DAP hits out at Najib after Cabinet clears 1MDB of wrongdoing

Prime Minister Datuk Seri Najib Razak has come under fire from DAP following the Cabinet's decision to clear 1Malaysia Development Berhad (1MDB) of any wrongdoing despite directing the Auditor-General (A-G) to conduct a full investigation into the debt-ridden fund.

The party’s national publicity secretary Tony Pua said that 1MDB critics were pleased that Najib had finally instructed the A-G to conduct an investigation into the controversial sovereign wealth fund after months of pressure.

"Unfortunately, it has taken an explosive expose by the Sarawak Report which published documents and emails pointing towards brazen shenanigans in the deals transacted all the way back in 2009 for the Cabinet to act," he said in a statement.

"However, we are at the same time flabbergasted that the prime minister, in the very same breath, cleared 1MDB of any wrongdoing."

Najib yesterday ordered the A-G to vet the debt-ridden 1MDB's accounts after the Cabinet was briefed about the government-owned company's accounts and told that allegations against it were related to transactions by third parties such as PetroSaudi International.

However, in the same statement, Najib also said that after the briefing by 1MDB and its auditors Deloitte, the Cabinet had expressed confidence that no wrongdoing had been committed within 1MDB as well as its desire for the company to be allowed to implement the proposed outcomes of its strategic review.

In his statement, Pua slammed the prime minister and his Cabinet for assuming that Malaysians would be taken in by the explanation that the state-owned investment fund had done nothing wrong despite amassing massive debts.

"This half-past six Cabinet must think Malaysians are complete fools, for how can 1MDB be cleared before even the Auditor-General starts his investigations?" the Petaling Jaya Utara MP said.

"How can the Cabinet listen to 1MDB and its external auditors for less than 2 hours, without listening to any other parties, and immediately accept all the explanations without question?

"After all, if 1MDB was managed so well, why has the company accumulated more than RM42 billion in debt and had to beg local tycoon Tan Sri Ananda Krishnan for an RM2 billion emergency loan? Subsequently, 1MDB had to further appeal for another RM3 billion bailout by Putrajaya."

Pua said that the "half-past six" ministers might not have understood the "complex" financial misappropriations that took place in 1MDB but that it did not give them the right to clear the company of any wrongdoing.

"In fact, if the Cabinet had even bothered to read and understand the documents and emails exposed by Sarawak Report, they would have realised that 1MDB may have been stupid, but they were fully complicit in the various shenanigans that took place resulting in massive losses for the company," he added.

Pua was referring to whistleblower site Sarawak Report which has embarked on a series of exposés regarding 1MDB, saying it had obtained "thousands of documents" on 1MDB's operations, as well as the roles of certain individuals who are known associates of Najib.

This includes businessman Low Taek Jho or Jho Low who is listed as one of 1MDB's advisers.

The exposés have prompted opposition politicians, former Umno leaders and anti-graft bodies to demand a thorough investigation into 1MDB, and piled pressure on Najib, who is also the finance minister and chairs the 1MDB advisory board.

Meanwhile, Pua also urged the A-G to promptly begin an investigation into 1MDB and deliver a report to the Public Accounts Committee (PAC) within 15 days.

"The A-G should conduct a forensic audit of 1MDB with the assistance of professional forensic auditors to uncover any financial shenanigans in the company, particularly in the light of the exposé by the Sarawak Report and the mind-boggling PetroSaudi transactions from 2009 to 2012.

“We look forward to working closely with the Auditor-General to ensure that any culprits who abetted or caused 1MDB to suffer from multi-billion ringgit losses will be prosecuted in court and punished for their treacherous conduct," said Pua, who is also a member of PAC.

The lawmaker said the report by the A-G should include:

1) Auditing and identifying the redemption trail of the investments in Cayman Islands and the whereabouts of its proceeds.

In particular, the Auditor-General should trace the money trail of the latest US$1.103 billion redemption in January from Cayman Islands to the overseas bank account of 1MDB where the cash is supposedly parked. This is because 1MDB has to date refused to repatriate these funds back to Malaysia where it nearly defaulted on an RM2 billion loan.

2) Auditing and identifying the exact investment holding, true value and whereabouts of RM13.39 billion of “level-3 assets” identified in the March 2014 financial report.

The figure includes the RM7.71 billion of investment in Cayman Islands which was declared as “redeemed”. “Level-3 assets” are where “fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).”

3) Confirming if 1MDB had to stoop to borrowing RM2 billion from local tycoon Tan Sri Ananda Krishnan to repay its debt and determine 1MDB’s cashflow shortage to meet its RM42 billion debt obligations as well as contract commitments which are likely to require government bailout.

This is especially pertinent given the failure of 1MDB’s external auditors to red flag the risk of insolvency when they signed off on the latest financial report on November 5, 2014.

4) Confirming if all historical emails in the 1MDB mail server were “wiped out” in December last year, as said by Sarawak Report. – March 5, 2015.