Malaysia's 1MDB says faces politically-motivated attacks despite success of rationalisation plan

Signage for 1MDB is displayed at the site of the Tun Razak Exchange (TRX) project in Kuala Lumpur, Malaysia.
Signage for 1MDB is displayed at the site of the Tun Razak Exchange (TRX) project in Kuala Lumpur, Malaysia. PHOTO: BLOOMBERG

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - 1Malaysia Development Berhad (1MDB) says it has come under "sustained and unsubstantiated" politically-motivated attacks, despite the success of its rationalisation plan.

The state investment fund pointed out an immediate outcome of the strategic review announced in February - the execution of a joint venture in March 2015 with Lend Lease of Australia to develop 17 out of 70 acres of land in Tun Razak Exchange (TRX).

However, it said this success and the fact that 1MDB was 100-per cent owned by the Malaysian Government did not stop the negative campaign against the company by politicians and former prime minister Tun Dr Mahathir Mohamad.

"These parties not only cast aspersions on 1MDB but used various means to sabotage its day-to-day business, which impacted, amongst others, a proposed IPO (initial public offering) of Edra Global Energy Berhad," 1MDB said in a statement on Saturday.

Edra is the fund's power unit.

1MDB added that various baseless allegations were made, including RM42 billion being missing from the fund and RM16 billion of its assets being worthless as well as claims that 1MDB had conspired to channel funds to third parties.

On July 3, The Wall Street Journal alleged in a report that US$700mil (S$959 million) was channelled into Prime Minister Datuk Seri Najib Tun Razak's personal bank accounts prior to the 13th general election, quoting an "unnamed investigator".

A special task force, managed by the Malaysian Anti-Corruption Commission, the Royal Malaysian Police and Bank Negara Malaysia, has since been set up to investigate the matter.

BNM is also among the government agencies investigating 1MDB's financials.

1MDB said the company had taken concrete steps to reduce the company's debt and ensure that maximum value was generated.

"Specifically, we completed the repayment of a US$975mil (about S$1.3 billion) loan on June 8 (2015)," it said.

This was on the back of a binding term sheet agreement with IPIC (International Petroleum Investment Company), which would ultimately result in a reduction of about RM16bil of 1MDB's debt, it added.

On June 30, 1MDB announced its intention to appoint an independent real estate consultant to help review expressions of interest received for the company's land parcels in Air Itam (Penang) and Pulau Indah (Selangor).

1MDB had received expressions of interest from over 40 local and international parties to be its partners to develop the 486-acre Bandar Malaysia project.

On July 16, 1MDB announced they had received indicative, non-binding offers from a number of local and international parties in relation to the monetisation process of its investment in Edra.

"Collectively, these tangible actions by 1MDB will significantly reduce debt and ensure the long-term sustainability of our three core assets, namely TRX, Bandar Malaysia and Edra Global Energy."

Meanwhile, in Putrajaya on Friday, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said 1MDB was looking to complete the sales of its power assets within the next three months.

He said 1MDB was looking at the various proposals submitted to buy its 13 power assets - five domestic and eight international - held through Edra.

"We will do it based on value for money," Husni told The Star during the Hari Raya open house hosted by the Prime Minister and Cabinet Ministers at Seri Perdana.

Besides Tenaga Nasional Bhd, three other companies are reportedly interested in buying Edra or its assets - YTL Power International Bhd, Malakoff Corp Bhd and I Holdings Bhd.