-defunct 1MDB venture. Mr Low was a key figure in setting up the investment vehicle that was eventually renamed 1MDB in 2009.

"The report will lay the blame on the previous management, but leave Najib untouched. There was also strong insistence to include 1MDB's debt rationalisation plan and conclude that it will result in a cash surplus for the company," a source said.

1MDB's first managing director and chief executive, Datuk Shahrol Azral Ibrahim Halmi, remains a board member. He was interviewed twice by the PAC, a bipartisan panel of lawmakers, during the probe that began in May last year.

The A-G's review, which was ordered by the Cabinet in March last year, will not be made public.

But sources said the PAC report will contain at least three-quarters of the audit findings and that the "damaging" details are set to be made available online this morning.

1MDB's business moves that are said to have led to the crippling debt pile include the purchase of power plants at prices considered inflated by some analysts, and 1MDB's abortive joint venture with Saudi energy firm PetroSaudi in which it had invested a total sum of US$1.83 billion (S$2.48 billion). These forays were funded by raising debt involving large fees and terms considered overly favourable to the lender, resulting in 1MDB's inability to square off its liabilities until it began liquidating its assets last year.

1MDB claims to have profited from the PetroSaudi deal even though the joint venture undertook no actual business.

It says US$1.1 billion still remains in the Singapore branch of Swiss bank BSI. The banker in charge of the 1MDB account, Mr Yak Yew Chee, is being investigated by the Singapore authorities as part of a money-laundering probe.

After reports last July revealed that US$700 million linked to 1MDB had ended up in Datuk Seri Najib's private accounts, he insisted that the bulk of the money was a donation from the Saudi royal family.

The government has been accused of covering up the 1MDB scandal, with several other probes stalling or abandoned altogether.

Senior opposition MP Rafizi Ramli was yesterday remanded until tomorrow for allegedly breaching the Official Secrets Act, after revealing documents that he claims prove that 1MDB was unable to meet payments to the armed forces pensioners' fund.

A version of this article appeared in the print edition of The Straits Times on April 07, 2016, with the headline 'Report on 1MDB 'to highlight founding team''. Print Edition | Subscribe