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    Sep 10, 2015

    1MDB slams WSJ for 'US$1.4b' report


    MALAYSIA'S debt-ridden state investment arm 1Malaysia Development Berhad (1MDB) yesterday slammed the Wall Street Journal (WSJ) for yet another report on it, saying the allegations were incorrect and based on illegally leaked documents, local media reported.

    The WSJ report, which was published yesterday, alleged that a sum of US$1.4 billion (S$2 billion), which 1MDB was supposed to have paid to International Petroleum Investment Co (IPIC), the state investment vehicle of the United Arab Emirates, has never reached the recipient.

    According to the United States-based WSJ, neither IPIC nor Aabar Investments PJS, a subsidiary of the IPIC, knows where the funds have gone to.

    IPIC had guaranteed US$3.5 billion in bonds that 1MDB issued to finance the purchase of power plants in 2012, said the WSJ report.

    In return, IPIC had the option to buy a 49 per cent stake in the power plants as well as collateral for the bond.

    WSJ said an auditor-general draft report of 1MDB showed a collateral payment of US$1.4 billion by 1MDB to IPIC. But IPIC's consolidated financial statements showed no reference to the receipt of the payment.

    Abu Dhabi is now trying to sever ties with 1MDB, said WSJ, and restructure IPIC which had provided funds to 1MDB.

    1MDB said in a statement yesterday that the US$1.4 billion was clearly described in its financial statements as its deposits.

    According to the news website Malaysian Insider, the description suggests 1MDB, which has accumulated debts totalling US$42 billion, considers the sum its financial asset and not an expense.

    WSJ was wrong to state that it was not clear what happened to the funds, said 1MDB.

    The company also slammed WSJ for possibly having breached Malaysian laws by publicising confidential information to be presented at the parliamentary Public Accounts Committee hearings on 1MDB, reported The Star daily.

    1MDB called for an investigation to find out who had leaked the transcripts.

    The latest WSJ report comes at a politically sensitive time as Prime Minister Najib Razak, who is also Finance Minister and chairman of 1MDB's advisory board, comes under scrutiny for accepting RM2.6 billion (S$854 million) from a Middle Eastern donor.

    According to a WSJ report published in early July, the money was deposited into his private bank accounts after being channelled through 1MDB-linked firms.

    Mr Najib's lawyers have said he was considering suing WSJ over that report, but no legal action has been taken to date.