FRIDAY, March 29, 2024
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Malaysian government exposed to 1MDB risk, says PAC

Malaysian government exposed to 1MDB risk, says PAC

PETALING JAYA - The Malaysian government is exposed to a risk estimated at 20.31 billion ringgit (US$5 billion) not including interests, if 1Malaysia Development Bhd (1MDB) fails to pay off its debts, according to the Public Accounts Committee (PAC).

 
The PAC in a report revealed that the federal government had committed some 5.8 billion ringgit in government-guaranteed loans, standby credit of 950 million ringgit alongside another 13.56 billion ringgit via a letter of support which meant that the government would intervene if 1MDB could not honour its loan payments.
 
The purpose of this was to raise funds for a 50:50 joint venture (JV) with Aabar Investments PJSC, which is a subsidiary of Abu Dhabi’s International Petroleum Investment Co.
 
This fund-raising exercise was done through Goldman Sachs.
 
No specific information on the investment was provided.
 
A letter of support issued on March 14, 2013 with Cabinet approval stated that 1MDB would step in if its subsidiary – 1MDB Global Investment Ltd (1MDB GIL) – fails to honour the bonds.
 
1MDB GIL is a British Virgin Islands-registered entity set up on March 8, 2013, to receive the proceeds of the fund-raising exercise, said the report.
 
“If 1MDB, as a shareholder in 1MDB GIL, fails to provide the funds, the federal government will take over and provide what is necessary,” the report said.
 
It is stated that 1MDB and Aabar had managed to raise $2.72 billion for this, but the PAC found that $1.75 billion was instead invested in a portfolio with BSI bank in Lugano, Switzerland.
 
The PAC was informed this was pending finalisation of the JV with Aabar.
 
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