A more credible answer needed – T.K. Chua

I refer to a news report which quoted our Prime Minister as saying that “the RM42 billion was not lost; the money was now part of the Tun Razak Exchange (TRX) and Bandar Malaysia land bank”.

In accounting we learned that when we borrow money, the liability side is represented by the debts we owe while the asset side is represented either by cash in bank or the assets we bought through the borrowing we obtained.

In this occasion, I wish to refer to what Tun Dr Mahathir wrote on 1MDB on April 23, 2015 in CheDet which also appeared in some of the news portals.

Essentially what he said and asked were as follow:

1.    Total initial borrowings of 1MDB amounted to RM42,000,000,000 (42 billion ringgit). As far as can be ascertained the investments were as follows:

2.    (i) Purchase of Tanjong Energy (now known as Powertek Energy Sdn Bhd) from Ananda Krishnan for RM8.5 billion. This is higher than market price. The licence was about to expire.

3.    (ii) Purchase of Genting Sanyen Power (now known as Kuala Langat Power Plant) for RM2.3 billion. Again above market price. The licence was about to expire.

4.    (iii) Purchase of Jimah Energy for RM1.2 billion.

5.    (iv) Purchase of 70 acres of land in Jalan Tun Razak for RM320 million i.e: RM64.00 psf.

6.    (v) Purchase of 495 acres of land in the former Sungai Besi TUDM airport (now known as Bandar Malaysia) about RM 363.5 million i.e: at RM 91.00 psf.

7.    (vi) Purchase of 234 acres land in Air Itam in Penang for RM 1.38 billion i.e: at RM135.00 psf.

According to him, these are known purchases the total of which add up to RM14.7 billion. So there is approximately 27 billion ringgit left still unaccounted for.

Now with our PM’s statement which said RM42 billion is now part of the TRX and Bandar Malaysia, are we supposed to accept that the balance RM27 billion are now invested in these two pieces of land?

We know TRX and Bandar Malaysia lands were given to 1MDB for a song. But we also know that revaluation of assets requires no financial outlay.  So the next logical question for us to ask is what improvements or enhancement have they made to the lands which have taken up the balance of RM27 billion.  Are there office towers or residential condominium being constructed now? If so, at what stage?

Surely we need more convincing and credible explanations on the where about of the remaining RM27 billion than just “the money was now part of the Tun Razak Exchange (TRX) and Bandar Malaysia land bank”.

I think these are very straight forward questions which need no auditor reports to know the answers.

* T.K. Chua reads The Malaysian Insider.