Whenever I see the word “foundation”, my antenna is inclined to buzz.
On 11 January, Bernama reported that PM Najib had announced the “establishment of Yayasan 1MDB to manage a RM100 million Corporate Social Responsibility (CSR) Fund“.
The 1MDB Foundation will soon launch “several key initiatives in bridging socio-economic gaps towards fulfilling the aspirational values of 1Malaysia”. Najib would be the chairman of the foundation’s board of trustees.
I have a few questions:
First, where is the money coming from?
Second, who has oversight over how it is going to be spent?
Third, why so much CSR? How many Malaysian firms do you know that have set up a CSR foundation for RM100 million? Bridging socio-economic gaps is fine, but wouldn’t this be better handled through the usual government channels, which are supposed to have their own checks and balances (for what they are worth), rather than an opaque foundation? What are the reporting and disclosure requirements for such a foundation? Does anyone know?
Bear in mind that 1MDB evolved out of plans to set up a Terengganu Investment Authority to create a sovereign wealth fund to manage the state’s securitised future revenue from oil royalties.
The plan is for 1MDB to eventually manage RM11 billion. The first tranche of RM5 billion has already been raised through the issue of ‘Islamic Medium Term Notes’ guaranteed by the federal government.
Did I just say guaranteed by the federal government? So, fourth, on what basis was the bond financing raised? On the strength of what?
Fifth, are we investing future revenue now and allowing the federal government to be saddled with guarantees?
Clarification would be appreciated.
Already, 1MDB has signed deals with China (for possible investment in dams and a smelter in Sarawak worth US$11 billion) and with PetroSaudi International Ltd (US$2.5 billion).
All I can say is that Malaysians need to keep a close eye on 1MDB.