1MDB’s US$ 1 billion default could trigger cross default on its other debts, admits Arul

April 25, 2016

1MDB’s US$ 1 billion default could trigger cross default on its other debts– Why take the crap, Arul Kanda Kandasamy?

by Tan Choe Choe/ theedgemarkets.com


Malaysian Taxpayers’ Bailout in the Works–Najib Razak must resign

If troubled 1Malaysia Development Bhd (1MDB) defaults on its US$1 billion loan from Abu Dhabi’s IPIC, that could trigger cross defaults on the fund’s other debts, including some bonds, according to the fund’s president and group executive director Arul Kanda Kandasamy.

Though 1MDB has declared just four days ago that it is free of all its bank and short-term debts, it still has a RM5 billion sukuk with a government guarantee, another RM2.4 billion Bandar Malaysia sukuk, a RM800 million loan from the Social Security Organisation or Socso in short, and in his words, “the one that everyone is worried about”, a US$3 billion bond the fund issued in 2013 to fund the Tun Razak Exchange development.

In an exclusive interview with The Edge Malaysia, published in the weekly’s cover story for the week of April 25-May 1, a clearly frustrated Arul told the publication’s Executive Editor Kathy Fong and Associate Editor Jose Barrock what had derailed the asset for debt settlement with IPIC, which he thought was a done deal and the final piece of the jigsaw to rescue 1MDB from its massive debt woes — and what could happen next now with IPIC’s declaration of default against 1MDB.

The binding term sheet 1MDB signed with IPIC in June 2015 got the cash-strapped 1MDB then the US$1 billion it needed to settle some immediate obligations, including a US$975 million syndicated loan led by Deutsche Bank AG.

There is one crucial item on the term sheet, which is that 1MDB has to transfer the amount that IPIC paid, the cash plus the interests — US$1.15 billion — by December 31, 2015, according to Arul. As such, he said: “actually, we were in default since December”. But he questioned why IPIC waited until now to make the announcement.

“It should have been made immediately after the default as it’s a large amount. Why wait until April to say you don’t own Aabar BVI?”  As to the US$3.5 billion worth of payments that 1MDB made to Aabar BVI (Aabar Investments PJS Ltd), the company with the near identical name to IPIC’s subsidiary Aabar Investments PJS, Arul said: “What we cannot discount is there could actually be fraud…a massive fraud…and maybe there was collaboration from our side”.

He also spoke about wanting to quit 1MDB, and how the issues at the fund was not his and “not what I signed up for”. “I’m very tired. I’m doing over and above what I had signed up to do.”

Pick up The Edge Malaysia today from newsstands near you to find out what could have caused the IPIC-1MDB deal to turn sour, why 1MDB thinks that IPIC holds corporate responsibility too for the US$3.5 billion that was diverted into Aabar BVI for not calling foul earlier if it hadn’t received the monies, and more.

Also, read about what the publication has to say about whether 1MDB was cheated or if it was a party to the fraud.


19 thoughts on “1MDB’s US$ 1 billion default could trigger cross default on its other debts, admits Arul

  1. Arul is in a bind and must stick to the end. Eventually, he will be one of those who will take the fall. Najib will have to do deal with his successor to escape punishment under our law. What a shame. –Din Merican

  2. 1MDB financial scandal has brought infamy onto 1Malaysia, its kleptocrac leaders and their multi-ethnic associates.

    I wonder how many years it will take for Malaysia to dig itself out of this
    financial hole. We are already seeing the effects e.g. across the board budget cuts for government ministries, new taxes (whether obvious or disguised), economic distress in the form of job layoffs and accelerating inflation.

  3. What made Arul to make this U-Turn after vehemently fighting tooth and nail of !MDB in collaboration with his boss Najib by giving false hopes of the way the money robbed. Hope that he will not end up in a concrete filled drum like Kevin.

    The truth will prevail one day soon so Najib doesn’t have to bullshit and pretend nothing had happened by his hypocritical smile on his face.

  4. Questions are whether we should allow the successor :
    1. to do a deal with Najib so that the latter can escape punishment?
    2. to allow Najib to keep any part of the remaining loot?
    3. to allow Najib not to return any of the loot that has since been spent or lost?

    Surely, if a thief is caught, with all evidence pointing to him committing the crime, the thief should be punished and restitution made by him for the loss.

    I understand that under syariah law, it goes further that the thief will have his arm(s) cut off as punishment.

    Surely, all these applies to the situation on hand.

  5. This is beyond shame, it’s a big crime and all those connected to 1MDB must be brought to court and be punished . This will set an example for future leaders to be honest and transparent. Using Rakyat’s money to win an election is unacceptable and constitutionally wrong. Mana pergi ‘Tetaatan and Kesusilaan’ yang terkandung dalam Rukan Negara. Malu dan amat AIB kepada keluarga mereka, bangsa dan Agama.

  6. According to Arul, Aabar BVI is in the agreement with IPIC. Yet when the issue was first raised more than six months ago, nothing was said OR done since then about the possibility of fraud until now. Its clear 1MDB is complicit with the fraud and the no 1. fraudster is Najib which is why he said nothing until now..

  7. Why was this issue not raised six months ago?

    Simple. Then, all especially the commander in thief and his merry men and women (azlina excluded from this category), were sitting pretty thinking nothing could happen to them.

    Now that the gas has escaped their putrid orifices the stink has gotten even the likes of Kanda gasping for breath. And what a man he’s claiming to be – going above and beyond the call of duty. Doing what? Splashing Najib’s bottom hoping it will smell like the perfumes of Araby?

    As for she who thinks all this is a test from the Almighty, no amount of botoxing or whatever she uses will be able to wipe the crap accumulated from the years of high living stealing from the rakyat.

  8. Arul, aren’t you recycling Tony Pua’s “allegation”, now? We are not taken in by your pathetic excuses to save your sorry a**.

  9. Clearly now, 1 MDB can no longer be treated as just a political or personal issue of Najib and the leaders in Umno Baru.
    It is an issue of Accountabilty to the nation, its whole cabinet and the Rakyat. The whole cabinet should resign if it fails to account for it.

  10. ….And, ……so are those involved with the many Unaccountable past scandals, starting from the BMF 2.5 Billion Loss in the 1980s ,through the 15 Billion BNM Forex Loss , …..Perwaja , PKFTZ , till this day……because like bank failures, they were all robbed from inside at an enormous cost, expense to the nation and unimaginable pain to the people.

    They just cannot be trusted.
    They are traitors of the nation .

  11. This Mother-Father of All Scams is unfolding like a gigantic Rafflesia flower..

    Petal by Petal it unfolds, it’s putrid stink reaching ‘up’ to high heaven. Upon which the Almighty will ‘test’ the Perps by smiting them with all sorts of Pestilence. The First has started – Octo and Gang. The second, is the sheer Creativity of the Minions by speaking in ‘Tongues’. The third will be the Bonfire of Vanities. The fourth, the Exit to Seychelles, where banishment awaits. Refuge in Paradise, er Tax Haven. The final Petal will be Kick out of UMNOb.

    For those who hope for speedy closure, kindly watch in real time a Rafflesia bloom. It ain’t happening yet. Kemaluan takes time..

    So.., for now the gentlefolk of BolehLand will reap the odiferous spores of that gigantic bloom – with each living soul, whether cacat or not, having to fork out USD how much? GOK – God only knows, or izzit GST?

  12. Arul was trying to pressure IPIC with this threat of cross default in the event the 50mill. interest was not paid and IPIC not being exactly stupid have agreed to make the payment in the event that 1MDB DEFAULTS.

    It means IPIC avoids the default on16B, but 1MDB will pay heavily in the long run (penalties,overdue interest, costs?) since Arul is willing to walk the plank for Najib…..

    IPIC says would make 1MDB payment after default
    “As at the time of this announcement, IPIC is not aware of the Guarantee being called upon. IPIC has always honoured its obligations arising from any agreements it has entered in to and will continue to do so,” it said in the statement.

    It was not clear whether a default had already occurred. 1MDB did not immediately respond to a request for comment.

    IPIC said a 1MDB default would not mean a cross-default by IPIC on its own debts.

    And if Arul cannot understand that, then he is not fit to be a Banker, but an embarassment to those in Banking & Finance. Utter disgrace.

  13. Arul is now pretending to be the good guy and feigning innocence. He is complicit in the plot to cover up the 1MDB scam ever since he came on board 1MDB. His denials of Sarawak Report’s expose’, WSJ reporting, Tony Pua and Rafizi’s claims of the huge 1MDB scandal are probably now haunting him and he’s trying to find an escape route. But it’s too late for him now as he’s already the scapegoat.

  14. I think its not as simple. This fella is sneaky (or is it snaky)… By pointing to fraud and possible internal collaboration, it is obvious the blame ain’t gonna be Arul Kanda Kandasamy… I think he is preparing for Shahrol Helmi to take the blame… to be the scapegoat.

    That was how Rachel Rewcastle-Brown of The Sarawak Report put it – it is obvious a red laser light is aimed at the forehead of Sharol Helmi now as the collaborator – and he better find a way to run fast and run far!

  15. All Sharol has to to do is run off to Australia, apply for Complimentary Protection Visa on grounds of real fear of threat to his liberty and safety, and demand AUD 17 million from Najib to keep his mouth sealed and willingly become the scapegoat. He might even get to do high quality video to exonerate that Najib had nothing to do with the heist .

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