Malaysia

Pua says 1MDB profits suspect

By Clara Chooi
October 09, 2010

KUALA LUMPUR, Oct 9 – DAP MP Tony Pua cast doubt today on 1 Malaysia Development Bhd’s (1MDB) RM425 million net profit figure, questioning if the sum was merely the result of hefty asset injections from the government.

The Petaling Jaya Utara MP challenged Prime Minister Datuk Seri Najib Razak, who is the 1MDB advisory board chairman, to show proof of this by exposing the strategic development company’s balance sheets for public viewing.

“While we are pleased to that the fund has managed to generate a return of 8.5 per cent, the profit only gives us a piece of the puzzle.

“Any accountant worth his salt will tell you that evaluating the performance of a company based purely on a profit figure without footnotes, details and context is as good buying a pretty looking car, without evaluating its engines,” Pua (picture) said in a statement today.

He asked if the company’s RM425 million net profit figure for the year ended March 31, 2010, was merely derived from the government’s practice of “left hand, right hand transfer”, which was not a true reflection of its financial position.

“For example, it has been reported in The Star on May 19 that the government will be transferring the prized land in Sungai Besi, currently the base for the Royal Malaysian Air Force to 1MDB. This means that 1MDB would have gotten this piece of land for free from the government.

“The question then is, did 1MDB regard the receipt of this piece of land in its accounts as earnings?” he asked.

If so, Pua continued, this would mean that if the land was valued at RM1 billion, 1MDB would have recorded a loss of RM575 million instead of a net profit of RM425 million.

“There is no way for us to know if the above or other hypothetical scenarios are accurate or otherwise, unless the Prime Minister walks the talk about the results ‘underscoring 1MDB’s corporate governance’ and make public the full accounts of 1MDB.

“If Najib is indeed pleased with 1MDB’s performance, then there should be absolutely nothing to hide,” he challenged.

He pointed out that Najib had twice avoided his questions in Parliament in March and June this year when he asked the Prime Minister for an update on 1MDB’s investments and performance as well as its financial standing.

“However, in both circumstances, my question wasn’t given a proper answer on the pretext that 1MDB has only been set up and the performance and financial data are not ready,” he said.

Pua said that with Najib’s announcement on 1MDB’s profit figures yesterday, the Prime Minister could no longer deflect queries on the body’s performance.

“I have once again submitted a similar question on 1MDB for the current session commencing next week and the Prime Minister has no excuse but to release the full details of the investment performance of 1MDB since he has willingly teased us with the profit made by the fund,” he said.

Pua added that if he were truly sincere, Najib should not have to wait for the question to be raised in Parliament to publicise 1MDB’s accounts.

“He could make it immediately available to be downloaded from the 1MDB website, or at the very least, be available on our respective seats in Parliament when the new session starts on Monday.

“As the English idiom goes – if you’ve got it, flaunt it. Do not just tease us with a RM425 million profit, show us the real thing,” he said.

When announcing 1MDB’s profits at a signing ceremony between the company and Abu Dhabi’s Mubadala Development Company yesterday, Najib said that the results showed proof of 1MDB’s strong corporate governance in striving to be a strategic enabler for new ideas and source of growth.

“Indeed, this strengthens my confidence in 1MDB as a critical enabler in the government’s economic transformation programme for Malaysia to have a high performance and market-driven economy as well as become a high-income nation,” he had reportedly said.