Malaysia

Pakatan persists with 1MDB questions despite PAC snub

June 29, 2011

KUALA LUMPUR, June 29 — Pakatan Rakyat (PR) lawmakers will persist with questions over 1 Malaysia Development Bhd’s (1MDB) profits as the Public Accounts Committee (PAC) has yet to consider requests to investigate its disposal of investments in its joint venture firm with PetroSaudi International Limited last year.

Opposition leader Datuk Seri Anwar Ibrahim submitted a written request to PAC last week to uncover details of 1MDB’s RM3.5 billion investment in 1MDB PetroSaudi Limited and subsequent RM4.1 billion sale back to PetroSaudi International Limited, barely five months after its cash transaction.

“The PAC has not discussed the matter,” a committee source told The Malaysian Insider.

A Barisan Nasional (BN) MP in the PAC said the issue did not involve public funds although Anwar had asked if 1MDB’s funds are backed by government. There has been no answer from Putrajaya.

Anwar  (picture) said last week that 1MDB’s transaction with PetroSaudi  resulted in a RM615 million profit which contributed substantially to the RM425 million profit that the investment agency had recorded in its maiden year of operations last year.

Anwar however noted that payment for the sale, made on March 31 last year, would be made in stages over 11 years, meaning that the full RM4.1 billion would only be paid in full by March 31, 2023.

“If paid, this means there was a 17.6 per cent return or 42 per cent, based on the annualised rate of return,” he explained.

Anwar said his request for a PAC investigation into the transaction was because an audit report from KPMG had led him to believe that the deal was “suspicious” in nature.

Among others, the Permatang Pauh MP wants the PAC to evaluate PetroSaudi’s financial position, its shareholders, nominee and management to determine if the firm has the capacity to pay its RM4.1 billion bill.

He also asked the committee to uncover 1MDB’s financial source and how it had financed its RM3.5 billion investment in 1MDB PetroSaudi Limited.

“Was it the result of any government-backed bonds?” he asked.

Anwar also questioned PetroSaudi’s nature of business and location and if it were true that the firm had been incorporated in Cayman Islands or the British virgin Islands.

“Is it true that it has no connection whatsoever to the petroleum business or any individual or organisation from Saudi Arabia?

“This investigation is needed to ensure that 1MDB, as a government investment agency, is not involved in any suspicious or criminal international financial syndicate,” he said.

Last year, Anwar questioned whether 1MDB was a scandal in the making, alleging that 1MDB was seeking an additional RM5 billion in loans to be secured by RM10 billion in state backed bonds. Many in the market were surprised by the agency’s announcement that it had made nearly half a billion in profit in its maiden year of operations.