‘Worse than loan sharks’, Pua says of 1MDB paying US$993m for US$3.5b bond guarantee
KUALA LUMPUR — The payment for an Abu Dhabi state fund to guarantee a bond issue by 1Malaysia Development Berhad (1MDB) amounted to nearly a third of the funds raised, Democratic Action Party’s (DAP) Tony Pua said today (Sept 22).
Questioning the rationale for offering International Petroleum Investment Corporation (IPIC) the US$993 million (S$1.4 billion) to secure 1MDB’s US$3.5 billion bond issue in 2012, the federal lawmaker said it must be investigated fully by authorities to “uncover the culprits behind the scene”.
“That represented an unbelievable 28.4 per cent cost to 1MDB, on top of more than 9 per cent paid to Goldman Sachs for arranging the bonds. Such onerous terms are even worse than those of loan sharks in Malaysia,” Mr Pua said in a statement today.
The Petaling Jaya Utara MP today also escalated his criticism of Deloitte Malaysia, 1MDB’s former auditors, accusing the firm of helping the state-owned investor mask its losses by failing to properly account for the US$993 million.
Mr Pua claimed that Deloitte ignored accounting standards by leaving out the US$993 million costs in 1MDB’s share options offer to IPIC when finalising its audit, in effect turning what should have been a loss of RM3.9 billion (S$1.29 billion) in 2013 to just RM665 million.
Deloitte cannot claim that it was unaware of the share options offered as it only closed 1MDB’s books at the end of last year, he added.
“How can Deloitte, an international auditing firm, make such a massive blunder by failing to account for the massive options expense as required by IFRS2, adopted by the Malaysian Accounting Standards Body (MASB)?” he said, referring to the International and Malaysian Financial Reporting Standards 2.
But he said the silver lining of Deloitte’s failure was that the public can now see the onerous conditions imposed in 1MDB’s agreement with IPIC for the latter firm to guarantee the former’s bond issue.
Today’s statement by Mr Pua is an intensification of his criticism of Deloitte, which he turned his attention to after failing to obtain his desired response from 1MDB.
He yesterday demanded the auditing firm corroborate a Wall Street Journal (WSJ) report alleging that the US$993 payment was not registered in the account of IPIC, as it was 1MDB’s auditor during the period in question.