PETALING JAYA - There is no justification or facts to back former prime minister Tun Dr Mahathir Mohamad's claims that vast amounts of money have disappeared, says Government investment body 1Malaysia Development Berhad (1MDB).
"He first claimed that RM42billion (S$15 billion) was missing. Then, when 1MDB provided a summary of how the RM42bil was spent, he started saying some of the RM42bil is missing. Now, Tun Mahathir has resorted to saying that vast amounts of money have disappeared," 1MDB said in a press statement issued on Tuesday.
1MDB added that Dr Mahathir was repeating the same questions about its dealings with PetroSaudi which ended in 2012, although 1MDB had responded to earlier allegations in detail when explaining a US$1.9bil (S$2.6bil) loan pointed out by him.
"Further to an earlier joint venture arrangement in 2009, 1MDB invested US$1.83bil cash in murabaha notes issued by JV Co, a company that, by then, was 100 per cent owned by PetroSaudi following the termination of the joint venture in March 2010.
"In June 2012, this entire amount was repaid by way of conversion into shares of Petrosaudi Oil Services Limited for a value of US$2.22bil," said 1MDB.
1MDB added that in September 2012, it sold its shares in PetroSaudi Oil Services Limited for US$2.318bil and received fund units in a Cayman Islands registered fund. These fund units were owned by 1MDB via its 100 per cent subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian.
"Accordingly, 1MDB invested a total of US$1.83bil with PetroSaudi as murabaha notes, and ultimately received US$2.318bil of fund units, representing a gain over time of US$488mil. The information referred to above can be found in the notes to 1MDB's financial statements," it said.
It added that contrary to Dr Mahathir's claims, it had clearly provided detailed information on this issue, most recently on June 16 in a direct response to a previous allegation raised by him.
"It is important to highlight that the murabaha notes were guaranteed by PetroSaudi, thereby having a lower risk profile than equity. 1MDB had an option to convert the murabaha notes into equity," it added.
It also refuted more claims by Dr Mahathir that it had overpaid for acquiring independent power producers (IPPs), saying that the value paid for them was based on independent advice from financial, legal, accounting, tax and technical advisors.
It also said 1MDB took a long-term view and considered the social and economic impact on the country in arriving at a final valuation.
"1MDB only acquires assets when we are convinced that they represent compelling long-term value. In this particular case, 1MDB purchased power plants from the original private sector owners i.e., first generation IPP investors, who were granted lucrative, long-term, fixed price contracts during the time Dr Mahathir was prime minister," said 1MDB.
1MDB added that the value it paid which may have involved a premium in certain instances, as is common when acquiring another business is commensurate with their future potential and overall benefit to the nation, before explaining how it intends to reduce its RM42bil debt.
It added that it was actively pursuing various options with respect to the monetisation of Edra Energy and, as reported by the media, had received significant interest from potential investors in both Malaysia and abroad.
"Combined, these actions will allow us to reduce 1MDB's debt significantly, and ensure that maximum value is generated for the 100 per cent ultimate shareholder, the Government of Malaysia," said 1MDB.
It said however that Dr Mahathir's allegations were damaging to its efforts to reduce the company's debt levels as well as the wider economy.