RM28 billion hole at 1MDB–Malaysia’s Burden?

August 2, 2016

RM28 billion hole at 1MDB–Malaysia’s Burden?

by P Gunasegaram

QUESTION TIME: Desperate people are dangerous people – not just to themselves but to all of those around them. The more powerful you are when you are desperate and the more influence you have, the more dangerous you are to more and more people. What dangerous, despicable things will desperate people do to fill up that RM28 billion hole at 1MDB?

The US Department of Justice (DOJ) civil filings to recover over US$1 billion in assets purportedly belonging to our disgraced “strategic development company” 1Malaysia Development Berhad or 1MDB very comprehensively explained how over US$3.5 billion (US$3.657 billion to be exact or RM14.6 billion at current exchange rates) was allegedly stolen from the country.

The DOJ filings painstakingly detailed the money trail for the over US$3.5 billion purportedly stolen from 1MDB, which is wholly owned by the Minister of Finance Inc, an arm of the Finance Ministry, showing that a total of US$730 million went into Prime Minister Najib Abdul Razak’s bank accounts, of which US$620 million were returned to one of the accounts from where it came.

Michael Kors And Vanity Fair's Krista Smith Along With Red Granite Pictures Toast The Cast Of "Friends With Kids"

Niza Aziz Bin Rosmah Mansor



According to the filings, most of the money went to accounts controlled by Low Taek Jho aka Jho Low, while the other portions went to two senior officials – since dismissed – of Abu Dhabi’s International Petroleum Investment Corp or IPIC and its subsidiary Aabar PJS Investments (their CEOs in fact), and Riza Aziz, the PM’s stepson (Rosmah Mansor’s son).

Some three quarters, amounting to US$2.627 billion or RM10.5 billion of the embezzled 1MDB funds went into the accounts of Jho Low, from which portions were subsequently distributed into other accounts. Over and above this, US$238 million or over RM950 million went to Riza Aziz while nearly US$540 million or some RM2.16 billion went to the accounts of the two senior officials at IPIC and Aabar.

Guess who is this guy?

The DOJ filings add on to other reports, including one from our very own auditor-general. News reports quoting the auditor-general’s report on 1MDB say that some US$7 billion (RM28 billion) worth of 1MDB assets could not be verified and accounted for.

That means that between US$3.5 billion and US$7 billion of 1MDB money could have gone missing – a further US$3.5 billion over and above what the US DOJ says could still be missing and misappropriated or stolen. The gaping hole in 1MDB could be as large as RM28 billion but is at least RM14 billion deep. The auditor-general’s report has been classified under the Official Secrets Ac,t which means that there is much information there which the government is suppressing from public view.

1MDB itself admitted that over US$3.5 billion it purportedly paid Aabar has gone missing. Neither IPIC nor Aabar acknowledge the payments. Apparently, 1MDB paid into the account of a British Virgin Islands company with a similar name! And still 1MDB claims that all is well and no police report has been lodged.

IPIC is now claiming from 1MDB not US$3.5 billion but US$6.5 billion under arbitration proceedings filed in London – that’s US$3 billion more than the payment gone missing of US$3.5 billion. It’s not clear why but if the arbitration goes against 1MDB, Malaysia has to pay out US$6.5 billion.

Inflating cost of rail project?

Whichever way one looks at it, there’s going to be a huge hole in 1MDB – US$3.5 billion at least and as high as US$7 billion. 1MDB will be desperately trying to cover that hole but how is it going to do that?

Remember that 1MDB is wholly owned by MOF Inc, remember that its former board, as well as the advisory board which the PM headed, has been disbanded and control is now with MOF Inc. The burden falls on MOF Inc to fill up this hole with minimal damage in terms of public perception – yet another cover-up, in other words.

This raises serious questions as to what 1MDB, its new board and shareholders will do to either fill the hole in a manner which is acceptable or can be passed off as acceptable to the public at large, or continue to deny foolishly that such a hole exists. The former is tough or even impossible to do and the latter cannot be done indefinitely.

It’s been more than a year – 16 months – since 1MDB’s financial year-end of March 31, 2015 and there are no signs of the accounts. In another two months, it will pass the limit of six months given to file the accounts for the year ended March 31, 2016 as well. How long can 1MDB delay the accounts and still say things are A-OK? Already its auditors for its last accounts released (2013 and 2014), Deloitte, has said no one should rely on them anymore.

Speculation is mounting as to how Najib and his government will placate an increasingly sceptical and impatient public who are getting highly upset and restless by irrefutable reports of corruption at the highest levels. If nothing is done, the game will be up.

Sarawak Report – one of the organisations that helped blow open the 1MDB misappropriations when it reported leaked e-mails – is saying that the East Coast Railway project may be used for this purpose, claiming it has seen documents to this effect.

Basically, Sarawak Report alleges that the project, originally expected to cost around RM30 billion, will be awarded to a China company at an inflated price of RM60 billion, the differential of RM30 billion being transferred back eventually to 1MDB to fill the hole. Works Minister Fadillah Yusuf has denied this.

Denial or not, the point is, how is 1MDB going to fill that hole? What will MOF Inc come up with? And if it can’t fill the hole, who will be hauled up? Who will be blamed for all this?

Desperate things will be done during desperate times by desperate people so we have to keep our ears to the ground and eyes wide open.

Remember that there is the High Speed Rail project too which, by the time it is done, could cost as much as RM80 billion, giving room for lots of fiddling. And remember too that China companies are highly likely to be involved here as well.

It is dangerous for desperate people to be in charge of a country during desperate times for they can throw much more good money into a sinkhole so that they look good for as long as they can; they can wound a nation sometimes mortally, and hurt and maim its people just so that they remain in power and thereby avoid being brought to account for their actions and ill-gotten gains.

This highlights yet again the need for change at the very top in Malaysia and extends to charging all those who conspired and were responsible for the largest theft in the world and the bringing to account of everyone who helped to suppress information, did not do their jobs and allowed criminals to roam free.

P GUNASEGARAM is absolutely amazed and astounded by the audacity and ultimate stupidity of those who conspired in this heist against 1MDB. How could they think that they could forever hide the billions stolen and launder such large sums through the world’s financial markets without eventually being found out?




6 thoughts on “RM28 billion hole at 1MDB–Malaysia’s Burden?

  1. Learning from Philippines and Indonesia’s experience, recovery rate for such money is gone for good, even if one has been able to lock up MO1 and Jho Low.

    Let’s figure out the mechanism to find that next leader who could help navigate a sinking ship across a treacherous path. #BraveNewWorld for the right balance of Law and Sensibility in the coming years. Without some law and order, the next leaders in the coming decades could be even more desperate. Most of all, Jho Low and MO1 related families would always come back in the decades to come.

    Marcos never went away, it seemed.

  2. Aliyah, the DoJ report is hard to read. Can’t understand American English. They need to write in Manglish, that way MO1, AG, and all then UMNOb goons can understand. Anyway that is American law. WE here in Malaysia only understand Malaysian Law. Our Yang Ariffs too will have a difficult time following American legal terms, process and procedures. Need to find that guy from San Quentin to explain.
    AG Pandi now wants to go to US for watching brief and at same time do a study your on US legal system. He will probably feel lost in the crowd of other state AG’s, US Attorneys, and Prosecutors. Maybe he needs to sit in on People’s Court or Judge Judy show. That will be good for Pandi.

  3. The bill may be large BUT its NOT the real big bill of Najib. The big bills are Najib’s mega projects – MRT, HSR, Pan-Borneo higway, Defense contracts and not to mention BR1M, middle-class subsidized housing. These projects are based on assumptions – that his track record is real and sustainable – its not. The only way it gets paid is if oil prices go way way up again and soon before we run out oil – even then its consumption tax as we import oil now. Even all that is acceptable, where is the money to continue the uneconomical system going?

    The question that need ot be asked is why is Khairy Jamaluddin now. after being quiet for a while, the most vociferous advocate of trying to turn the lie into a truth? His education must tell him that its not sustainable. Najib is simply a criminal and he is cheering too loudly his “macai” to risk jail to support him? HE MUST be in extreme panic as it goes against all of his instincts.

  4. Sarawak Report article on lots of $$$ spent on anti-ageing products.

    “Picture of Dorian Gray” immediately springs into my mind !

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