PUTRAJAYA (THE STAR/ASIA NEWS NETWORK) - State fund 1Malaysia Development Berhad (1MDB) is insolvent and unable to repay its debts, two of the company's directors have told the Finance Ministry.
The revelation was made at a meeting between the Finance Ministry and 1MDB directors Norazman Ayob and Kamal Mohd Ali.
"The directors of 1MDB confirmed that 1MDB was insolvent and unable to repay its debts," Finance Minister Lim Guan Eng told reporters on Wednesday (May 23) after the meeting.
"The former CFO (chief finance officer) Azmi Tahir had also written to the ministry in March to state that 1MDB will not be able to service its interest due in April and May 2018.
"These investments are worth purportedly some RM9.8 billion (S$3.3 billion), which if redeemed, would be more than sufficient to meet 1MDB's financial obligations for the next few years," said Mr Lim.
He said: "The board of directors claimed they have repeatedly disputed the value and the existence of these investments during monthly board meetings. This is because the 1MDB management had repeatedly failed to supply the board with evidence of the existence of these investments over the past two years.
"Datuk Kamal called these investments a scam. That's the director himself saying it."
Besides the two directors, Mr Lim had a separate meeting with 1MDB chief executive officer and president Arul Kanda Kandasamy as well as former 1MDB CFO Azmi and former 1MDB general counsel Ivan Chen.
Mr Lim lambasted Mr Arul Kanda as being "utterly dishonest and untrustworthy".
He said: "Arul Kanda claimed that all financial matters were handled strictly by the company CFO and he is uncertain what the value of these investments are - or whether they exist in the first place.
"It is completely unbelievable that a highly paid and experienced investment banker can be so irresponsibly clueless as to not know whether RM9.8 billion worth of investments are even real."
The Finance Minister said he had instructed the ministry's legal advisers to review Mr Arul Kanda's position as president of 1MDB.
The ministry will also appoint accounting firm PricewaterhouseCoopers (PwC) to conduct a special position audit and review of 1MDB.
"We want Malaysians to know the true financial state of affairs in 1MDB. We will then be able to determine the cost to the taxpayers," said Mr Lim.
"The PwC report will be submitted to to the 1MDB Special Committee once it's completed."
Also present with Mr Lim at the meetings were deputy treasury secretaries-general Siti Zauyah Md Desa, Ahmad Badri Mohd Zahir and Asri Hamidon.