Be 100% sure that 1MDB & TemaSEX have big stinking business connections. Smells worse than shit.
https://en.wikipedia.org/wiki/1Malaysia_Development_Berhad
1Malaysia Development Berhad
From Wikipedia, the free encyclopedia
Not to be confused with 1Malaysia.
"1MDB" redirects here. It is not to be confused with IMDb.
1Malaysia Development Berhad
Formerly called
Terengganu Investment Authority
Former type
Government-linked company
Industry Strategic development
Founded 2009
Defunct May 9, 2018
Headquarters Kuala Lumpur, Malaysia
Key people
Lodin Wok Kamaruddin (chairman, board of directors)
Arul Kanda (president & group ED)
Revenue Non-disclosed
Owner Government of Malaysia
Website www.1mdb.com.my
1Malaysia Development Berhad (1MDB) is a strategic development company, wholly owned by the Minister of Finance Incorporated Malaysia (MOFI).[1][2] 1MDB was established to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment.[3] 1MDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness. 1MDB is currently involved in several high-profile projects such as the Tun Razak Exchange, Tun Razak Exchange's sister project Bandar Malaysia, and the acquisition of three independent power producers.
However, from 2015 onward, 1MDB been heavily investigated for a financial scandal where in a lawsuit filed by United States Department of Justice (DOJ), at least US$3.5 billion been stolen from 1MDB.[4]
Contents
1Malaysia Development Berhad (1MDB) started off as Terengganu Investment Authority (TIA) in which is initiated by Menteri Besar of Terengganu. TIA is a sovereign wealth fund with initial fund of RM11 billion aimed at ensuring economic development for the state of Terengganu that is long term and sustainable while safeguarding the economic well-being of the people of Terengganu. The TIA fund was derived from an outstanding royalty income of RM6 billion and funds from bond issued by local and overseas financial markets with the Federal Government's proposal to provide a guarantee of RM5 billion based on Terengganu's future oil revenues.[2][5]
On 27th May 2009, Ismee Ismail and Shahrol Azral Ibrahim Halmi signed a deal arranged by AmInvestment Bank Bhd to raise RM5 bilion via the issuance of Islamic medium-term notes (IMTNs), despite being told not to do so by the Terengganu state government. This exercise was adviced by TIA's special adviser, Jho Low. On 29th May 2009, TIA received RM4.385 billion in net proceeds from IMTN from the full value of RM5 billion.[6]
On 31st July 2009, Minister of Finance Incorporated Malaysia (MOFI) took over TIA and changed its name to 1Malaysia Development Bhd (1MDB), four months after Najib Razak was made Prime Minister.[6] In his announcement on 22 July 2009, then-Prime Minister Najib Razak said the decision to expand TIA into a federal entity was made to enable its benefits to reach a broad spectrum of Malaysians rather than the residents of only one state.[7]
In general, 1MDB investment can be summarize into the following:-[2]
On 4th March 2016, the audit report by the Auditor General of Malaysia have been classified as Official Secrets Act under the Official Secrets Act 1972 by the National Security Council (Malaysia). [8]
On 15th May 2018, 1MDB audit report by the Auditor General of Malaysia have been declassified after being requested by the 7th Prime Minister of Malaysia, Tun Dr Mahathir Mohamad.[9][10]
Investment in PetroSaudi Holdings (Cayman) Ltd and Segregated Portfolio Company (SPC)
Joint venture with PetroSaudi Holdings (Cayman) Ltd
On 28 September 2009, 1MDB established a joint venture (JV) with PetroSaudi Holdings (Cayman) Ltd, company name was 1MDB-PetroSaudi Ltd with a 60:40 ratio where 1MDB hold 40% with a cash contribution of US$1 billion while PetroSaudi Holdings contribute with assets worth at least US$1.5 billion. There were four different companies registered under the name of PetroSaudi but the investment proposals submitted to the board of directors of 1MDB did not state the information. [2][11]
On 29 September 2009 (a day after formation of joint venture), Edward L. Morse submitted an asset valuation report. In the same day, he was appointed as the 1MDB Chief Executive Officer. The assessment report takes into account assets on oil exploration and production rights in Turkmenistan and Argentina. The assessment was implemented on PetroSaudi International Ltd’s assets despite the JV agreement clearly stating that the company owning all the rights and interests of the agreed assets for the joint venture project is PetroSaudi International Cayman, the report said. [2][12]
Besides that, the JV agreement contained clauses that lacked in guarding the interests of the company. Among the clauses are there was an advance fees of US$700 million received by the 1MDB-PetroSaudi from PetroSaudi Holdings to be fully repayable on or before 30th September 2009. Therefore, on 30th September 2009, a total of US$1 billion (RM3.487 billion) was transferred by 1MDB into two separate accounts. The first US$300 million was transferred into joint venture account but the questionable parts is the leftover US$700 million was transferred into another company's account (Good Star Ltd, a PetroSaudi subsidiary) with the aim of repaying the advance taken by the joint venture company. However, approval of board of 1MDB wasn't obtain for the payment of US$700 million into a non-joint-venture account.[2][11]
On March 2010, about six months after the formation of joint venture of 1MDB-PetroSaudi, 1MDB decide to dispose all the 40% stake (worth US$1 billion) for US$1.2 billion in Murabahah Note. This Murabahah Note are guaranteed by corporate guarantee, PetroSaudi International Ltd. On the other hand, 1MDB made additional subscription to this Murabahah Notes up to additional US$830 million with partly funded via loans from financial institutions.[2][11]
On 1 June 2012, 27 months after holding on this Murabahah Notes, 1MDB redeemed all of the Murabahah Notes with a total US$2.22 billion including profits. This redemption of US$2.22 billion was done via an asset swap arrangement where 1MDB International Holdings Ltd (1MDB-IHL), a 1MDB subsidiary received 49% equity stake in PetroSaudi Oil Services Ltd (PSOSL), a PetroSaudi International Ltd subsidiary. This exercise raised a question in Auditor General's audit report where the conversion of Murabahah Notes to equity investments in PSOSL was done without any study to identify PSOSL liabilities, the ability to generate funds and past financial performance. Worth mentioned that 1MDB board aware that PSOSL operates in Venezuelan waters where sanctions have been imposed by the United States and ending drilling contracts, and the decision to invest in the PSOSL proceeded despite of such condition. Furthermore, the documents was signed by the 1MDB's CEO on 1st June 2012 prior to the 1MBD board approval on 20 June 2012 (more than two weeks after 1MDB's CEO sign the documents).[2][11]
During mid-July 2017, 45 days after investment into PSOSL equity on 1 June 2012, 1MDB disposal of all 49% equity in PSOSL to Bridge Partners International Investment Ltd (Bridge Partners) for a min US$2.2 billion after suggested by 1MDB's CEO. The disposal was done on 12 September 2012 and Bridge Partners issued six non-interest bearing promissory notes worth US$2.318 billion[2][11]
This promissory notes was further used as an investment on Segregated Portfolio Company (SPC).
Investment on Segregated Portfolio Company (SPC)
On 12th September 2012, Brazen Sky Ltd (a subsidiary of 1MDB) entered into a Investment Management Agreement with Bridge Global Absolute Return Fund SPC (Bridge Global SPC) and Bridge Partners Investment Management (Cayman) Ltd. to invest US$2.318 billion funded by the promissory notes from PSOSL sales. The investment involved various portfolio investments in the Segregated Portfolio Company (SPC) of the Cayman Islands. However, the company whom in charge of this investment, Bridge Global Absolute Return Fund SPC (Bridge Global SPC) is a new one-month old company with no fund management licence nor experience in managing large funds.[2][11]
On 20th May 2013, 1MDB's board of director decided to redeemed the investment gradually in which would improved perceptions towards the funds's credibility. As of 20th December 2014, total redeem amount from the SPC fund is US$1.39 billion out of US2.318 billion and the balance of US$939.87 to be fully redeemed by end of December. This US$1.39 billion was transferred into Brazen Sky's bank account and then transferred into 1MDB Global Investment Ltd (1MDB-GIL) account. Worth mentioned that the SPC funds with booked value of US$2.318 was pledged to Deutsche Bank for a loan amount of US$975 million without any 1MDB's board approval. From the proceeds of initial redemption and with Deutsche Bank loan, some US$993 million was used for the payment of Aabar option termination (but originally the settlement agreement was only US$300 million instead of US$993 million). Aabar option is an option given to Aabar Ltd in exchange of a guarantee of Abu Dhabi’s International Petroleum Investment Co (IPIC) to give 1MDB a total of US$3.5 billion in bond issuances via Goldman Sachs. All these actions raised a question as it wasn't inline with the initial objective of bringing back the SPC portfolio back to Malaysia.[2][13]
Investment in SRC Group
1MDB established SRC International Sdn Bhd (SRC) on 7 January 2011. According to the SRC Business Plan for the period of 2011 to 2015, SRC will supply coal for long-term needs of national by the fourth year of operation (in 2014).[2]
SRC obtains funding from government grants in the form of development grants of RM15 million out of RM20 million that were approved by the Economic Planning Unit (EPU) and RM2 billion financing from the Retirement Fund Incorporation (KWAP). Financing amounting of RM2 billion from KWAP was received on 29 August 2011 with a term of financing of 10 years. The loan is guaranteed by the government which includes principal and financing benefits of RM2.902 billion.[2]
On 3 November 2011, SRC (via subsidiary company SRC International (Malaysia) Limited, SRCI) establish a joint venture with Aabar Investments PJS (Aabar) with the name of Aabar-SRC Strategic Resources Limited (ASRC). The initial paid-up capital was US$120 million with each party contribute US$60 million.[2]
The board of directors of SRCI approved a US$45.50 million investment in the coal industry at Mongolia but this investment were questioned as this investment where done without any evidence showing any feasibility studies done on the status of the project. The mentioned project was undertaken by the joint venture of ASRC with the Gobi Coal & Energy Limited (GCE) company.[2][14]
SRC also invested in PT ABM Investama TBK, that operates in the energy resources, energy services, and energy infrastructure sectors in Indonesia up to US$120 million (RM366.68 million) through published share prices listed on the Indonesia Stock Exchange. [2][14]
During the meeting on 14 February 2012, CEO of SRC reported an estimated profit on the investment amounting to US$4 million.[2][14]
On 15 February 2012, SRC’s shareholding by 1MDB was transferred to the Ministry of Finance Incorporation (MOFI) by way of acquisition of shares through interim dividend-in-specie payments. The transfer of SRC shares has reduced the operating losses of the 1MDB Group from RM25 million to RM16.2 million, lowering the gearing ratio of 1MDB from 12 times to 9.5 times and reducing the government's total guarantee of RM2.902 billion to the 1MDB Group.[2]
Investment in real estate sector
1MDB invested into real estate market with the aim of diversification and aim to generate long-term return on investment. From 2010 until September 2015, 1MDB have acquired five different property assets with the acquisition amounting to RM2.111 billion. The land are:-[2]
On 21 May 2010, it was reported that 1MDB will jointly develop the Tun Razak Exchange project at a currently vacant piece of land covering 34.4 hectares in the city of Kuala Lumpur with Mubadala Development Company.[15] The Tun Razak Exchange was launched on July 30, 2012 by Najib Razak.[16] During his speech on Tenth Malaysia Plan, Najib identified the KL International Financial District (KLIFD) and Bandar Malaysia projects as two of many public-private partnership projects which will help drive the nation's transformation agenda.
Tun Razak Exchange (TRX) project land was acquired with the price if RM302.8 million. A joint venture agreement between 1MDB and Aabar Investments PJS (Aabar) was signed on 12 March 2013. However, the development of the TRX project in collaboration with Aabar was not realized and impacted on the rest of the project.[2]
Up to September 2015, five plots of lands of TRX were sold at RM1.358 billion in fund raising efforts for the 1MDB Group while remaining 11 plots of land plan to sell for RM2.592 billion. Besides that, 1MDB Group also construct a building in a Joint Venture with Mulia Group, namely [The Exchange 106|Exchange 106 (formerly TRX Signature Tower]] to be leased to an international financial services institution for 15 years from 2019 to 2033 with an estimated return of RM537.38 million. [2][17]
In order to fund the TRX project infrastructure development, 1MDB subsidiary, 1MDB Real Estate Sdn Bhd (1MDB RE, but now known as TRX City Sdn Bhd) relies entirely on the sale of land plots. Besides that, 1MDB also created a special purpose vehicle (SPV) raised about Rm229.50 million in August 2015 for fund raising. The TRX project is expected to face negative cash flows as the project receipts are insufficient to cover infrastructure and construction costs and worse still some money from the plots sales, i.e. RM1.095 billion and SPV fund has been flow back to 1MDB instead of using it to finance the TRX project development cost. [2]
Bandar Malaysia
On 13 May 2010, 1MDB as part of a consortium of companies, will jointly undertake redevelopment project of Sungai Besi Airport at Sungai Besi, an old international airport, which is now the base for the Royal Malaysian Air Force into a GDV of RM150 billion Bandar Malaysia. The site covers 486 acres and is planned to be developed into an Islamic financial centre and will include Qatar Investment Authority (QIA) as a partner.[18] About the same time, 1MDB and QIA had signed an MOU to assess the viability of energy and real estate investments. In the MOU, QIA also proposed to invest US$5bil.[19]
Investment in the energy sector
Following that, on 11 January 2010, 1MDB signed a co-operation framework agreement with the State Grid Corporation of China (SGCC), with the intention of undertaking various energy-based projects in the Sarawak Corridor of Renewable Energy (SCORE) and subsequently become major investors in SCORE.[20]
On 18 January 2010, 1MDB signed a co-operation agreement with Abu Dhabi Future Energy Company (also known as Masdar) to explore clean technology projects and investments, including the possibility of building Malaysia’s first carbon-neutral city.[21][22]
In November 2015, the company agreed to sell its energy assets, worth around $2.3 billion, to China General Nuclear Power Group and its subsidiaries.[23]
Corporate structure
1MDB has a three-tier check-and-balance system comprising a board of advisors, a board of directors and a senior management team. The board of advisors is chaired by Najib Razak himself.[24]
In early March 2015, with public discontent growing at the perceived lack of financial transparency at 1MDB, Najib, who is also the chairman of 1MDB's board of advisors, ordered the Auditor General of Malaysia to carry out an audit of 1MDB.[25] However, on completion of the audit, the auditor general's final report was classified as an Official Secret for only the eyes of the Public Accounts Committee (PAC) tasked to investigate improprieties at 1MDB.[26][27]
Controversy
Main article: 1Malaysia Development Berhad scandal
The involvement of 1MDB in the multi-billion ringgit Tun Razak Exchange development project barely a year after its establishment has drawn criticisms from the opposition. Opposition leader and Member of Parliament of Permatang Pauh, Anwar Ibrahim, openly questioned the credentials of the company. He told Parliament that according to the records held by the companies commission, 1MDB "has no business address and no appointed auditor." He further questioned the former Prime Minister's, Najib Razak who is in the office back then, his interest in the approval given to 1MDB on this matter.[28]
The RM425 million (US$140m) profit between 25 September 2009 and 31 March 2010 raised many criticisms and controversies on the lack of transparency given to 1MDB's accounts. Tony Pua, DAP Member of Parliament for Petaling Jaya Utara questioned former Prime Minister Najib Razak, 1MDB advisory board chairman, whether the figures were the result of an asset injection into 1MDB by the government such as the transfer of land rights to the company.[29][30] 1MDB said that it had lodged the necessary information, including its registered address, with the Companies Commission of Malaysia (CCM) as required by the law. The business address is also available on the company’s website, www.1mdb.com.my.
During the October 2010 parliamentary session, 1MDB explained that its accounts had been fully audited and signed by KPMG, and closed as of 31 March 2010. Deloitte was involved in the valuation and analysis of the portfolio, while Ernst & Young provided tax advice for 1MDB.
During 2013, 1MDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious.[31][32]
After 1MDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings.[33][34][35] The Malaysian cabinet rejected a RM3 billion ($US1 billion) cash injection, narrowing 1MDB's options to repay its debts on time.[36][37][38]
In 2015, allegations were made in several newspapers, including the Wall Street Journal, mentioned that the 1MDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low.[39]
In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no funds from 1MDB were transferred to the Prime Minister's private accounts as alleged by the Wall Street Journal.[40] Following, 1MDB's president and group executive director (CEO), Arul Kanda, appeared in a local TV programme to clarify issues and allegations against 1MDB and also appeared in an interviewed with BFM 89.9 with host Ibrahim Sani and mentioned that 1MDB has been cleared of any and all wrongdoing by the Malaysian Attorney General. [41][42][43]
In media interviews in September 2015, 1MDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, rebutting news reports on the matter.[44] The company has also dismissed claims of wrongdoing.[45]
In February 2016, Federal Bureau of Investigation (FBI) of the United States began probing the connection between a regional top executive of global investment bank Goldman Sachs with former Prime Minister Najib Razakand the nature of the former’s involvement in multibillion-dollar deals with 1MDB.[46] Similar probes have also taken place or are currently undergoing in the United Kingdom, Australia, Hong Kong and Singapore into banks that facilitated transactions for 1MDB.[47]
In May 2016, the Public Accounts Committee (PAC) of the Malaysian Parliament; consisting of several members of the parliament from both the ruling party and the opposition laid the blame for the troubles of 1MDB on the board of the troubled state fund and its former chief, saying that the board had failed to carry out its responsibilities.[48]
References
https://en.wikipedia.org/wiki/1Malaysia_Development_Berhad
1Malaysia Development Berhad
From Wikipedia, the free encyclopedia
Not to be confused with 1Malaysia.
"1MDB" redirects here. It is not to be confused with IMDb.
1Malaysia Development Berhad
Formerly called
Terengganu Investment Authority
Former type
Government-linked company
Industry Strategic development
Founded 2009
Defunct May 9, 2018
Headquarters Kuala Lumpur, Malaysia
Key people
Lodin Wok Kamaruddin (chairman, board of directors)
Arul Kanda (president & group ED)
Revenue Non-disclosed
Owner Government of Malaysia
Website www.1mdb.com.my
1Malaysia Development Berhad (1MDB) is a strategic development company, wholly owned by the Minister of Finance Incorporated Malaysia (MOFI).[1][2] 1MDB was established to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment.[3] 1MDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness. 1MDB is currently involved in several high-profile projects such as the Tun Razak Exchange, Tun Razak Exchange's sister project Bandar Malaysia, and the acquisition of three independent power producers.
However, from 2015 onward, 1MDB been heavily investigated for a financial scandal where in a lawsuit filed by United States Department of Justice (DOJ), at least US$3.5 billion been stolen from 1MDB.[4]
Contents
- 1 History
- 2 Investment in PetroSaudi Holdings (Cayman) Ltd and Segregated Portfolio Company (SPC)
- 3 Investment in SRC Group
- 4 Investment in real estate sector
- 5 Investment in the energy sector
- 6 Corporate structure
- 7 Controversy
- 8 References
- 9 External links
1Malaysia Development Berhad (1MDB) started off as Terengganu Investment Authority (TIA) in which is initiated by Menteri Besar of Terengganu. TIA is a sovereign wealth fund with initial fund of RM11 billion aimed at ensuring economic development for the state of Terengganu that is long term and sustainable while safeguarding the economic well-being of the people of Terengganu. The TIA fund was derived from an outstanding royalty income of RM6 billion and funds from bond issued by local and overseas financial markets with the Federal Government's proposal to provide a guarantee of RM5 billion based on Terengganu's future oil revenues.[2][5]
On 27th May 2009, Ismee Ismail and Shahrol Azral Ibrahim Halmi signed a deal arranged by AmInvestment Bank Bhd to raise RM5 bilion via the issuance of Islamic medium-term notes (IMTNs), despite being told not to do so by the Terengganu state government. This exercise was adviced by TIA's special adviser, Jho Low. On 29th May 2009, TIA received RM4.385 billion in net proceeds from IMTN from the full value of RM5 billion.[6]
On 31st July 2009, Minister of Finance Incorporated Malaysia (MOFI) took over TIA and changed its name to 1Malaysia Development Bhd (1MDB), four months after Najib Razak was made Prime Minister.[6] In his announcement on 22 July 2009, then-Prime Minister Najib Razak said the decision to expand TIA into a federal entity was made to enable its benefits to reach a broad spectrum of Malaysians rather than the residents of only one state.[7]
In general, 1MDB investment can be summarize into the following:-[2]
- Investment in PetroSaudi Holdings (Cayman) Ltd
- Investment in Segregated Portfolio Company (SPC)
- Investment in SRC Group
- Investment in real estate sector
- Investment in the energy sector
On 4th March 2016, the audit report by the Auditor General of Malaysia have been classified as Official Secrets Act under the Official Secrets Act 1972 by the National Security Council (Malaysia). [8]
On 15th May 2018, 1MDB audit report by the Auditor General of Malaysia have been declassified after being requested by the 7th Prime Minister of Malaysia, Tun Dr Mahathir Mohamad.[9][10]
Investment in PetroSaudi Holdings (Cayman) Ltd and Segregated Portfolio Company (SPC)
Joint venture with PetroSaudi Holdings (Cayman) Ltd
On 28 September 2009, 1MDB established a joint venture (JV) with PetroSaudi Holdings (Cayman) Ltd, company name was 1MDB-PetroSaudi Ltd with a 60:40 ratio where 1MDB hold 40% with a cash contribution of US$1 billion while PetroSaudi Holdings contribute with assets worth at least US$1.5 billion. There were four different companies registered under the name of PetroSaudi but the investment proposals submitted to the board of directors of 1MDB did not state the information. [2][11]
On 29 September 2009 (a day after formation of joint venture), Edward L. Morse submitted an asset valuation report. In the same day, he was appointed as the 1MDB Chief Executive Officer. The assessment report takes into account assets on oil exploration and production rights in Turkmenistan and Argentina. The assessment was implemented on PetroSaudi International Ltd’s assets despite the JV agreement clearly stating that the company owning all the rights and interests of the agreed assets for the joint venture project is PetroSaudi International Cayman, the report said. [2][12]
Besides that, the JV agreement contained clauses that lacked in guarding the interests of the company. Among the clauses are there was an advance fees of US$700 million received by the 1MDB-PetroSaudi from PetroSaudi Holdings to be fully repayable on or before 30th September 2009. Therefore, on 30th September 2009, a total of US$1 billion (RM3.487 billion) was transferred by 1MDB into two separate accounts. The first US$300 million was transferred into joint venture account but the questionable parts is the leftover US$700 million was transferred into another company's account (Good Star Ltd, a PetroSaudi subsidiary) with the aim of repaying the advance taken by the joint venture company. However, approval of board of 1MDB wasn't obtain for the payment of US$700 million into a non-joint-venture account.[2][11]
On March 2010, about six months after the formation of joint venture of 1MDB-PetroSaudi, 1MDB decide to dispose all the 40% stake (worth US$1 billion) for US$1.2 billion in Murabahah Note. This Murabahah Note are guaranteed by corporate guarantee, PetroSaudi International Ltd. On the other hand, 1MDB made additional subscription to this Murabahah Notes up to additional US$830 million with partly funded via loans from financial institutions.[2][11]
On 1 June 2012, 27 months after holding on this Murabahah Notes, 1MDB redeemed all of the Murabahah Notes with a total US$2.22 billion including profits. This redemption of US$2.22 billion was done via an asset swap arrangement where 1MDB International Holdings Ltd (1MDB-IHL), a 1MDB subsidiary received 49% equity stake in PetroSaudi Oil Services Ltd (PSOSL), a PetroSaudi International Ltd subsidiary. This exercise raised a question in Auditor General's audit report where the conversion of Murabahah Notes to equity investments in PSOSL was done without any study to identify PSOSL liabilities, the ability to generate funds and past financial performance. Worth mentioned that 1MDB board aware that PSOSL operates in Venezuelan waters where sanctions have been imposed by the United States and ending drilling contracts, and the decision to invest in the PSOSL proceeded despite of such condition. Furthermore, the documents was signed by the 1MDB's CEO on 1st June 2012 prior to the 1MBD board approval on 20 June 2012 (more than two weeks after 1MDB's CEO sign the documents).[2][11]
During mid-July 2017, 45 days after investment into PSOSL equity on 1 June 2012, 1MDB disposal of all 49% equity in PSOSL to Bridge Partners International Investment Ltd (Bridge Partners) for a min US$2.2 billion after suggested by 1MDB's CEO. The disposal was done on 12 September 2012 and Bridge Partners issued six non-interest bearing promissory notes worth US$2.318 billion[2][11]
This promissory notes was further used as an investment on Segregated Portfolio Company (SPC).
Investment on Segregated Portfolio Company (SPC)
On 12th September 2012, Brazen Sky Ltd (a subsidiary of 1MDB) entered into a Investment Management Agreement with Bridge Global Absolute Return Fund SPC (Bridge Global SPC) and Bridge Partners Investment Management (Cayman) Ltd. to invest US$2.318 billion funded by the promissory notes from PSOSL sales. The investment involved various portfolio investments in the Segregated Portfolio Company (SPC) of the Cayman Islands. However, the company whom in charge of this investment, Bridge Global Absolute Return Fund SPC (Bridge Global SPC) is a new one-month old company with no fund management licence nor experience in managing large funds.[2][11]
On 20th May 2013, 1MDB's board of director decided to redeemed the investment gradually in which would improved perceptions towards the funds's credibility. As of 20th December 2014, total redeem amount from the SPC fund is US$1.39 billion out of US2.318 billion and the balance of US$939.87 to be fully redeemed by end of December. This US$1.39 billion was transferred into Brazen Sky's bank account and then transferred into 1MDB Global Investment Ltd (1MDB-GIL) account. Worth mentioned that the SPC funds with booked value of US$2.318 was pledged to Deutsche Bank for a loan amount of US$975 million without any 1MDB's board approval. From the proceeds of initial redemption and with Deutsche Bank loan, some US$993 million was used for the payment of Aabar option termination (but originally the settlement agreement was only US$300 million instead of US$993 million). Aabar option is an option given to Aabar Ltd in exchange of a guarantee of Abu Dhabi’s International Petroleum Investment Co (IPIC) to give 1MDB a total of US$3.5 billion in bond issuances via Goldman Sachs. All these actions raised a question as it wasn't inline with the initial objective of bringing back the SPC portfolio back to Malaysia.[2][13]
Investment in SRC Group
1MDB established SRC International Sdn Bhd (SRC) on 7 January 2011. According to the SRC Business Plan for the period of 2011 to 2015, SRC will supply coal for long-term needs of national by the fourth year of operation (in 2014).[2]
SRC obtains funding from government grants in the form of development grants of RM15 million out of RM20 million that were approved by the Economic Planning Unit (EPU) and RM2 billion financing from the Retirement Fund Incorporation (KWAP). Financing amounting of RM2 billion from KWAP was received on 29 August 2011 with a term of financing of 10 years. The loan is guaranteed by the government which includes principal and financing benefits of RM2.902 billion.[2]
On 3 November 2011, SRC (via subsidiary company SRC International (Malaysia) Limited, SRCI) establish a joint venture with Aabar Investments PJS (Aabar) with the name of Aabar-SRC Strategic Resources Limited (ASRC). The initial paid-up capital was US$120 million with each party contribute US$60 million.[2]
The board of directors of SRCI approved a US$45.50 million investment in the coal industry at Mongolia but this investment were questioned as this investment where done without any evidence showing any feasibility studies done on the status of the project. The mentioned project was undertaken by the joint venture of ASRC with the Gobi Coal & Energy Limited (GCE) company.[2][14]
SRC also invested in PT ABM Investama TBK, that operates in the energy resources, energy services, and energy infrastructure sectors in Indonesia up to US$120 million (RM366.68 million) through published share prices listed on the Indonesia Stock Exchange. [2][14]
During the meeting on 14 February 2012, CEO of SRC reported an estimated profit on the investment amounting to US$4 million.[2][14]
On 15 February 2012, SRC’s shareholding by 1MDB was transferred to the Ministry of Finance Incorporation (MOFI) by way of acquisition of shares through interim dividend-in-specie payments. The transfer of SRC shares has reduced the operating losses of the 1MDB Group from RM25 million to RM16.2 million, lowering the gearing ratio of 1MDB from 12 times to 9.5 times and reducing the government's total guarantee of RM2.902 billion to the 1MDB Group.[2]
Investment in real estate sector
1MDB invested into real estate market with the aim of diversification and aim to generate long-term return on investment. From 2010 until September 2015, 1MDB have acquired five different property assets with the acquisition amounting to RM2.111 billion. The land are:-[2]
- Tun Razak Exchange (TRX) project land
- Bandar Malaysia project land
- land in Air Itam, Penang
- land in Alor Gajah, Melaka
- land in Pulau Indah, Selangor
On 21 May 2010, it was reported that 1MDB will jointly develop the Tun Razak Exchange project at a currently vacant piece of land covering 34.4 hectares in the city of Kuala Lumpur with Mubadala Development Company.[15] The Tun Razak Exchange was launched on July 30, 2012 by Najib Razak.[16] During his speech on Tenth Malaysia Plan, Najib identified the KL International Financial District (KLIFD) and Bandar Malaysia projects as two of many public-private partnership projects which will help drive the nation's transformation agenda.
Tun Razak Exchange (TRX) project land was acquired with the price if RM302.8 million. A joint venture agreement between 1MDB and Aabar Investments PJS (Aabar) was signed on 12 March 2013. However, the development of the TRX project in collaboration with Aabar was not realized and impacted on the rest of the project.[2]
Up to September 2015, five plots of lands of TRX were sold at RM1.358 billion in fund raising efforts for the 1MDB Group while remaining 11 plots of land plan to sell for RM2.592 billion. Besides that, 1MDB Group also construct a building in a Joint Venture with Mulia Group, namely [The Exchange 106|Exchange 106 (formerly TRX Signature Tower]] to be leased to an international financial services institution for 15 years from 2019 to 2033 with an estimated return of RM537.38 million. [2][17]
In order to fund the TRX project infrastructure development, 1MDB subsidiary, 1MDB Real Estate Sdn Bhd (1MDB RE, but now known as TRX City Sdn Bhd) relies entirely on the sale of land plots. Besides that, 1MDB also created a special purpose vehicle (SPV) raised about Rm229.50 million in August 2015 for fund raising. The TRX project is expected to face negative cash flows as the project receipts are insufficient to cover infrastructure and construction costs and worse still some money from the plots sales, i.e. RM1.095 billion and SPV fund has been flow back to 1MDB instead of using it to finance the TRX project development cost. [2]
Bandar Malaysia
On 13 May 2010, 1MDB as part of a consortium of companies, will jointly undertake redevelopment project of Sungai Besi Airport at Sungai Besi, an old international airport, which is now the base for the Royal Malaysian Air Force into a GDV of RM150 billion Bandar Malaysia. The site covers 486 acres and is planned to be developed into an Islamic financial centre and will include Qatar Investment Authority (QIA) as a partner.[18] About the same time, 1MDB and QIA had signed an MOU to assess the viability of energy and real estate investments. In the MOU, QIA also proposed to invest US$5bil.[19]
Investment in the energy sector
Following that, on 11 January 2010, 1MDB signed a co-operation framework agreement with the State Grid Corporation of China (SGCC), with the intention of undertaking various energy-based projects in the Sarawak Corridor of Renewable Energy (SCORE) and subsequently become major investors in SCORE.[20]
On 18 January 2010, 1MDB signed a co-operation agreement with Abu Dhabi Future Energy Company (also known as Masdar) to explore clean technology projects and investments, including the possibility of building Malaysia’s first carbon-neutral city.[21][22]
In November 2015, the company agreed to sell its energy assets, worth around $2.3 billion, to China General Nuclear Power Group and its subsidiaries.[23]
Corporate structure
1MDB has a three-tier check-and-balance system comprising a board of advisors, a board of directors and a senior management team. The board of advisors is chaired by Najib Razak himself.[24]
In early March 2015, with public discontent growing at the perceived lack of financial transparency at 1MDB, Najib, who is also the chairman of 1MDB's board of advisors, ordered the Auditor General of Malaysia to carry out an audit of 1MDB.[25] However, on completion of the audit, the auditor general's final report was classified as an Official Secret for only the eyes of the Public Accounts Committee (PAC) tasked to investigate improprieties at 1MDB.[26][27]
Controversy
Main article: 1Malaysia Development Berhad scandal
The involvement of 1MDB in the multi-billion ringgit Tun Razak Exchange development project barely a year after its establishment has drawn criticisms from the opposition. Opposition leader and Member of Parliament of Permatang Pauh, Anwar Ibrahim, openly questioned the credentials of the company. He told Parliament that according to the records held by the companies commission, 1MDB "has no business address and no appointed auditor." He further questioned the former Prime Minister's, Najib Razak who is in the office back then, his interest in the approval given to 1MDB on this matter.[28]
The RM425 million (US$140m) profit between 25 September 2009 and 31 March 2010 raised many criticisms and controversies on the lack of transparency given to 1MDB's accounts. Tony Pua, DAP Member of Parliament for Petaling Jaya Utara questioned former Prime Minister Najib Razak, 1MDB advisory board chairman, whether the figures were the result of an asset injection into 1MDB by the government such as the transfer of land rights to the company.[29][30] 1MDB said that it had lodged the necessary information, including its registered address, with the Companies Commission of Malaysia (CCM) as required by the law. The business address is also available on the company’s website, www.1mdb.com.my.
During the October 2010 parliamentary session, 1MDB explained that its accounts had been fully audited and signed by KPMG, and closed as of 31 March 2010. Deloitte was involved in the valuation and analysis of the portfolio, while Ernst & Young provided tax advice for 1MDB.
During 2013, 1MDB raised attention again when they asking for a six-month extension on the annual report meant to be filed in with the Companies Commission of Malaysia (CCM) by 30 September 2013. In the meantime, the change of three auditors since its inception in 2009 was considered suspicious.[31][32]
After 1MDB accumulated debts totalling RM42 billion (US$12bn), the bonds issued by the fund were downgraded to junk status by ratings agencies such as Standard & Poor's and Fitch Ratings.[33][34][35] The Malaysian cabinet rejected a RM3 billion ($US1 billion) cash injection, narrowing 1MDB's options to repay its debts on time.[36][37][38]
In 2015, allegations were made in several newspapers, including the Wall Street Journal, mentioned that the 1MDB organisation had been used to steal state funds for transfer into the accounts of former Prime Minister Najib Razak, and people associated with him such as Jho Low.[39]
In August 2015, the Malaysian Anti-Corruption Commission (MACC) had confirmed that no funds from 1MDB were transferred to the Prime Minister's private accounts as alleged by the Wall Street Journal.[40] Following, 1MDB's president and group executive director (CEO), Arul Kanda, appeared in a local TV programme to clarify issues and allegations against 1MDB and also appeared in an interviewed with BFM 89.9 with host Ibrahim Sani and mentioned that 1MDB has been cleared of any and all wrongdoing by the Malaysian Attorney General. [41][42][43]
In media interviews in September 2015, 1MDB said some media reports concerning the company appear to be politically motivated. Its president and group executive director, Arul Kanda, also clarified that none of the company's accounts in Singapore have been frozen, rebutting news reports on the matter.[44] The company has also dismissed claims of wrongdoing.[45]
In February 2016, Federal Bureau of Investigation (FBI) of the United States began probing the connection between a regional top executive of global investment bank Goldman Sachs with former Prime Minister Najib Razakand the nature of the former’s involvement in multibillion-dollar deals with 1MDB.[46] Similar probes have also taken place or are currently undergoing in the United Kingdom, Australia, Hong Kong and Singapore into banks that facilitated transactions for 1MDB.[47]
In May 2016, the Public Accounts Committee (PAC) of the Malaysian Parliament; consisting of several members of the parliament from both the ruling party and the opposition laid the blame for the troubles of 1MDB on the board of the troubled state fund and its former chief, saying that the board had failed to carry out its responsibilities.[48]
References
