DAP parliamentarian Tony Pua says Deputy Finance Minister Johari Abdul Ghani must explain to Malaysians whether they have to foot the bill for 1MDB's defaults.
Pua’s demand comes after Johari was reported as saying that 1MDB’s engagement with its US dollar-denominated bondholders was a good move towards restoring confidence in the market.
However, the Petaling Jaya Utara MP said Johari must be "living on a different planet", pointing out how 1MDB is on the verge of defaulting on the interest payment for its second US$1.75 billion bond.
Pua added that 1MDB was forced to engage with its bondholders to limit the financial damage to both the company and its shareholder – the Ministry of Finance (MOF).
“And yet, under such dire circumstances, Johari can (say) everything is hunky-dory, call ‘1MDB's engagement with its US dollar-denominated bondholders' a good move’.
“This must be one of the most irresponsible statements by the newly-appointed deputy finance minister, who replaced the previous bumbling Ahmad Maslan,” said Pua.
He also lamented MOF’s "cavalier attitude" to the fiasco when it claimed that it "does not want to interfere with this because it is between two corporate entities to go and sort out their problems".
Although the bonds were guaranteed by International Petroleum Investment Corporation (IPIC), Pua pointed out that MOF had provided an indemnity to IPIC for losses and damages suffered by the IPIC.
“If it was merely a ‘dispute’ between ‘two corporate entities’, then why did MOF agree to provide the indemnity to IPIC in the binding term sheet signed between IPIC and 1MDB in May last year?”
As for 1MDB, which is forced to engage with bondholders to "restore market confidence" and "prevent panic", Pua asked what about ordinary Malaysian taxpayers who are now liable for the bailout.
“Doesn’t Johari see it necessary to ‘restore the confidence of’ and ‘prevent panic’ by Malaysians?" he asked.
Johari's promise to Parliament
He said Johari had promised in Parliament last year that 1MDB would resolve "its debt and cash flow issue more quickly, without help from the governmen".
“Is this assurance still valid?” asked Pua.
“Both Prime Minister Najib Abdul Razak and 1MDB president Arul Kanda Kandasamy have boasted that the rationalisation exercise has been a success and has been completed. Did they both lie to Malaysians to provide a false front for 1MDB?
“If the answers to the above questions are above Johari’s pay-grade, then he must persuade his boss, Najib, who is also the finance minister, to explain the imploding 1MDB disaster to Malaysians,” Pua added.
On Monday, 1MDB announced that it had hired Alvarez & Marsal Asia Ltd as its financial adviser as it began an engagement process with bondholders following the default on the US$1.75 billion 1MDB Energy (Langat) Ltd (Langat Notes) fixed rate 5.75 percent notes due in 2022.
It also has hired DF King Ltd as the identification and information agent to directly carry out the bondholder identification and registration process.
But it is now facing the possibility of yet another default as the coupon payment for its US$1.75 billion bond is due tomorrow.
If 1MDB fails or refuses to pay, it will trigger another round of cross-default on its other debts, including US$1.83 billion (RM7.4 billion) in Islamic bonds.
