April 30, 2015
Will it be checkmate for Arul Kanda?
by Kee Thuan Chye
Arul Kanda Kandasamy is not involved in any siphoning of funds from 1MDB to the wrong pockets. He was brought in to head the company long after the foul deeds had been done. He was brought in to rationalise the company and bring it back in the black. ‘Rationalise’ might even have been a nice word used for his job description – to mean cover up the dirt, if he found any.
Well, from the Public Accounts Committee (PAC) report and some of the things he has said publicly, it appears that he did find dirt and he did cover it up.But now he has openly admitted that 1MDB might have been massively defrauded. More, he has also declared in an interview with The Edge Financial Weekly that “maybe there was collaboration from our side”.
Maybe? He was supposed to investigate and find out for sure. How could he say “maybe”? We are talking about billions of US dollars going astray, and he says “maybe”? Has he failed in his job?Or has he succeeded exceedingly well by way of not exposing fraud when he discovered it? And is he still equivocating by saying “maybe” when he could actually mean “certainly”?
Hiding the fraud would of course make him an accessory after the fact. And when it comes to prosecuting the culprits, he should also be implicated.
MP Tony Pua, a member of the PAC and 1MDB’s closest observer, has called Arul a “liar”. The fact that Arul has not defended his honour by, say, suing Pua, suggests that the accusation is true.
What was it that Arul allegedly lied about? In February 2015, he said in an interview with the Singapore Business Times that 1MDB had redeemed US$1.103 billion from its offshore account in the Cayman Islands and parked it in a Singapore-based branch of Swiss bank BSI Bank.
“The cash is in our accounts… I can assure you… I have seen the statements,” he attested. Note his confident tone.But it turned out there was no cash. In May, the government admitted that the redeemed US$1.103 billion was actually in the form of ‘units’.
In June, 1MDB laughably sought to get Arul off the hook by stating that he “never said he ‘saw the cash’” and that he was “on the record as saying he had ‘seen the statements’.”That was stupid. Anybody could see that Arul and 1MDB were trying to twist words. After all, he also was on record saying “the cash is in our accounts”, so how could he wriggle out of that?
Anyway, in October, Sarawak Report published on its website minutes of a 1MDB board meeting that took place in January 2015, at which Arul gave “detailed assurances to board members that there was indeed cash in the so-called Brazen Sky company account at BSI Bank”.
This cash-but-no-cash episode is very telling of what Arul’s mission amounts to. Even more telling is the refusal of 1MDB under Arul’s watch to provide details of the company’s foreign banking transactions to the PAC and the auditor-general.
Such information is crucial in determining, for example, whether a US$700 million transfer made by 1MDB to an account belonging to Good Star Ltd was legitimate.
More significant than that are the billions of dollars of unexplained payments – totalling at least US$3.51 billion – made to British Virgin Islands registered company Aabar Investments PJS Limited.
According to the PAC report, 1MDB has not clarified whether this company was linked to the Abu Dhabi-registered Aabar Investments PJS that is a subsidiary of International Petroleum Investment Corp (IPIC), which actually declared to the London Stock Exchange this month that the Virgin Islands Aabar “was not an entity” within IPIC or Aabar Investments PJS.
If the Virgin Islands Aabar is not a company that 1MDB had legitimate business dealings with, then it is incumbent on Arul to provide the essential information to set the record straight. Why hasn’t he done it? Why did he not furnish the PAC with the required foreign banking information? What is he trying to hide?
I could cite more instances of Arul’s seemingly dodgy behaviour in divulging information to the public and the authorities, but I think the main points have already been clearly made.
As I said earlier, if he is hiding the truth, he is an accessory. And now that he has acknowledged the possibility that there was fraud and that 1MDB itself might have participated in the fraud, something that he had been denying before, what is he going to do about it?
He was brought in to head 1MDB in January 2015 on a three-year contract. He still has time left. And although, as he told The Star on April 1, that his job was to turn 1MDB around and sort out its debt, and that “from my perspective, I’m done”, he should know that he’s now in a very vulnerable position.
Should he merely confine his stint at 1MDB to just the brief he was originally given when he now suspects that fraud has been committed? Isn’t in in the interest of 1MDB to get down to the bottom of the fraud?
In fact, since 1MDB is government-owned, isn’t it in the interest of Malaysian taxpayers to know the truth? And since all Malaysians pay tax these days, at least in the form of the goods and services tax (GST), doesn’t this mean that all Malaysians have a stake in 1MDB and what it’s been doing (or misdoing)?
So, is Arul Kanda going to carry out his duty to all Malaysians or is he going to wash his hands of the matter? Is he going to care for the financial well-being of the country or uphold the interests of his master?
The answer to that has become more pressing this week in light of IPIC’s termination of the deal to slash US$3.5 billion of 1MDB’s debts that has led to 1MDB defaulting on its payment of US$50 million interest for bonds it issued.
This latest development has prompted Pua to warn that as a result of it, “Malaysians need to brace themselves for the bailout of the century of at least RM20 billion by the Malaysian government”.
If that should turn out to be true, the culprits that started this whole 1MDB mess must be held accountable. Arul’s head should also roll if he was not duly diligent in averting a disaster by coming clean with the company’s dirt.
On April 1, Arul said, “We don’t need any money from our shareholders to get us to 2039. There is no bailout of 1MDB.” What will he say in the weeks to come? He also said the allegations against wrongdoing by 1MDB were unfounded and politically motivated. “The misunderstandings about 1MDB stem from the fact that what was a business problem became politicised and became a tool by the opposition or those not aligned with the government to topple a democratically elected prime minister and government.”
That was glib (misunderstandings, indeed!) and parrot-like (quoted verbatim from government propaganda about toppling blah blah blah). Unfortunately, in a matter of weeks since then, the situation has turned negatively against 1MDB. And, naturally, for Arul Kanda, too. He could be due for his comeuppance.For his own sake, he should decide now to do the right thing.