This infographic was prepared by 1MDB. The column on the left totalling RM14.1bn is basically culled from Mahathir’s tabulation of what he felt 1MDB had spent.
Mahathir had said that 1MDB could only account for RM14bn of its RM42bn debt. He asked what happened to the other RM27-28bn.
Basically, 1MDB is trying to explain the “missing” RM27bn. According to 1MDB, it is made up of:
RM6.0bn – “Inherited debt” (What the heck is this? Weren’t the power plants profitable in the first place? So why should there be “inherited debt”? If these plants are not profitable, why did 1MDB acquire them? Did it overpay for the power plants as various quarters have maintained?)
RM6.1bn – “Investment cost: Brazen Sky” (This is managed by Bridge Partners of Hong Kong. How much of this is recoverable? This must be the Cayman Islands “money”, some of it supposedly parked in Singapore and now infamously known as “units”.)
RM5.1bn – “Investment cost: GIL Funds” (This is supposedly part of the US$3 (RM10bn) that 1MDB raised for the Bandar Tun Razak project. How much of this is recoverable?)
RM4.2bn – “Investment cost: Aabar Investments” (This is supposedly for a security deposit in return for a guarantee on a 1MDB bond issue to raise US$3.5bn (RM11.5bn). But how much of this will 1MDB get back?)
RM4.5bn – “Cost of finance and working capital” (Why so expensive? 1MDB has to reportedly pay RM1.6bn per year to service its borrowings. Can we have the breakdown between ‘commission’, etc and the regular interest? Specifically, how much ‘commission’, etc was paid for the funds procured via Goldman Sachs?)
RM1.8bn – Others (including forex loss RM0.9bn and cash RM0.9bn)
Of course, this doesn’t explain why 1MDB was said to have overpaid in acquiring the power plants, which were nearing the end of their concession periods.
Neither does the table above explain why the government sold land at ridiculously low prices to 1MDB. (Mahathir estimates that the government lost RM25bn due to these low prices – which would mean 1MDB stands to reap the same amount in revaluation surpluses at the government’s expense.)
Forensic auditors are going to have ‘fun’ if they are allowed to pore over 1MDB’s books and documents and verify all these “investments” in order to establish how much they are really worth.
Just make sure there are no shredders around.
The larger question is, why did we need 1MDB in the first place? Why couldn’t Khazanah have handled the land deals? Why couldn’t Tenaga have decided whether it needed to acquire those power plants.
1MDB is not a sovereign wealth fund as it was borrowing money at stiff rates to invest in questionable assets and even “units”.
In effect, the 1MDB set-up allowed a tiny group of powerful and well-connected individuals to make huge ‘brazen’ investments and other large payments with hardly any checks and balances, parliamentary oversight or thorough audit by the Auditor General.
The land it acquired at outrageously low prices from the governent allowed 1MDB to show rosier financial results due to revaluation surpluses. This enabled it to mask its poor returns, alleged overpayments for power assets and high financing costs – for a while.
But then, the large net cash outflow finally caught up with 1MDB and the game was up. The party was over.