Najib govt chalked up $338b in debt, says finance minister

Former Malaysian prime minister Najib Razak leaving the Malaysian Anti-Corruption Commission headquarters in Putrajaya yesterday. He was questioned for five hours over transactions involving state firm SRC International, which was once a subsidiary o
Former Malaysian prime minister Najib Razak leaving the Malaysian Anti-Corruption Commission headquarters in Putrajaya yesterday. He was questioned for five hours over transactions involving state firm SRC International, which was once a subsidiary of 1MDB.PHOTO: EPA-EFE

Nation was heading towards crisis, he says; mega projects, defence deals to be reviewed

Malaysia's new administration yesterday detailed the full extent of the threat posed to the country's economy by mega projects under the previous government, while former prime minister Najib Razak was hauled in for questioning by anti-graft investigators.

Finance Minister Lim Guan Eng revealed that the country's debt obligations had surpassed RM1 trillion (S$338 billion) under the Najib administration, far higher than the RM700 billion flagged by the previous government at the end of last year. The new administration said it would review defence deals, housing projects and even the High-Speed Rail (HSR) to Singapore in an effort to cut waste and corruption.

Mr Lim also claimed that the Treasury had been "bailing out" scandal-ridden 1MDB and had paid RM7 billion to service the state fund's debt obligations since April last year. This included a settlement of more than RM5 billion to Abu Dhabi fund IPIC, he said. This showed that 1MDB had "essentially deceived Malaysians" by giving the impression that its debts were under control, said Mr Lim.

"It is clear that the previous government has conducted an exercise of deception to the public about certain hot-button items, especially 1MDB, and even misrepresented the financial situation to Parliament," added Mr Lim.

Factoring in government guarantees and loans parked under state-linked firms as part of Putrajaya's full liabilities, the debt obligations would hit RM1 trillion, according to the Finance Ministry.

Asked if this meant Malaysia was headed towards bankruptcy, Mr Lim told reporters "under the previous government, of course, but under the current government, we will rescue the situation".

Earlier in the day, Economic Affairs Minister Azmin Ali said some projects would be reassessed. He said: "We need to look at factors which contributed to this RM1 trillion debt. We need to ensure the procurement process is transparent, no more direct negotiations or limited tenders. We need to look at it again and renegotiate the terms."

Aside from the HSR, the RM55 billion East Coast Rail Link from Port Klang to Kelantan is also among deals to be reviewed.

This comes against the shadow of the Pakatan Harapan coalition scrapping the goods and services tax while reintroducing the sales and services tax. The revelations on 1MDB appear to be giving it the ammunition to go on the offensive.

Besides the RM7 billion already paid, Mr Lim said another RM1 billion is due by November. Finance Ministry officials told The Straits Times 1MDB chief Arul Kanda will be asked to clarify the matter today.

This came hot on the heels of claims by new anti-graft chief Shukri Abdull that he "nearly died" when investigating claims of graft in 1MDB linked to Mr Najib three years ago. Then the deputy chief of the Malaysian Anti-Corruption Commission (MACC), he recalled how he faced death threats, missing witnesses and ended up seeking safe haven in Washington before being ordered to take leave until his retirement in October 2016.

Meanwhile, Mr Najib was questioned for five hours at the MACC headquarters yesterday over transactions involving state firm SRC International, which was once a subsidiary of 1MDB. He is alleged to have received RM42 million from SRC via intermediary firms. He was given a clean chit in the past, but charges could follow the latest probe.

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A version of this article appeared in the print edition of The Straits Times on May 23, 2018, with the headline 'Najib govt chalked up $338b in debt, says finance minister'. Print Edition | Subscribe