“[This] strengthens my confidence in 1MDB as a critical enabler in the government’s economic transformation programme for Malaysia to have a high performance and market-driven economy as well as become a high-income nation.”
Prime Minister Datuk Seri Najib Razak when announcing a net profit of RM425 million for 1Malaysia Development Bhd (1MDB) after its first financial year ending 31 March 2010. Najib is also advisory board chairperson of 1MDB, a government-owned strategic investment agency focused on bringing Middle East investments to Malaysia.
1MDB was set up with RM5 billion raised through government-guaranteed bonds. It raised eyebrows recently when it chose an Abu Dhabi-based company, Mubadala Development Co., over local players as a joint-venture partner to develop the Kuala Lumpur International Financial District (KLIFD) mega project. KLIFD is a component in the government’s Economic Transformation Plan (ETP). (Source: 1MDB posts RM425 million net profit in first financial year, Bernama as reported on the official website of the Office of the Prime Minister of Malaysia, 8 Oct 2010)
“While we are pleased to [note] that the fund has managed to generate a ‘return’ of 8.5%, the ‘profit’ only gives us a piece of the puzzle. Any accountant worth his [or her] salt will tell you that evaluating the performance of a company based purely on a ‘profit’ figure without footnotes, details and context is as good [as] buying a pretty looking car, without evaluating its engines.”
“[Malaysians] will be interested to know if the profits of 1MDB is derived from its various investments made to date, or is it purely a profit arising from the injection of assets into 1MDB by the Government.
“…1MDB would have gotten [the Sungai Besi] land for ‘free’ from the government…did 1MDB regard the receipt of this piece of land in its accounts as ‘earnings’, and if so, how much is this piece of land valued at? Hypothetically, if it was valued at RM1 billion, then without this ‘grant’ from the Government, 1MDB would have then made a loss of RM575 million and not a profit.”
DAP Petaling Jaya Utara Member of Parliament (MP) Tony Pua asking Najib to reveal details about 1MDB’s accounts to justify its huge profits after just one year. Don’t tease the public but flaunt the results if they are true, Pua said. He referred to suspicions that the profits were based on asset injections by the government, such as the transfer of government-owned prime land in Sungai Besi to 1MDB, without any tender exercise. 1MDB has been tasked with developing a proposed Islamic financial centre on the land with other companies in a consortium.
Pua said he had twice submitted questions in Parliament to the prime minister for details on 1MDB’s investments and performance. Pua did this in March and June 2010, but said he did not receive proper answers. He has re-submitted the questions for the current October 2010 Dewan Rakyat sitting. (Source: 1MDB Accounts Should Be Made Public, Tony Pua’s blog Philosophy Politics Economics, 10 Oct 2010)
“It is not like other statutory bodies governed by the Statutory Act (Annual Accounts and Reports) 1980 that needs their annual report tabled in Parliament. 1MDB only needs to file its annual report to the Companies Commission of Malaysia (CCM).”
Najib on why 1MDB did not have to reveal its accounts to the public through Parliament. He said 1MDB was subject to the Companies Act 1965 which did not provide for the company’s accounts to be tabled in Parliament. He added that the public could obtain 1MDB’s accounts through CCM later. Najib said this in Parliament when replying to Lembah Pantai MP Nurul Izzah Anwar who asked for 1MDB’s annual report to be tabled. (Source: Najib: 1MDB report need not be tabled, The Star, 13 July 2010)
“The profit arose from the disposal of our investments in our JV [joint-venture] company with PetroSaudi. In addition, a portion is also attributable to the effective management of treasury function funds in 1MDB.”
1MDB chief executive officer (CEO) Shahrol Halmi stating the reason for the investment agency’s RM425 million profit. He also said that 1MDB had never received any cash injections from the government beyond paid-up capital. The CEO also said that 1MDB’s accounts will be accessible to the public through the CCM. The Sungai Besi land transfer, however, was not discussed in the interview. (Source: 1MDB’s CEO on KLIFD making KL a global city, Bernama report in theSun, 11 Oct 2010)