The Straits Times responds to criticism of reports on 1MDB

The Straits Times has dismissed criticism by a Malaysian MP who said the newspaper got its facts wrong in two recent articles on the 1Malaysia Development Berhad (1MDB) saga.

Mr Tony Pua, who is political secretary to Finance Minister Lim Guan Eng, made the criticism in a statement to the Malaysian media on Monday (Oct 15).

He took issue with two articles in the ST with the first published on Oct 7 and headlined  "Looming $70m 1MDB interest payment is key test for Malaysia". Mr Pua said that a US$50 million interest payment to Abu Dhabi, referred to in the article, was not "the first financial commitment" the new Pakatan Harapan government had to honour over the 1MDB affair since coming to power after the general election on May 9.

Mr Pua pointed out that Mr Lim, as Finance Minister, had on May 31 announced that he had "very reluctantly" signed off on the interest payment of RM143.75 million (S$47.6m) the previous day for a 1MDB bond "guaranteed" by International Petroleum Investment Corporation (IPIC).

Mr Pua added that the Finance Ministry had also authorised and made the October coupon payment without fuss.

Responding to the Malaysian MP's statement, ST regional correspondent Leslie Lopez, who wrote the Oct 7 report as well as the other report at issue, noted that the October payment was the first to be paid out under the 1MDB settlement agreement the previous government had signed with Abu Dhabi to avoid a potentially damaging arbitration process.

The settlement agreement, which required Malaysia to make payments amounting to US$1.2 billion in two separate instalments in the second half of 2017, also called for milestone payments between April 2017 and October 2022.

Mr Lopez said the payment schedule seen by The Straits Times showed that the last charge of US$52.41 million fell due on May 7, two days before the country's historic general election. The Oct 15 payment thus represents the first obligation of the new government under the settlement agreement.

Mr Pua also took issue with ST's Oct 14 article headlined "Malaysia's 1MDB Debt to Abu Dhabi may have ballooned". The article stated that the commitments listed in an IPIC statement to the London Stock Exchange, "amounting to roughly US$6.89 billion before interest charges, are more than double the sum Kuala Lumpur believes is owed to Abu Dhabi".

Mr Pua said the Abu Dhabi company stated that the guarantee for IPIC debts amounting to approximately US$6.89 billion would be assumed by its parent company, Mubadala.

"The announcement at the same time discloses that the 'Guaranteed Obligations' provided by IPIC for the two 1MDB bonds amounting to US$3.5 billion, will also be assumed by Mudabala (sic). It doesn't say that 1MDB owed US$6.89 billion in debts to IPIC or Mudabala (sic)," he added.

Responding to this, Mr Lopez said that Malaysian government lawyers remain in the dark about the settlement agreement between 1MDB and Abu Dhabi because they are unable to source documentation related to the deal.

The London lawyers appointed by the Malaysian government have been instructed to look into the possibility that the notes cited in the IPIC announcement could be tied to 1MDB, he added.

The Straits Times editor, Mr Warren Fernandez, said the paper stood by its reporter and the reports filed as these were based on documents and information from highly placed and reliable sources.