Either 1MDB or MoF to foot refund of RM741m deposit

KUALA LUMPUR (May 5): Questions are now being raised over who will refund the RM741 million deposit paid by a consortium led by Iskandar Waterfront Holdings Sdn Bhd (IWH) to acquire a 60% equity interest in Bandar Malaysia Sdn Bhd after the deal was called off on Wednesday.

“Will 1Malaysia Development Bhd (1MDB) now refund the deposit or will the finance ministry (MoF) have to once again bail 1MDB out by forking out the RM741 million?” DAP publicity secretary and member of parliament for Petaling Jaya Utara Tony Pua said in a statement yesterday.

Pua pointed out that the MoF has to also independently service the RM2.4 billion proceeds raised from the Islamic bonds (sukuk) issued two years ago by 1MDB for the purposes of the Bandar Malaysia project in Sungei Besi here.

“MoF will also have to bear the burden of making payments to Perbadanan Perwira Harta Malaysia, a wholly-owned subsidiary of Lembaga Tabung Angkatan Tentera, which had received a RM2.7 billion contract to relocate the air force military base, of which nearly RM2 billion is still outstanding,” he noted.

On Wednesday, TRX City Sdn Bhd, an indirect wholly-owned subsidiary of MoF, announced that the RM7.41 billion sale of a 60% equity interest in Bandar Malaysia Sdn Bhd has been terminated.

Pua said he has previously questioned 1MDB and the MoF as to why the prized asset was sold to a consortium led by IWH, whose total net assets are worth barely RM3.8 billion, less than half the above transaction value. “For the financial year ended Dec 31, 2015, IWH’s pre-tax profit was only RM170.4 million.”

Pua also called for the resignation of 1MDB president and group executive director Arul Kanda Kandasamy for the deal fallout.

This article first appeared in The Edge Financial Daily, on May 5, 2017.

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