Reports in Kuala Lumpur say Malaysian billionaire Ananda Krishnan came up with the $693 million that the fund, known as 1MDB, was due to repay by February 18 to the country’s largest bank, Malayan Banking Bhd, and a smaller financial house, RHB Capital Bhd.
While the payment appears to have given 1MDB some breathing space after the fund repeatedly failed to meet debt repayment deadlines, it has done nothing to remove questions about the $14.5 billion in debts the fund has accumulated since its founding in 2009.
1MDB was created as a vehicle for investment of state profits from the country’s oil and gas resources. But it has borrowed heavily from local banks to invest in power plants. 1MDB plans a public offering of shares in these assets some time this year, with the aim of raising around $4 billion.
But from the start, 1MDB has been surrounded by questions and scandal. Many of the questions stem from the fact that the fund’s “chief economic adviser” is Malaysia’s prime minister, Najib Razak. Although no direct lines are drawn, media and political criticism of the travails of 1MDB frequently include references to the extraordinary amounts of money being spent on property and luxuries by Najib’s family and close relatives.
At the same time, a flamboyant young Malaysian financier, Jho Low, who persuaded Najib to set up 1MDB, has bought multimillion-dollar properties in the United States on behalf of the prime minister’s stepson, film producer Riza Aziz.
Much of the significant reporting on the issues around the management of 1MDB has been done by The Edge, Malaysia’s bestselling business newspaper, which is owned by Tong Kooi Ong. Tong is well known in Canada as the owner of Toronto-listed Taiga Building Products Ltd., the largest wholesale distributor of building materials in Canada and California. Tong has filed a suit against Low, who Tong believes was behind a defamatory blog attack after The Edge published details of 1MDB’s troubled internal affairs.
The latest reports from Kuala Lumpur are that all employees of 1MDB have been ordered to take their office-issued computers and smartphones to the company’s information technology department to have their hard drives wiped clean. The company says the move is to counter an attempted hacking of the fund’s system. But some observers have noted that when Tong’s legal action gets to examination for discovery, there will be nothing in 1MDB’s records for his lawyers to find.
Tong isn’t the only one pushing back against blog attacks associated with criticism of 1MDB. Another is the prime minister’s brother, banker Nazir Razak, who has also launched legal action against Low. Nazir, head of CIMB, Malaysia’s fastest-growing bank, has had a very public falling-out with his brother Najib over the flaunting of excessive wealth by the prime minister and his wife. In January last year Nazir wrote a long article for an online business news site about their father, Malaysia’s second prime minister, Abdul Razak, and his absolute refusal to use public funds for his own and his family’s personal expenses.
The 1MDB questions also spark memories of unresolved questions around the 2006 murder of Mongolian model and interpreter Altantuya Shaariibuu – who allegedly was Najib’s ex-mistress – by Najib’s bodyguards. Najib was then the defence minister, and French investigators have found his policy adviser, Abdul Razak Baginda, was paid over $200 million in bribes by the French manufacturers of three submarines Malaysia was buying for $2 billion.
Jonathan Manthorpe (email@example.com) has been an international affairs columnist for nearly 40 years.