Hornbill Unleashed

March 18, 2017

MoF Inc not taking over 1MDB debts, second finance minister says

Filed under: Politics — Hornbill Unleashed @ 8:01 AM

Second Finance Minister Datuk Seri Johari Abdul Ghani said while MoF Inc would not be taking over 1MDB debts, the substance of the letter of support and guarantee from the government remained intact, as described in the PAC Report. — Bernama picThe Minister of Finance Incorporated (MoF Inc) will not be taking over 1Malaysia Development Bhd (1MDB) debts, said Second Finance Minister Datuk Seri Johari Abdul Ghani.

He said the Public Accounts Committee (PAC) Report had made clear that the debts that would remain on the balance sheet of 1MDB were RM5 billion sukuk, US$3.0 billion bond and US$3.5 billion International Petroleum Investment Co (IPIC) bond.

These debts would be serviced from matching cash flows, as described in the PAC Report, he said in a statement today in response to Petaling Jaya Utara Member of Parliament Tony Pua’s remarks on 1MDB.

Speaking to reporters at Parliament lobby yesterday, Pua allegedly said that Putrajaya indeed had bailed out 1MDB by taking over RM3.2 billion worth of debts.

Johari said while MoF Inc would not be taking over 1MDB debts, the substance of the letter of support and guarantee from the government remained intact, as described in the PAC Report.

He said there was a clear distinction between 1MDB debts, which would not be taken over by MoF Inc, and the Bandar Malaysia Sdn Bhd (BMSB) and TRX City Sdn Bhd (TRXC) project company operating debts.

The BMSB and TRCX project company operating debts were part of their assets and liabilities which would be serviced from the project cash flows, he added.

Expressing his disappointment over Pua’s allegation, Johari said Pua, who is a PAC member, chose to misrepresent the facts and attempted to mislead the people when the matter at hand was “clear, simple and had been publicly explained”, as evidenced on page 81 of the PAC Report on 1MDB.

Johari said the TRX and Bandar Malaysia lands were originally owned directly by the government but it made a decision to sell them in 2010 and 2013, respectively to 1MDB, a holding company 100 per cent owned by MoF Inc.

1MDB, in turn, owned the lands via its 100 per cent equity shareholding in two subsidiary companies, TRXC and BMSB, he said.

“It is clear that from the transactions, the government ownership of the lands shifted from direct to indirect ownership, via MoF Inc ultimate ownership of 1MDB and its subsidiary companies,” he said.

Johari said although the Bandar Malaysia land was sold at a nominal sum to BMSB, there was a responsibility to construct and upgrade six bases for the Royal Malaysian Air Force and two bases for the Royal Malaysian Police, for a total development cost of RM 2.7 billion, of which 1MDB had to contribute RM1.6 billion.

“Although the TRX land was sold at a nominal sum to TRXC, there was a responsibility to construct infrastructure not only in TRX but also in the surrounding areas, including a vehicular tunnel under Jalan Tun Razak, for a total sum of approximately RM3 billion,” he said.

He said TRXC and BMSB undertook debts of RM800 million and RM2.4 billion, respectively to undertake the construction of infrastructure and the six air force and two police bases.

“These debts were always attached to the said land when these two companies raised their financing and thus form part of the security for the said debts.

“In other words, it is an operating debt of these two companies,” he said.

With the infrastructure development and planning approvals obtained by TRXC and BMSB from 2010/2013 to the present day, Johari said the value of the TRX and Bandar Malaysia lands had increased significantly.

Johari recounted that the PAC recommended in April last year that MoF Inc took over direct ownership of Bandar Malaysia and TRX lands from 1MDB.

He explained that the most efficient and cost-effective way to achieve this was via a transfer of TRXC and BMSB shares to MoF Inc.

“So, instead of owning those companies via 1MDB, MoF Inc will directly own BMSB and TRXC, along with all the assets and the operating debts of the respective companies,” he said.

He said TRXC and BMSB debts would be repaid by future cash flows of these companies as described the PAC Report on page 81.

“Further, while TRXC will continue to be 100 per cent owned by MoF Inc, it is pertinent to note that a sale and purchase agreement has been executed with a consortium for the sale of 60 per cent equity shareholding in BMSB,” he said.


Source : @ Bernama


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