Unanswered questions in 1MDB’s ‘bare all’

YOURSAY ‘Arul was cornered, he did the next best thing - give some nice stats.’

1MDB reveals all on 'missing' billions

Onyourtoes: 1MDB president and group executive director Arul Kanda, please forgive me, I am a simpleton, so I can only ask simple questions and make simple calculation.

To me, it is finally confirmed that 1MDB can’t really account for at least RM15.4 billion of the borrowed money (RM6.1 billion in Brazen Sky + RM4.2 billion in Aabar + RM5.1 billion in GIL Funds).

Can you tell us the details of these “investments”; how much are they worth now; whether these are in US dollars or “units”? I don’t have a good feeling on these “investments”, so please prove to me that I am wrong.

Then you have RM4.5 billion for cost of finance and working capital which to me is simply ridiculous. Look, to borrow RM42 billion, the financing cost of RM4.5 billion is more than 10 percent. I have not included forex (foreign exchange) cost.

Then what about RM6 billion inherited debts of IPPs (independent power producers)? So please tell us exactly how much are the IPPs worth and how overpriced are these assets?

You know what, Arul, I think I should be able to secure loans for 1MDB at must lower cost than 10 percent. And I should be able to buy those IPPs at much favourable terms, especially when I know the concessions are about to expire soon.

Ib: This does not answer any real question. What is inherited debt? What is GIL Funds? What is Brazen Sky money used for? Why the huge finance costs? This is like the PM's TV interview. A show to fool the fools. We, Malaysians, are no fools.

Clearwater: One figure boggles the mind - RM4.5 billion cost of finance and working capital. Can it be broken down further so we can know the actual cost of borrowing?

And what is the inherited debt of RM6 billion that does not appear to be matched by real assets?

Vijay47: Like many have commented here in Malaysiakini, there is in the analysis, an interesting item of ‘RM6 billion inherited debt’. What is it?

Since it is listed under the category of ‘Purchase of Power Plants’, my limited understanding of accounts and high finance suggests that one of the three purchase prices came with the additional burden of absorbing the disposer's debts to the tune of RM6 billion.

This means that the cost of buying a second-hand company with a soon-to-expire license would range from RM14.5 billion to a miserly RM7.2 billion. So for whichever company that came with the baggage of RM6 billion, was the final price worth it?

In fact, 1MDB should also state whether the price of any of the three companies, with or without that tantalising RM6 billion, was a fair market price.

Then we also have other annoying questions like the commission paid and who to.  I would assume that this inherited debt was not included in whatever PM Najib Razak acquired through his ‘inheritance legacy’.

Fair Play: Vijay47, no doubt the application of forensic accounting methodology would provide more than a glimpse of the RM6 billion inherited debt.

I wouldn't be surprised that this could be the result of sheer incompetency in financial management, or worse still, fraud at a colossal scale.

Anticonmen: This confirms that IPPs were used to make money at three levels. First, at award level when inflated loan was given by government.

Second, at operations level where premium power rates were paid by Tenaga Nasional Berhad (TNB), and third, at buyout level when the inflated assets and even the loan is being paid for again by government.

There is no such thing as inherited debt being bought from IPPs which were given premium power purchase rates and hence they should have settled their debt in their books at the expiry of their concessions.

How could IPPs, which enjoyed high profits, could default on their loan repayments and conveniently now dump it on the taxpayers?

Mushiro: Yes, already the IPPs were purchased at inflated prices and now there is an additional RM6 billion of inherited debt from the IPPs.

Are they now admitting that they have bought the IPPs at about 300 percent above market price, including the inherited debt?

Anonymous_1430119660: Indeed, where did the RM6 billion inherited debts from the IPPs purchase come from? It has to be shown next to the cost of purchase as it is part of liabilities assumed.

Why on earth would 1MDB be paying so much for such depleting deteriorating assets, whose life span was coming to an end?

The RM15.4 billion debt on investment would require explanation. This presentation is skilled misinterpretation. Show assets value next to this liabilities and let’s see if these are still unimpaired.

Hermit: The IPPs have been dished out on silver platter and their ROI (return of investment) are somewhat like 20 to 25 percent.

IPP invoices TNB basing on capacity charge and energy charge and whatever units generated are all transferred and billed to TNB. All costs incurred by IPPs are passed through to TNB.

IPPs are earning super profit and while they are approaching close to the end of their concession period, there could hardly be much debts left in their books, unless both IPPs and 1MDB were in collusion.

What RM6 billion inherited debt from the purchase of IPPs is Arul cooking?

Mob1900: RM20 billion just on investment cost and financial expenditure alone, whereas assets of IPPs and lands are only RM19.7 billion. What kind of business is this? -Mkini