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Saturday, 27 June 2015

Your bill for extreme meroyan: RM8.6 BILLION (not including 6% GST)

About a week ago, Tenaga announced that the Electricity Commission (EC) has accepted Tenaga to take over from 1MDB as the lead developer in Track 3B, a 2,000MW coal-fired power plant in Jimah.

The final tariff for this 25 years concession will be 26.67 sen/kwh which is 1.34 sen higher than the initial tariff of 25.33 sen/kwh given to 1MDB.

Gosh! Scandal! Crony! Bail-out!

Higher Power Purchase Rates for Tenaga because it had to "bail out" 1MDB who is unable to raise financing for the Track 3B plant!

Wait... hang on...

When 1MDB bid 25.33 sen/kwh and won this project in early 2014, the 26.67 sen/kwh price was EXACTLY the price of the nearest qualified bidder,

Shortly after winning the Track 3B tender, 1MDB issued this press release on 7th March 2014:
"Their levellised tariff of 25.33 sen/kWh is very competitive where it is 1.34 sen/kWh lower than the next ranked bidder - or 26.67 sen/kwn

In essence, the Electric Commission (EC) is basically just awarding the project to the next lowest bidder, since 1MDB failed to deliver this project in time.


Tenaga did not get a higher PPA tariff by taking over the project from 1MDB than what the next lowest bidder offered in 2014!

That would still mean that this deal is profitable to Tenaga who now takes over the project and Tenaga will still make (a lot of) money from this project.

So, what if the tariff given to Tenaga is now higher than to 1MDB?
According to Affin Hwang, the imbalance cost pass-through (ICPT) mechanism would be used to address the potential higher tariff for Track 3B, which means that the additional costs associated with Track 3B may be passed on to consumers under the generation-specific cost adjustment portion of the ICPT.
Okay, so it means we might have to pay higher electricity rates in future.

But it's only 1.34 sen/kWh extra mah. Satu perpuluhan tiga empat sen saja. Kacang putih.

But wait again....
CIMB Research estimates the 1.34 sen/kwh hike in tariff will translate into a present value of almost RM2bil.
Okay.. Net present value of RM2b. So, what does a Net PRESENT value translates to over the entire 25 years concession period?

Let's use a discount rate of 6% and expand that over 25 years.

That would mean...  RM8.6 billion.

Yes, potentially Malaysian consumers can expect to pay an additional RM8.6 billion extra for their electricity bills over the next 25 years.

Rakyat pay and not govt pay to TNB and correspondingly, the IPPs.
RM8.6 beluyon... Sap Sap Water.

RM8.6b extra because of the political power and extreme negative publicity that caused 1MDB to no longer be able to access government guarantees or borrow any more money from the capital markets to deliver this Track 3B power plant.

Why was 1MDB able to bid lower prices initially before all the bad publicity and political pressures hit it?
Affin Hwang Capital said TNB may need to take into account its higher Weighted Average Cost of Capital (WACC) of 8% compared with 1MDB's lower WACC, which is around mid-single digits.
Yes, because initially 1MDB was able to borrow cheaply - IF it had no political pressure and was still able to draw on government guarantees and/or there was no extreme negative publicity that caused the banks and capital markets to avoid it.

It is a fact that at the time when 1MDB was building up its IPP business, every single electricity generation bid - whether new or renewal - the price that 1MDB offered was the lowest among all the qualified bidders including the Prai plant which they lost out to TNB.

High profits at 1MDB's power unit must come from elsewhere - and eventually the cost is passed to the people.. So what if 1MDB's power business makes less profits by always being the lowest bidder when the winners would be the rakyat?

I find it really funny that 1MDB has been continually whacked for its IPP business because they are not profitable enough or people claim they overpaid for their IPP assets - especially since the write-downs of the IPP asset was self-inflicted because the govt asked its own 100% subsidiary to lower their IPP rates or did not extend the concession for one of their less-efficient power-plants.

Higher 1MDB IPP profits = less money for Rakyat.
Lower 1MDB IPP profits = more money for Rakyat.

The above is a simple formula, no?

Now, 1MDB is constrained and can no longer do this anymore.

And because Malaysians shot ourselves in the foot again, we may end-up paying an additional RM8.6 billion extra over the next 25 years just from this Track 3B deal alone to pay for our melatah and meroyan and our gullibility to be cheated by politicians and the biased media.


Friday, 26 June 2015

Sarawak Report, did you just fall into a Trap?

In response to a specific example given by Protection Group International (PGI) which says a certain document has been tampered with, Sarawak report just made a post showing two copies of the same document which they allege that it was the one meant referred to by PGI.

Sarawak Report admits PGI allegations that at least ONE document had been modified.

Specifically with regards to this one file, Sarawak Report says "A simple examination of the so-called “meta data” identifying this document from our original report does indeed show that it was opened by Xavier Justo (‘xavierj’) on January 17th 2013.

However, Sarawak Report in detail claims, at least for the purpose of this document, there is "No Difference! - We Prove How The Allegations Of "Tampering" Are Lies".

However, I am of the opinion that with this ill-advised post by Sarawak Report, they have essentially screwed themselves.

Yummy, Is that a trap?

Why? 
  1. Sarawak Report essentially condemned Xavier Justo as the source of the data theft - essentially confirming his guilt. I am sure Xavier is none too happy about this.
  2. Sarawak Report essentially confirmed that at least one file has been modified by Xavier Justo but there was no change in this one document. But what about the dozens or so documents and emails that Sarawak Report has already published? Can they similarly confirm that all such documents have not been tampered with, modified and the contents substantially changed prior to being passed to Sarawak Report or changed by Sarawak Report? Remember now that the Police have a copy of those files and can easily compare with PetroSaudi's original files.
  3. Sarawak Report also essentially condemned themselves of being in possession of stolen documents passed on or sold by a suspected criminal, Xavier Justro. No matter how you cut it, Xavier Justro is guilty of data theft. Whether he is guilty of blackmail or tampering with stolen property or for selling stolen property remains to be seen. It is more likely than not that the person(s) behind Sarawak Report will be found guilty and end up in jail.
  4. Now that Xavier has been condemned and guilt proven by Sarawak Report, he is likely to feel betrayed. Hence is more likely than before to fully cooperate with investigations and happily point out those involved in this chain of data theft and show which documents, if any, that he has tampered with and by how much.
If I was a conspiracy theorist, I would think that PGI and PetroSaudi has probably laid a trap for Sarawak Report - which they gladly fell into.

Xavier be thinking "Haiya Sarawak Report, why you do like that ? Now I am screwed and so are you all."


Whilst I am not a legal expert but Sarawak Report's threat to sue others for libel based on stolen property that they themselves say have been modified (but no change) seems a bit far-fetched and unlikely.

You committed a crime which you just admitted to and you still want to sue for reporting on your crime?

In the meantime, I still believe that Sarawak Report has not told us the full story of the PetroSaudi-1MDB dealings and have deliberately and very selectively released only a dozen or so documents to paint and manipulate a story to point to songlap or conspiracy to cheat money.

Since Sarawak Report has said that it has 3 million emails from PetroSaudi, perhaps they should release all of it for our consumption and allow us to understand the full story of this transaction with 1MDB, understand PetroSaudi's business and the real persons behind PetroSaudi.

For months, we have been led to believe that PetroSaudi is a shady shelf company with little assets and business and conned 1MDB into doing business with them but now it appears the truth is coming out that PetroSaudi is indeed a sizable company with Saudi royal connections and ownership.

Here is the story of how Tony Blair, the ex-Prime Minister of Britain signed a contract with PetroSaudi who are "founded by senior member of Saudi royal family".
Deal: Tony Blair in 2010 with King Abdullah of Saudi Arabia, right. Mr Blair signed a contract with PetroSaudi, a firm founded by his son

Now it appears PetroSaudi is no small or shelf company with no assets and no liability. Heck, according to Sarawak Report, it has 3 million emails! No small company is able to amass 3 million emails. It would take you 10 years if you create 1,000 emails each and every day.

In the name of transparency and fairness, I think Sarawak Report should release all the 3 million emails that they have to allow the public to fairly judge PetroSaudi and their dealings with 1MDB.

After all, the PAC, BNM and Auditor-General will soon tell us the full story anyway - complete with full documentation and proof.

And plus, the two international auditors KPMG and Deloitte had given the troubled company a clean bill of health and already told the PAC that they fully stand behind their audits.

Although Tun Mahathir did advise the public not to trust auditors - even if both auditors are the biggest names in the world and any failure by either one or both of them would be of world-wide consequences and probably would be double the impact of Enron.

Heck, CBS even made a movie out of Enron,  Here, watch the trailer.



Perhaps if both KPMG and Deloitte also screwed up, a movie about 1MDB will also be made about it since it will create world-wide history?
On a separate note, I'd like to advise Tun Mahathir that he was wrong when he cannot rule out that Thailand govt conspired with "very clever people" in Malaysian Govt to blacken his face and saying that "What makes me puzzled is that he didn't commit a crime in Thailand. He committed the crime in Saudi Arabia.  Usually, other countries don't care unless he is a terrorist,"   
Xavier was resident in Thailand for many years and when he blackmailed PetroSaudi or sold the data, he was in Thailand - hence he commited a crime in Thailand. 
Going by Tun's logic, it cannot be that if a Swiss man kills a Spanish man in a fight in Thailand, the Thai police cannot arrest or charge him and only the police in Spain can since the victim is a Spain citizen?
If you are in another country, you must abide by the law in that country - and that includes no blackmail, extortion or selling of stolen property or data.
Okay.. let's get back to the main topic.

Come on, Sarawak Report. Do the right thing before you go to jail.

Publish all the 3 million emails.



Thursday, 25 June 2015

Thailand and Abu Dhabi govt are possible "cronys", plots to blacken face and auditors should NOT be trusted.

Tun Mahathir cannot rule out that Thailand govt conspired with Malaysian Govt and very clever people in the "suspicious and planned" arrest of sacked PetroSaudi exec Xaivier Justo. 
"What makes me puzzled is that he didn't commit a crime in Thailand. He committed the crime in Saudi Arabia. 
"Usually, other countries don't care unless he is a terrorist," Dr Mahathir told a press conference after a buka puasa event with PERKASA. 
"I guess he must be a terrorist, that's why Thailand arrested him. If it was just a matter of defrauding a company, that should be Saudi Arabia's problem." 
Dr Mahathir added that he did not know whether Prime Minister Datuk Seri Najib Razak was involved in the matter. 
"I don't know, because we are finding some very clever propagandists working very hard, so now my face is blackened and my legacy all has been destroyed," said Dr Mahathir.

2.  Tun M believes the emails in Sarawak Report are real and not tampered with.
He also he believed the emails on PetroSaudi, which Sarawak Report published on its website earlier this year, had not been doctored. 
"If you look at the series of emails, it was not tampered with," said Dr Mahathir. 
When asked if he was prepared to apologise should authorities prove that the leaked documents on 1MDB had been tampered with, Dr Mahathir was non-committal. 
"I will see what he says. But the circumstances appear suspicious. It seems planned. Many clever people are involved."

3. Tun M advise the public not to trust auditors - including Big 4 internationals KPMG and Deloitte 
Dr Mahathir also added that the public could not trust 1MDB's auditors, which had given the troubled company a clean bill of health. 
"Audits cannot detect all wrongdoings. Auditors just read the accounts. The person doing the accounts can lie if they want to. 
"They can do all sorts of lies, so the audit would not be able to detect it."

4, Tun M defends Tony Pua's right to be biased
He said those who criticised the DAP lawmaker for being biased should realise the bi-partisan panel mostly comprised biased Umno MPs. 
"They said Tony Pua is biased, that he is one-sided. But the others are biased too, they are on Umno's side. So they are all considered biased. 
"So in the end you, you might as well not have (PAC). And we (Barisan Nasional) will last through the next elections,"‎

5. Reuters carries report that says Abu Dhabi Govt's  US$4.5 billion (RM16.9 billion) asset-debt swap is political motivated due to close ties and brotherhood with Malaysia
"I think the 1MDB deal has a more or less political motivation behind it... It symbolises the importance of bilateral ties between the GCC (Gulf Cooperation Council) and Malaysia," said Sergey Dergachev, senior portfolio manager for emerging market debt at Union Investment Privatfonds in Germany, which holds IPIC bonds. 
Abu Dhabi and Malaysia have close investment and diplomatic ties, which have strengthened since the global financial crisis.

Tuesday, 23 June 2015

Only RM400m to buy a business that gives RM160m to RM230m profits per year?

“Wall Street Journal reported this was achieved by having 1MDB make overpriced purchases of power assets from Genting Group in 2012, paying RM2.3 billion or five times what was only worth RM400 million, with Genting then making a donation to a foundation controlled by Najib who used the funds for the 13th General Election campaigning.” said Uncle Lim Kit Siang.

Hmmm.. Genting's own Financial statements for the year ended 2011 when it still owned the plants showed that this particular Genting Sanyen asset was making RM231million per year.  Check under the results for "discontinued operations".
Genting Group FY 2012 Financial Report - discontinued operations means business sold to 1MDB
In 1MDB's own financial statement for the year ended Mar 2014, it showed that this very same asset had revenues of RM352m and making RM159m per year - lower probably due to higher financing cost).

Page 137 of 1MDB Audited Financial Statement 2014 shows the Genting plants contributed RM159m to 1MDB profits

(RM159m profit out of revenues  of RM352m? IPP seems to have very high margins)

Can Uncle Lim tell me where I can buy an asset for RM400m but makes about RM160m-RM230m per year in profits?

Price-to-Earnings of only about 2X.

What a good deal.

The Genting power plants concessions now extend to 2026 and even when 1MDB bought the plants, the bid to extend were already submitted.

Due to its well-maintained equipment, its location being the closest to the main load center of KL (60KMs) and competitive pricing submitted, it was almost a sure bet to be renewed.

Also, 1MDB bought key parcels of land besides the existing plants and if ever an additional power purchase agreement was tendered out  by the Electricity Commission, and expansion or additional plant next to the current plant would have meant that 1MDB would be best placed to offer the best price, fastest time to market and best location  to win since all the power cabling and infrastructure is there already.

If you had offered RM400m or even RM500m to Genting to buy those plants then, they will laugh at your face and roll you all the way down the Genting hill.

Monday, 22 June 2015

Jilake! Sampai UGUT lu pun tak takut? Berani betul.

"Tentang nasihat saya dah nasihat... Tentang ugut pun saya dah ugut.... Tapi dia kata dia tak akan berhenti.

"Sebab dia tak akan berhenti, saya ingat, pasal dia takut. Kalau dia berhenti 'maybe' kena 'criminal charge'." kata Mahathir.

Menurut Mahathir, jika Najib meletak jawatannya sekarang, perdana menteri itu akan ditangkap dan disoal siasat mengenai kehilangan duit dana pelaburan negara 1Malaysia Development Berhad (1MDB).

video

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Oh wow... Ugut... threaten our PM?

I thought people say PM Najib is not brave enough?

Being threatened by our "Negarawan" also Najib is not scared?

That sounds like extreme bravery to me if Najib stood up to Tun M and believes he has done no wrong.

To stand up to our PM for 22 years, Tun Mahathir takes a lot of guts. A heck of a lot - especially if Tun M has evidence that can land the PM in jail, or does he?

Who the heck likes to be threatened? By Tun M no less...

Ugut with what? What proof? Show the proof, Tun M.

For a PM to resign, whatever Tun M is threatening Najib with must be very damaging and compelling, so what is this threat based on?

Make Najib go to jail, if you have proof. Show it.

What you ugut Najib with? Ordinary Malaysians have a right to know.

All the Audited Financial Statements for 1MDB - 2010 to 2014

As these are public documents, I will share them here.

Make your own conclusions whether RM42b has disappeared or not.

Remember that these documents are the creation of two out of the top 4 international accounting firms, Deloitte and KPMG - both of whom have recently told the PAC that they stand by the accuracy of their audit.

1MDB Audited accounts. Click on the year to download the PDF.

The Hard Turn Left begins

The Auditor-General is close to releasing their interim report on 1MDB and BNM is also concluding their own investigations. The bi-partisan PAC have also met both sets of auditors for 1MDB and have yet to come out with any smoking guns since the auditors both stand firmly behind their judgement clearing 1MDB of any songlap.

1MDB have also come out strongly and answered all the allegations so far on where the money is and it is well on its way to restructuring and normalizing their cash-flow - without borrowing further and without any cash injection from the Govt.

And after being comprehensively answered by multiple parties, all that Tun M can now ask for is to see the documents and proof of 1MDB's replies - something that Tun M can easily have access too since 1MDB said all that is already with the relevant authorities.

Thus the attacks on 1MDB starts to unravel.

Time to start giving excuses for their previous accusations.

Therefore, yesterday A Kadir Jassin has started discrediting the AG, the Police, BNM (including the internationally-acclaimed BNM Governor Zeti) and even the PAC!

A Kadir, whom I strongly believe is not well-versed in financial matters, have now started to accuse 1MDB of "Cooking Up The Book"
He now says "The process of dressing up 1MDB’s book via creative accounting is in full swing. We hear such jargons as enterprise value, prudence and propriety being used to trap the uninitiated. The whole idea is to give the impression that everything is OK and above board." 
But in the case of 1MDB, whose records are now being scrutinised by at least four agencies ― the Auditor-General's Department, the police, Parliament's Public Accounts Committee and Bank Negara Malaysia ― Kadir repeated that it was not likely that the probe would unearth much. 
"That is to be expected," he remarked. 
"Be it the police, the MACC or the Auditor General, their boss is the PM. We cannot expect them to go against their boss," he said
At first make all these allegations of RM42b hilang and songlap etc, and when fully investigated by all the relevant authorities and multiple parties - including internationally-famous external auditors and the bi-partisan PAC, u start ot give lame excuse and say "Of course lah... all cover up!".

Just because A.Kadir does not understand terms such as "Enterprise Value", which is understood by anyone with even basic interest in financial matters does not mean it is cover-up.

It just means you are not competent in such matters and should really not comment on the audit process.

All is covered up, so simple is it? 

As if all those qualified parties are wrong and only you and Tun M can only be right?

So easy to accuse and so easy to give excuse that it is a cover-up when your accusations are not proven correct.

My apologies but you sound like you're just giving lame excuses in the form of "Ini semua tipu! Mereka semua tipu!".

Mature and respectable ex-senior journalists don't give excuses like this.

Najib not resigning

In order to encourage and increase the momentum for a rebellion, for months Tun Mahathir supporters have been telling any UMNO member that would listen that they have hard evidence of Najib's crimes and Najib will step down as Finance Minister in May and Prime Minister in June in order to save himself.

Trying to propagate a self-fulfilling prophecy. Good strategy.

However, Najib threw a spanner in their devious plans.  So bad of you, Najib!

Not only did Najib get unanimous support from the UMNO division leaders and Supreme Council, Najib also did not step down as Finance Minister in May.

And today is now 23rd June, and there are no signs that Najib is stepping down as Prime Minister. On the contrary, PM Najib believing the did no wrong and intent on completing his transformation agenda, has even fought back strongly.

And all that Tun Mahathir can say now to save some face is:
“Advice, I have given. Even threats I have issued. But (Najib) says he won’t quit,” Dr Mahathir said. “I think he is afraid. If he quits, he might face criminal charges.”
Eh... if you have proof of his "crimes" then show it now. Why still waiting? End of June already woh.

Damnit! 1MDB attacks fail. Najib step down rumors failed!

HARD TURN LEFT!

Therefore, it is now time to attack Najib on other things since the 1MDB accusations and instigating a rebellion has failed and is now boomeranging back and hitting them back in the fact.


Apparently, the new song they are saying  is that  Najib will destroy the Malays!!

Nothing like playing the well-tested racial games now and some good old-fashioned scare-mongering.

And the Malays will suffer like the Malays in Singapore when Najib causes BN to lose GE14 or so that's what Tun Mahathir is warning us about.

Not sure who BN is going to lose GE14 to since Pakatan Rakyat is either dead or alive in spirit or broken or pengsan only.


Tun Mahathir and A Kadir has started on a new story to scare the Malays with their recent rhetoric that Malays will suffer like in Singapore if Najib continues to lead UMNO and BN and hence cause BN to lose in GE14.

No mention however how the Malays in Singapore are suffering though as the majority of the Malays there seems contented and have decent income and living standards.

And they come out with scary statements such as this.
Beliau yakin mata dan telinga orang Melayu-Bumiputera serta orang miskin luar bandar boleh ditutup dengan BR1M agar tidak menghiraukan isu-isu genting seperti 1MDB, Felda/FGV dan PFI serta ekonomi yang menurun, harga barang dan perkhidmatan yang semakin mahal akibat pelaksanaan GST dan banyak lagi isu yang menekan. 
And to give proof that Malaysia is dying and the "Melayu-Bumiputera serta orang miskin luar bandar" will suffer great hurt by BR1M throwing lots money at them (how I wish people will throw lots of money at me too. Hurt me, baby!), A Kadir Jassin gives this hard evidence that Malaysia is in danger of economic collapse.
[Anggaran terbaru Bank Dunia mengatakan ekonomi Malaysia akan berkembang 4.5 peratus saja tahun ini berbanding enam peratus tahun lalu.]
Eh... Mr Kadir... 6% GDP growth last year was one of the best in the world.

Even 4.6% is very decent growth for Malaysia and among the HIGHEST projected growth in the world amidst a global economic uncertainty.

And even as recent as in Q1, Malaysia achieved 5.6% GDP growth.

Does Mr Kadir know what he is talking about? Are you trying to scare us by saying Malaysia is only going to record among the highest projected GDP growth in the world?

Coz that just won't work.

Oh well, good luck on your new attack angle, Tun M and A Kadir Jassin.

Past lies aside, I admire persistence in both of you.

It's Ramadan now and I hope both of you lay off the bigger blatant lies this month though.


The 6-years itch

Does the entire Malaysia have to go through all this "Turunkan PM" drama and false allegations every 6 years just because someone was apparently not treated in the way he expected to be and felt slighted?
 Mahathir craved, but never got, ‘elder statesman’ status 
Asked how he coped with retirement, Mahathir said, “It was very unsettling because you move away from a position of power to being just an ordinary person. “It was a little bit depressing.”
“I didn’t expect such bad treatment by the new prime minister, who basically I elevated to that position,” Mahathir told his interviewer. 
“I thought at least (do) not (be) vicious to me. And he was.” 
“Within two weeks he changed everything. Rejected all the things I had started, which he promised to deliver.”


Pakatan: Dead or Alive? Or just "Pengsan" Only?

They actually said all of these. I kid you not!

Feel free to check.

Probably the most confused political coalition in the world. Ever.

Pakatan is either dead or alive or is a spirit or have fainted or is divorced but still friends with benefits

Sunday, 21 June 2015

Foreign Minister Anifah Aman was right. JMD is very wrong.

Jebat Must Die (JMD) wrote this when he tried in vain to slam Foreign Minister Anifah Aman:

"And there is no truth that Najib had democratised the UMNO party elections. 

In fact, the new voting system had made it easier for him to hold on to power. Instead of controlling nearly 3,000 voting delegates, he now just have to control only about 190 division leaders. 

These division leaders  in turn, control the branch leaders in their division. While the branch leaders then instruct their members on who to vote. 

As the result, there were no changes in party leadership since 2009 and this is a fact. The 2013 party elections saw the same people being voted into power; from the presidency, deputy presidency, vice presidents, women and youth wings."
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What JMD is trying to say is that abolishing the quota system of minimum nominations and increasing the number of party members eligible to vote for their leaders from 3,000 delegates to 146,000 delegates has made UMNO less democratic !

JMD thinks we are absolute fools with that illogical reasoning.

Let me demonstrate why you are wrong, point-by-point Tun M style.
1. The previous extra-special and cowardly bonus points and quota systems already gave inordinate power to the 190 division leaders who could decide on who can qualify to get nominated, much less contest, in the UMNO party elections. 
2. Why did you think those bonus votes and quota systems was introduced in the after the 1987 Team A vs Team B UMNO fight?  Here is more on what this is all about:
That's right, to make it much harder and almost impossible for someone to challenge the UMNO leadership.  
If you don't believe me, you can always ask Ku Li. 
And this unfair quota system for party elections is what Najib abolished in 2009. All you need now is just one nomination from a division to qualify to contest instead of getting 10% or 20% or 30% of all branches. 
3. Najib reformed the party elections and opened up voting to 146,000 Umno delegates instead of 3,000 delegates or 190 division leader. JMD is insulting the intelligence of UMNO members when he said 190 division leaders will tell their branch leaders who to vote for, and will in turn instruct 146,000 other people who to vote for.  
Not only is money politics no longer super-effective, it is strange to even suggest that 146,000 people are mindless yes-men or yes-women that will just listen to instructions on who to vote for. 
4) And it is true that there was no change in party leadership during the 2013 UMNO elections...... but there nearly was!  
Hishammudin Hussein just barely scrapped through beating out Mukhriz Mahathir for the final VP spot with a razor-thin margin of about 10 division electorate votes. 
Under the past quota system and if all you needed to do was to control just 190 division leaders who can instruct 146,000 people who to vote for, Mukhriz would not even get the chance to compete - much less come so very close. And the presidency was not contested in 2013 because Tengku Razaleigh decided himself not to contest - not because like in 2008 where he wanted to contest for presidency but did not receive nominations to qualify under the previously unfair quota system.
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JMD is a pentaksub par excellence.

He has clearly mastered the art of lying to himself when he simply cannot see that the UMNO party elections have been clearly democratized, reformed and improved from what it was prior to 2009.

This case of the UMNO party election is as clear as day and yet JMD cannot see.

 Foreign Minister Anifah Aman was right. JMD is very wrong.

Are you sure Tun M has no influence at all on our economy?

BNM released a statement saying that there were bigger issues affecting the strength of our currency.

“The central bank wishes to reiterate that the current movements of the ringgit are affected by both global and domestic developments,”

“Global developments would include the investor expectations relating to monetary policies of major central banks and the trends in crude oil and gas prices. Domestic factors include concerns about government-linked entities and ratings related issues.”

The Central Bank remains focused on its role and mandate in maintaining monetary and financial stability and to support sustainable economic growth. The Central Bank has never been and will not be drawn into any political agenda but will remain accountable for delivering its mandates to the people of this country.

Singapore-based economist at Mizuho Bank Ltd, Vishnu Varathan, was reported by Bloomberg as saying, “Bank Negara is telling markets to look beyond the political noise and the current market volatility, as fundamentals remain sound. The other message is that Bank Negara is apolitical as it is a highly professional and sound central bank.”

The “political noise” in question is the current spat between Prime Minister Najib Razak and ex-premier Dr Mahathir Mohamad who is pushing for the former’s resignation, which Deputy Finance Minister Ahmad Maslan said BNM had indicated was contributing to the ringgit’s sluggish performance.

Commenting on this statement, Nizam Idris, head of foreign-exchange and fixed-income strategy at Macquarie Group Ltd. in Singapore, said, “In itself, the political noise is not a significant factor for the ringgit.

“But Mahathir’s comments basically bring the focus to 1MDB, slightly more than what it could have been. It leads the market to think about potential contingent liabilities on the government and therefore a potential downgrade on Malaysia’s rating,”
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My comment: Essentially, BNM was saying that.. "Yes, Tun M is a contributing factor to political instability and also aggravated the concerns on 1MDB but he is NOT THE ONLY factor or reason for the recent weakness. BNM is not interested nor allowed to play politics therefore don't quote us in any political attacks"

1) Tun M definitely contributed to political instability.

2) Tun M also aggravaated the concerns on 1MDB with his continuous "Mana itu Rm42b or RM27b or berbillion?" although answered many times.

3) Aggravated concerns on 1MDB and our contingent liability AND political instability definitely contributed to uncertainty and confidence in our local economy.

4) Therefore, I am afraid that Ahmad Maslan was right. Tun M is indeed A contributing factor in the currency weakness - but not the main factors.

What Ahmad Maslan was wrong in doing was to use BNM's name when giving the reason.

5) It is unthinkable that given his track-record in changing the Prime Minister prematurely, Tun M has ZERO influence on political instability and economic uncertainly.

To say that Tun M has zero influence on our economy is just fooling one-self.




In fact, the incredibly-biased (against BN and Najib) William Pesek even confirmed as much when he wrote three days ago in his column in Bloomberg:
" Mahathir now has a new target -- Najib Razak, Malaysia's current prime minister. The daily squabbling between Najib and his predecessor has unsettled Malaysian markets, with the ringgit falling to its lowest value in a decade."
William Pesek;s article was a real mess and wholly inaccurate, which led the normally reserved Idris Jala to write a rebuttal completely tearing apart William Pesek which started with:

"When I read William Pesek’s latest commentary on Bloomberg View, I barely recognised the country he was writing about."

Idris then went on to list point-by-point where William Pesek was wrong and citing examples and then he ended his comment with the damning
"Differing opinions are bound to be expressed on Bloomberg View. The defence of “fair comment”, however, does not apply to getting facts so woefully wrong. We would hope that the editors at Bloomberg agree, and will correct or take down such a disgracefully biased and ill-informed article.?
Remember that Idris Jala is listed by Bloomberg Markets itself as one of the 50 most influential people on earth for last year - hence Idris condemning a Bloomberg columnist is all the more sweeter and damning.

That that, Mr Pesek!


Saturday, 20 June 2015

TNB-1MDB: Shooting ourselves in the foot

These are the facts.

Bang! Ouch.

1) Among the 5 power plants whose Power Purchase Agreement (PPA) was renewed in 2012, 1MDB bid and received the lowest rate at 35.3 sen/kWh compared to 36.3sen/kWh for Segari and Tenaga Pasir Gudang's 37.4 sen/kWh.

2) 1MDB was the lowest technically qualified bidder when it won the Phase 3B IPP project at 25.33 sen/kWh (YTL was disqualified because its proposed solution was untested technically) - beating out TNB, YTL and others.

3) Even the 50MW Solar plant that 1MDB won had a rate of between 40 sen and 46 sen/kWh - which will make it the lowest price for any solar-generated electricity in Malaysia. At that time, the current Seda rate was 61.2 sen per kWh. Previous winners had rates of 90 sen/kWh to even over RM1 per kWh

4) 1MDB also bid the lowest for the Prai power plant in Aug 2012 at  34.6 sen/kWh compared to Tenaga's 34.7 sen/kWh and other bids of between 35.9 sen/kWh to sen/kWh. However, 1MDB lost this bid to Tenaga.

5) The base cost used to calculate electricity tariff (to consumers) in Malaysia is set at 38.52 sen/kWh. Any IPP able to pass a price lower than this base tariffs will results in savings that can be reflected in a negative Imbalanced Cost Pass Through (ICPT) - which then results in a lower electricity price. As at March 2015, the ICPT is at MINUS 2.25 sen/kWh.

Formula used to calculate electricity price to consumers in Malaysia
6) The reason why 1MDB could not list their IPP in May 2014 was the existing two power plants yields was less than 4% so it is not attractive for a listing. Why is these yield low? Because they bid lowest and accepted the lowest tariff rates renewal in Malaysia (point 1).

However, an extension to the PPA of all of 1MDB's Malaysia power plants would easily have allowed an increase in the valuation of the planned IPO and allowed the IPO to proceed quickly and successfully -  but Malaysia govt refused to do forcibly extend the IPPs owned by 1MDB at their pre-existing historical rates, something that the govt could easily have done and no one could question them.

A high yield for the energy assets at IPO would mean higher profits and higher valuation but at the detriment to energy cost to consumers. More money for 1MDB Energy = less money for Rakyat - this is a conflicted goal.

6) Since no extensions at good rates was allowed, what was then planned was that when Phase 3B is nearer to completion, 1MDB Energy will attract a higher valuation. However, due to extreme negative publicity and unwillingless of government to pump in any money into 1MDB to fund this Phase 3B project due to political pressure and the low tariff price that they bid for Phase 3B, 1MDB was unable to raise the RM8 billion necessary to proceed with the Phase 3B plant and consequently, the IPO.

7) Since Malaysia and TNB needs to ensure energy security and the delay to Phase 3B is a concern, TNB wanted to take over the Phase 3B plant.

This has been approved on a willing buyer willing seller basis recently in the Cabinet and revealed on Thursday 18th Jun.

TNB explained it was not a bail-out of 1MDB and said it had been offered a tariff rate of 26.67 sen/kWh instead - higher than the 25,33 sen/kWh given to 1MDB .

8) Consequently when this deal was announced, the knee-jerk reaction from the market on 18th June caused TNB's share price to fall.

“Foreign investors likely feared the association of this deal with 1MDB and sold without realising that this is, in fact, a greenfield power plant with good prospects." And a project that TNB had also bid for before. Thus negative publicity on 1MDB due to people unfamiliar with business has again hurt our interests.


The next day on Friday, when people got more rational, no longer melatah and thought "hmm.. hey, this appears to be a good deal for Tenaga", its share price staged a sharp recovery.

Tenaga share price: Sharp fall on Thursday, strong recovery on Friday

Say what you want but the above are all verifiable facts.

The end result is that soon, 1MDB will no longer be around to bid the lowest for all new power plant projects or renewal due to the unreasonable negative publicity on 1MDB .

The removal of an aggressive bidder in 1MDB who have always been bidding the lowest rate (this is undeniably a fact!) would relieve competitive pressure for future bidders - a situation that current IPP competitors would welcome! Any 1 sen/kwh higher tariffs for them would mean billions in additional profits for them over the course of their IPP concessions.

Make your own conclusions. It appears that Malaysians seem to like our IPPs charging a higher tariff and do not like lower electricity costs.

Which is why we keep sabotaging govt's attempts to restructure the IPP industry and unwind past mistakes.

Maybe shooting ourselves in the foot due to our lack of knowledge and our gullibility to be incited into hate by politicians has become the new national hobby for Malaysians?

Friday, 19 June 2015

Not just a fence around TRX: Guess who paid for all these?

Someone said yesterday that all of 1MDB has developed is only "a fence" and nothing else.

So, who has been paying to develop and equip eight military sites throughout the country? As part of the deal to take over the Bandar Malaysia land in Sungai Besi from RMAF, not only does 1MDB have to pay RM400million to govt for the land but it has to purchase replacement land and fund at least RM2.1b worth of development project for RMAF before it can move RMAF out of Sg Besi and take vacant possession of the land and start doing soil tests and planning.

You still think 1MDB got land cheap from the govt?

The Malaysian Defence blog shares some of these 1MDB developments for the RMAF

SHAH ALAM August 20, 2014 : RMAF is getting another ThalesRaytheonSystems Sentry Battle Control System (BCS)for its new Command and Control (C2) centre to be built at the Subang Airbase in the near future. 
Like the future Sendayan Airbase, the construction of the Subang AOC HQ will be funded by 1Malaysia Development Bhd as part of the redevelopment of the Kuala Lumpur Airbase located at the Sungei Besi Airport. 
Due to various issues, the construction of the new facilities were delayed which Rodzali explained resulted in different start-up and completion dates. 
The Sendayan base is expected to be completed in 2016 and some 3,000 personnel are expected to be based there. A nine hole golf course is also being built just outside the grounds of the new base, a replacement for the Armed Forces golf course at Sungei Besi airport. 
Rodzali said he was generally satisfied with the construction of the Sendayan airbase although he cautioned that it was important that the project team ensured that the deadline was adhered to and the quality of construction was maintained. 
The main contractor for Sendayan is Perbadanan Perwira Harta Malaysia, a subsidiary of LTAT. 
1MDB are also building new facilities for other non-RMAF units operating at the airport including the 31 Artileri Di Raja (Semenyeh) and PDRM Air Unit (Subang). 
According to Rodzali, the 750 acre Sendayan base will be the new headquarters for the service’s Education and Air Training Command. RMAF he said also intend to consolidate all non-aviation related training at Sendayan, especially advanced courses for administration and logistics personnel. 
It will also served as the sport’s excellence centre for RMAF as modern sporting facilities including a mini-stadium will also be built. Quarters for officers and lower-ranking personnel are also being built.

There has been significant progress in the construction works for RMAF in the eight military sites funded by 1MDB. Here are some pictures of the ongoing progress three months ago.

How does 1MDB reflect these spending on RMAF in their financial statements?  Yes, by increasing the land revaluation cost. It's not all just paper revaluation on the properties. Actual money (and lots of it) has been spent by 1MDB on the various projects that will benefit RMAF and Malaysia.


Even TRX itself is not just a fence around nothing. Significant work on the common infrastructure and initial work on the various traffic tunnels have started. After paying government RM220mil for the TRX land, 1MDB has committed to spend about RM3.5billion of its own money on the infrastructure and roadworks at TRX.

This will include several expensive underground tunnels leading out of TRX directly onto nearby highways in order not to add to the already heavily congested golden triangle area.

Govt or Felda or Lend Lease or Mulia are not paying for the TRX infrastructure and tunnels. 1MDB has to pay for them.

Here is the Google Earth location:

Have a look at the progress photos below:


You still think the land is that cheap?

It's these relatively unknown developments that people like Tony Pua and Tun Mahathir and their various blogger cohorts that are not telling you about.

These are some of the hidden costs that 1MDB had to incur that you are simply not aware of.

Imagine funding all the above just on an actual cash injection of RM1 million as paid up capital to 1MDB by the government.






Thursday, 18 June 2015

TNB taking over 1MDB's Phase 3B power plant. What is your choice?

1MDB obtained the RM11 billion Phase 3B Independent Power Plant (IPP) project in early 2014 in a joint venture with Mitsui & Co Ltd and reportedly beat YTL Power International, TNB and Malakoff Corp in the open tender bid.

To bid for this project, money has been spent and once awarded additional money was used to prepare for financial close.

In order to develop this project, 1MDB energy will need to raise at least RM8b financing to achieve financial close.

Initially, the idea was to list the energy company first, and then use this separate listed company to raise this financing.

However, since the listing was delayed for over a year, in order to develop the project 1MDB must raise an additional RM8b at holding company level.

Under heavy criticism and negative publicity, a decision was that 1MDB cannot borrow anymore. Thus how do you expect 1MDB to develop this project?

Now, people are whacking TNB for buying into this IPP project to develop it.

When TNB gets this project, it is not as if they will lose money but will make long term money - which is why they bid on this project in the first place.

There are some people who does not like TNB winning this project even though it will make money and YTL is desperate for this project. YTL had complained bitterly about losing this project earlier.

Therefore, who do you want to take over the Phase 3B IPP project?

Foreigners? San Miguel? Ananda Krishnan? Syed Mokhtar? YTL? Genting? Vincent Tan?

Or TNB?

Or do you want 1MDB to borrow an additional RM8b to develop this IPP?

http://www.freemalaysiatoday.com/category/nation/2015/06/18/tnb-to-buy-stake-in-1mdbs-coal-power-plant/

Wednesday, 17 June 2015

Is someone deliberately feeding false info on 1MDB to Tun M? (PART 2) - Who started the Terengganu Investment Authority?

According to news reports in December 2008 when Najib was not yet the Prime Minister, the proposal for the Terengganu Investment Authority (TIA) was put forward by the then Yang di-Pertuan Agong, Tuanku Mizan Zainal Abidin, who is also the Ruler Terengganu. The state exco endorsed the proposal.



This was from The Star's archives dated Sunday December 14, 2008

KUALA TERENGGANU: The Government has agreed to the setting up the Terengganu Investment Authority, a sovereign wealth fund which will manage oil royalty payments to the state. 
Deputy Prime Minister Datuk Seri Najib Tun Razak said the Cabinet had on Wednesday given the nod to the setting up of the authority with a starting fund of RM10bil. 
“The Cabinet will continue to discuss the technical aspects of the setting up the fund at the next meeting,” he said after handing a cheque for RM408.6mil as part of the oil royalty to Terengganu Mentri Besar Datuk Ahmad Said here yesterday. 
The amount is the remainder that the state was supposed to get for the 2007-2008 period. The TIA was proposed by Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin as a way to channel part of the oil royalty into a sovereign wealth fund which would be operated by a team of professionals and supervised by foreign bankers and investors. 
Tunku Mizan will be the chairman of the TIA board of advisers while the Mentri Besar will be also represented on the board. 
Najib said the TIA would utilise oil royalty to invest in Terengganu and other parts of Malaysia. 
The authority would also have the mandate to invest globally in bonds to ensure the state’s financial sustainability on a long-term basis. 
He said revenue earned by the TIA would be able to complement the state’s income when oil and gas resources were exhausted. 
As was detailed in The Star's article then, setting up TIA and raising up to RM10 billion was indeed tabled and approved in Cabinet - which corroborates 1MDB's recent reply denying Tun Mahathir's allegation that Cabinet did not approve TIA (now 1MDB) raising the original RM5 billion.

This was also carried in The Malaysian Inciter dated Dec 12th (the link is now broken but a copy of the article was carried by blogger SatD here)
 Dec 12 — History will be made soon when the Terengganu state government sets up its own RM10 billion sovereign wealth fund, the first state in Malaysia to do so and a move aimed at ensuring steady revenue after the oil and gas money dries up.The decision to set up the Terengganu Investment Authority — a body to be run solely by professionals — is also an indictment of the unsatisfactory manner royalty funds from oil and gas have been used by politicians for the last two decades.  
The Malaysian Insider has learnt that the proposal for a sovereign wealth fund was put forward by the Yang di-Pertuan Agong, Tuanku Mizan Zainal Abidin, who is also the Ruler of the east coast state. The state exco endorsed the proposal at its weekly meeting yesterday. 
Political observers say that the decision to set up the authority is probably driven by the desire to ensure that royalty from oil and gas is spent wisely and in the long-term interest of the state, and not squandered on flashy projects. While the oil and gas resources in the state have not been tapped fully, concerns have been raised that insufficient emphasis has been placed on how to maximise the royalty payments. 
Under the TIA, the Sultan of Terengganu will be the chairman of the Board of Advisors. The Menteri Besar of the state will also be represented on this board. But the Board of Directors will comprise only professional managers. The idea here is to ensure that investment decisions are made by professionals and without the interference of politicians.  
Sources in the state said that RM10 billion will be invested both within Terengganu and also the rest of Malaysia. But the TIA will also have a mandate to invest globally. The RM10 billion will be sourced from the local and foreign capital markets with a proposal for the Federal Government to provide a government guarantee of up to RM5 billion. 
As was stated, the original plan was for RM10b to be raised with a RM5b guarantee by the Federal govt. However there was much disagreement then and the story of what happened was never truly told.
However, The Edge is its 14th Dec 2009 issue carried this story, which is also posted on 1MDB's own website here.
Coming back to TIA, the idea was to establish the fund along along the lines of Mubadala Development Company, the SWF of Abu Dhabi. In fact, Khaldoon AI-Mubarak, CEO of Mubadala and chairman of Abu Dhabi Executive Affairs Authority, still sits on the board of 1MDB. 
But after the initial RM5 billion, raised by a federal government guarantee, the troubles at TIA began. The state, led by Menteri Besar Datuk Ahmad Said, wanted control over the utilisation of the money, something that went against the charter of the fund. 
The funds were supposed to be managed by a professional team and overseen by a board of directors and advisers. It was a triple-layer structure to ensure the money is well spent. 
But the prime movers behind the funds found out early that this was easier said than done. Subsequently, TIA became a federal entity, which gave birth to 1MDB.
What The Edge reported was that the then Menteri Besar Ahmad Said wanted control of the entire fund but the Federal Govt was unwilling to allow the entire RM10 billion to be managed by the state govt.
After the initial RM5b was raised in May 2009, a break-up hence ensued and in July 2009, TIA became 1MDB.
In GE13, the state government of Ahmad Said did not do well and only won Terengganu with the slimmest of margin at 17 seats vs 15 seats.
Initially he did not want to go and even quit UMNO and wanted to bring a couple of other Terengganu ADUNs loyal to him out of BN - which would have meant the BN government in Terengganu would collapse. 

This triggered a mini Menteri Besar crisis in Terengganu which was resolved by the Prime Minister and Deputy Prime Minister within days with Datuk Ahmad Razif Abdul Rahman being made the new Menteri Besar - a decision that had the approval of the Terengganu palace.
Ex-Menteri Besar Ahmad Said is still a Terengganu ADUN but understandably given his forced exit as MB, he has now become a critic of Prime Minister Najib Razak and can be seen to be at the side of Tun Mahathir in recent events.
It is also important to note that the original plan was to secure the RM10 billion via a RM5 billion federal guarantee and RM5b against future oil royalty payments from the Federal Govt to Terengganu. The TIA did not pledge the oil wells of Terengganu as alleged by Tun Mahathir who accused in his blog: "Najib decided to raise through bonds RM5 billion using Terengganu oil wells as collateral"

The RM 5 billion raised was via a Federal Guarantee and Terengganu did not put their oil wells up as collateral - mainly because Terengganu does not own the oil wells and you can't put up as collateral something you don't actually own!
Under the Petroleum Development Act 1974, the state does not own any oil-wells as they are all owned by the Federal government via Petronas. 

I am really surprised that given his wealth of knowledge and experience, Tun Mahathir does not remember about the Petroleum Development Act 1974 and the ownership of oil wells in the country he used to manage for 22 years.

Is someone feeding Tun M false information ?




Tuesday, 16 June 2015

Is someone deliberately feeding false info on 1MDB to Tun M? (PART 1)


Tun's "1MDB Story" post (which 1MDB partly rebutted yesterday) is riddled with so many mistakes and errors!

Whoever is advising Tun M on 1MDB should really be more careful and not feed Tun with the wrong facts to mislead and embarrass him.

Who has been feeding the Tun with false info?

Let me point just some of these basic errors out.

In point 7, Tun M said that the RM5billion sukuk in 2009 was never approved by Cabinet.

In point 8 and 9, Tun M said the RM5b loan was raised by Goldman Sachs and the terms were very unfavourable to 1MDB and the Government.

Specifically, he said  Goldman Sachs which was entrusted with raising the loan was given a Commission of 10% and the interest rate was fixed at 5.9% and in point 10, Tun said what this means is the RM5 billion borrowed 1MDB would get only RM4.5 billion. Goldman Sachs would get RM500 million as commission, an inordinately large sum.

In point 11, Tun also said "1MDB would pay 5.9% interest on the whole of RM5 billion. Since it gets only RM4.5 billion the rate of interest on this amount would be 6.6% plus. Goldman Sachs need not pay interest on the RM500,000,000/- it got as commission."

and then in point 12. Tun said "Loans taken by Government or guaranteed by Government would normally carry 3% interest or less."

WRONG, WRONG, WRONG, WRONG, WRONG and WRONG!


  • the 2009 RM5b sukuk WAS tabled and approved by cabinet;
  • Ambank was the arranger for the 2009 RM5b sukuk and NOT Goldman Sachs;
  • the coupon rate was 5.75% and NOT 5.9%;
  •  the discount rate of 12% was to the SUBSCRIBERS of the bond and not a commission to Ambank or Goldman Sachs - which also makes Tun's point that Goldman Sachs need not pay interest on the RM500mil as moot and frankly, laughable;
  • a discount rate of 12% on the face value of a 5.75% coupon bond gives an effective yield of  6.15% - NOT 6.6% or 7% as claimed by Tun.

  • Lastly, the effective yield of the May 2009 30 year bond of 6.15% is not grossly overpriced by any measure.  The 12% discount was to increase the effective yield to 6.15% for 30 years while maintaining a coupon rate to 5.75%.

(bonds are discounted to reduce the coupon rate - its just a question of paying more interest upfront and then lower interest throughout the bond OR not discounting as much and paying higher interest payments yearly throughout the bond's life. Here is an explanation why bonds are sometimes discounted.

In Aug 2009 (3 months after 1MDB's 30 year bond) Petronas issued US$4.5bil of 10 year bonds that yielded 5.322% (coupon rate of 5.25% and discount of 0.53%).

It is commonly understood that Petronas' credit rating is two notches better than the govt's credit rating according to Moody's.

This makes 1MDB's effective yield of 6.15% for THIRTY years guaranteed by govt compared to Petronas' TEN years 5.322% with a credit rating two notches BETTER than govt as not unreasonable.

The longer the bond is, the higher the interest rates payable.

Name of Bank wrong. Coupon rate wrong. Calculate effective yield wrong. Confusing bank commissions with discount to subscribers. Forgot to check comparable bond issues at that time. Comparing interest rates for shorter term tenures vs very long-term tenures. All basic basic mistakes that even a regular cybertrooper can spot.

How is it possible that one single Tun M blog post can make so many BASIC errors just for one simple part where the information has been in the public domain for 6 years already?


I would ask that whoever is advising Tun M to be extra careful and give him the correct info so he can argue effectively without his credibility being questioned.

Monday, 15 June 2015

1MDB's official rebuttal of Tun M's Chedet post titled "“More Investments by 1MDB”

Official rebuttal by 1MDB: http://www.1mdb.com.my/press-release/facts-in-relation-to-blog-posting-entitled-%E2%80%9Cmore-investments-by-1mdb%E2%80%9D-by-tun-dr
Facts in relation to blog posting entitled “More Investments by 1MDB” by Tun Dr. Mahathir Mohamad
1. Tun Mahathir claims that “PetroSaudi did not pay a single cent” in a joint venture with 1MDB.
  • PetroSaudi, via a subsidiary company, owned assets, comprising rights to oil fields in Turkmenistan and Argentina, worth approximately USD2.7 billion. These assets were sold by PetroSaudi to another subsidiary, “JV Co”, which at the time of the asset sale, was a company formed by and initially 100% owned by PetroSaudi for the purposes of a proposed joint venture with 1MDB.
  • In return for the USD2.7 billion asset transfer, JV Co had to pay PetroSaudi USD700 million. This indebtedness resulted from the asset transfer. Accordingly, there was no loan made or “to settle”.
  • On 29 September 2009, 1MDB executed a joint-venture agreement with PetroSaudi. Upon completion of an independent valuation, 1MDB contributed USD1 billion of cash in return for 40% ownership of JV Co, and PetroSaudi was left with a 60% stake in the JV Co. In effect; 1MDB’s contribution was in cash, whereas PetroSaudi’s contribution was in independently valued assets worth USD2.7 billion.
  • It was part of the joint-venture agreement that, of the USD1 billion from 1MDB, USD700 million would be used to pay PetroSaudi for the initial asset transfer to JV Co (see above) whereas USD300 million would remain in JV Co. Upon satisfaction with the independent valuation, as per the joint-venture agreement, 1MDB made a payment of USD700 million to a subsidiary of PetroSaudi, and obtained legal title to 40% share of JV Co, a company with independently valued assets worth USD2.7 billion at the time.
  • Accordingly, PetroSaudi had full rights to the USD 700 million paid by 1MDB and these funds were for PetroSaudi to use, at its discretion.

2. Tun Mahathir claims:  “suddenly, USD 300 million of the payment by 1MDB is converted to a Murabaha loan”. He further claimed “We really don’t know where it is”.
  • The joint venture with PetroSaudi was terminated in March 2010, with PetroSaudi assuming 100% ownership of JV Co. 1MDB converted its USD1 billion of equity in JV Co to murabaha notes issued by JV Co, under the terms of a Murabaha Financing Agreement. PetroSaudi, as 100% owner of JV Co, fully guaranteed JV Co’s obligations under the murabaha notes.
  • 1MDB then made further investments of USD500 million and USD330 million in additional murabaha notes issued by JV Co.
  • In total, 1MDB invested USD1.83 billion cash in murabaha notes issued by JV Co, a company that, by then, was 100% owned by PetroSaudi following the termination of the joint venture in March 2010.
  • In June 2012, the entire USD1.83 billion amount invested by 1MDB in murabaha notes was repaid, by way of conversion into shares of Petrosaudi Oil Services Limited, for a value of USD2.22 billion.
  • In September 2012, 1MDB sold its shares in PetroSaudi Oil Services Limited for USD2.318 billion and received fund units in a Cayman registered fund. The Cayman registered fund is managed by Bridge Partners, a Hong Kong-based fund manager. These fund units were owned by 1MDB via its 100% subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian.
  • Accordingly, 1MDB invested a total of USD1.83 billion with PetroSaudi (initially as equity, then as murabaha notes), and ultimately owned USD2.318 billion of fund units i.e. a gain over time of USD488 million. 
  • The facts detailed above can be verified by reference to the notes to the audited financial statements of 1MDB dated 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013 and 31.03.2014.

3. Tun Mahathir has stated: “Arul Kanda said he saw the cash there and Prime Minister said the money was there. It was not brought back because Bank Negara would ask too many questions. But Bank Negara must get the approval of the Minister according to the law for approving or disapproving any transaction. And the Minister is the effective head of 1MDB. So what is so difficult about getting Bank Negara’s approval?”
  • Despite Tun Mahathir’s vigorous claims, it is a fact that Arul Kanda never said he “saw the cash”. He is on the record as saying he had “seen the statements”, referring to the fund unit ownership and redemptions.
  • Tun Mahathir repeats in his blog posting the original MOF answer to Parliament, but has chosen to ignore the amended answer by MOF and the clarification issued by Arul Kanda on 10 June 2015.
  • There was indeed a misunderstanding on information provided by 1MDB to MOF, which required the original Parliamentary answer to be subsequently amended. This is a matter of public record and has been acknowledged by 1MDB.
  • As the President of the company, Arul Kanda takes full responsibility for this misunderstanding and will ensure better communication with all stakeholders. Furthermore, as clarified by the MOF, appropriate steps have already been implemented to prevent this happening again in the future.
  • We must accordingly question why must Tun Mahathir keep repeating his earlier statement, when clarification has been provided and responsibility has been accepted. 
  • As for Tun Mahathir’s reference to Bank Negara Malaysia, it is a fact that Bank Negara Malaysia is presently conducting an investigation on 1MDB. It is only appropriate to await the outcome of this investigation instead of casting doubt and sharing half-truths in the public domain.

4. Tun Mahathir claims: “1MDB and the Prime Minister have not shown proof of the existence of the money from Cayman Islands. Is it in Singapore or has USD1 billion dollars disappeared?”
  • From the answer to question (2) above, it should be clear that from September 2012, 1MDB owned, via its subsidiary Brazen Sky, fund units in a Cayman Registered Fund, with a valuation of USD2.318 billion as of 31.03.2015. These fund units were held through BSI Bank Singapore, as custodian. This has been the case since 2012.
  • The existence of USD2.318 billion in fund units has never been questioned, and this value was included in the audited financial statements dated 31.03.2014, which must provide a true and fair value of the assets of the company. 
  • In fact, the first tranche of USD1.22 billion fund units was redeemed in cash in 2014 and the cash proceeds were used to pay for termination of options relating to the energy business, granted to Aabar, working capital and interest payments - as outlined in the company’s publicly available financial accounts.
  • As for the remaining USD1.1 billion of fund units, these have also been redeemed, as previously announced by 1MDB. All “documentary proof” on this redemption will be provided to auditors of 1MDB and the lawful authorities.
  • Despite repeated public clarifications, Tun Mahathir chooses to ask the same question again and again. One must question the motive behind why he keeps saying that the “USD1billion is missing” when it is obvious that the funds have been accounted for and audited.
  • Furthermore, Tun Mahathir has been quoted on the record as stating “RM42 billion is missing”. He now states that “USD1 billion is missing”. This continuous change in figures is perplexing, and raises questions as to the motivation behind these ever-changing claims.

5. Tun Mahathir claims: “Statements without documentary proof are, as we have seen, quite useless. We need proof of all the investments and payments made by the 1MDB. But no proof has been shown accept (sic) for the acquisition of the power plants and purchase of Government land in Kuala Lumpur and private land in Penang. Until signed documentary proofs and not just statements by the Chief Executive Officer or Prime Minister, are shown, we have to assume that the money borrowed by 1MDB has disappeared.”
  • “Documentary proof” for all the assets of 1MDB, including the fund units and other financial assets of 1MDB, has been presented to the auditors of 1MDB. It is based on this that 1MDB’s accounts have been signed off by the auditors, without qualification.
  • In addition, “documentary proof” has now been presented to the Auditor-General and Bank Negara Malaysia, the lawful authorities, who we would expect to carefully scrutinise these documents.
  • We are fortunate in Malaysia to have rule of law which states a party is “innocent until proven guilty”. Due process requires that the lawful authorities first undertake investigations, establish the facts and take action accordingly.
The Prime Minister has already said, on numerous occasions, that if any wrongdoing is proven, action will be taken. 1MDB fully supports this position and is accordingly cooperating fully with the lawful authorities in their ongoing investigations.