Singapore's NRA Capital emerges as valuer of 1MDB's Cayman investments

Singapore - Singapore's boutique finance house NRA Capital was roped in to value 1Malaysia Development Berhad's US$2.318 billion (S$3.15 billion) controversial Cayman Islands investment by fund manager Bridge Capital Partners.

This was disclosed in the Hansard transcripts on the hearings of Malaysia's Public Accounts Committee with Deloitte, the auditor which signed off the March 2013 and 2014 accounts of the troubled state-backed firm 1MDB.

NRA Capital is under the Netresearch group of companies founded by Kevin Scully, a well-known veteran market strategist in Singapore.

When contacted by The Business Times, Mr Scully said "valuing listed and unlisted companies and assets is what NRA Capital does in the ordinary course of the business."

During the three-hour PAC proceedings which largely delved into the factors that led to Deloitte's true and fair view of 1MDB's accounts, Deloitte disclosed that it had met with NRA Capital to understand its "methodology and competence" in valuing the Cayman-Islands registered Bridge Absolute Return Fund in which 1MDB had invested.

The fund was managed by little-known - up until the scandal blew up, that is - Hong Kong firm Bridge Capital which in turn hired NRA Capital as valuer of the investments; Bridge Capital subsequently changed its name to Avestra of Australia.

Ng Yee Hong, Deloitte Malaysia's partner, said at a hearing with PAC in June last year: "We met with the fund manager... and we obtained evaluation statement from the fund administrator. We further met with the valuer that has given input to the fund administrator, who in turn came up with the valuation statement.

"This company is called NRA Capital."

Mr Ng was responding to questions by the members of the bi-partisan parliamentary committee on whether Deloitte - 1MDB's third auditor since the firm's inception in 2009 - was "satisfied" with its investments in Cayman Islands funds, which took place in 2012.

1MDB's Cayman investments was slammed by critics for its choice of Bridge Partners, a modest outfit for a state-backed entity, as fund manager and the investment, among others, have since morphed into a full-scale financial scandal for Malaysia.

Moreover, the investments in Cayman Islands-registered funds followed complex transactions of Islamic notes issuance and asset flipping which began with a US$1 billion cash investment by 1MDB in a joint-venture with PetroSaudi International that eventually flopped.

The much-awaited PAC report which was released last week highlighted that key aspects of this investment were pushed ahead by 1MDB's top management without the board's approval and that funds were paid to firms whose ownership could not be verified.

The Cayman Islands investments was one of two "level three assets" - assets that are deemed illiquid - worth over RM13 billion (S$4.53 billion) held by 1MDB as stated in the 2014 accounts.

The second portion, according to Mr Ng in the transcripts, have been invested in funds managed by DBS Bank Ltd Hong Kong, Amicorp Fund Services, Orangefield Fund Services and Manulife Trust Ltd.

The custodian bank for all these investments is Swiss bank BSI, whose private banker at its Singapore branch was also the relationship manager to Jho Low and several 1MDB entities. The banker, Yak Yew Chee, has had his bank accounts frozen amid a probe by the Monetary Authority of Singapore and the Commercial Affairs Department into the 1MDB money trail. Mr Yak left the bank in February.

Deloitte was appointed after KPMG, which had signed off 1MDB's accounts for 2010, 2011 and 2012, was "removed".

According to the Hansard transcripts on PAC's session with KPMG Malaysia partners, 1MDB's management was "unhappy over delays on the 2013 audit" as KPMG had requested further details on the Cayman Islands investments to ascertain its underlying value.

This article was first published on April 15, 2016.
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