STATE SECRET!

- US$7 BILLION Went From 1MDB, Says

Auditor-General
11May2016 SARAWAK REPORT

Auditor-General Ambrin Buang could not be compromised, so they just made his report
secret

All last year Malaysians were told to be patient for the Auditor-Generals report, before they complained
about 1MDB. Then all would be revealed, BN politicians told the public.

But when it was completed Najib instead decided to make the entire report an Official Secret. Funny that.

Then today the Prime Minister/Finance Minister/Chairman of 1MDB, Najib himself, blamed all the funds
problems on the failure to float the fund (ie to entice ordinary folk to buy shares in this floundering
enterprise).

He blamed that failure on critics like Sarawak Report and all the opposition and press which questioned
1MDBs gaping debts.

At which point, an exasperated Tony Pua (DAPs finance spokesman on the Parliamentary Accounts
Committee) suggested that maybe the US$7 billion which the Auditor General had identified as gone
missing from the fund had more to do with the failed flotation than criticisms from observers?

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The Auditor-General has specifically confirmed that US$7 billion of 1MDB assets and transactions
overseas cannot be verified or traced. The figure includes US$1.03 billion paid to Good Star Limited,
which Bank Negara has disclosed is owned by an individual unrelated to 1MDBs joint venture partner,
Petrosaudi International Limited. [Tony Pua, media statement]

Ooops! Is that what the Auditor-General concluded in his report? No wonder Najib slapped a secrecy
order on it!

It means that every carping little bit of criticism those pesky opposition people and journalists have come
up with is true and more. The Swiss Attorney General had said that in his estimation at least US$4 billion
had been stolen from the fund, but now Malaysias own internal enquiry by its very top finance officer has
almost doubled that amount to a shocking US$7 billion Pouff all that money gone!

Tony Pua, the man Najib suggests is responsible for 1MDBs woes, because ordinary
share-buyers were not enticed to throw their money into covering up the losses

PAC members like Pua have of course been allowed to see the report, but sworn to secrecy about its
contents, in contravention of their constitutional duty to represent and inform the peoples interests in the
oversight of their assets.

The job of Parliamentarians is to hold the Government and Prime Minister accountable, but Najib does not
want to be accountable, so he has shut them up.

So, will Najib now jail Mr Pua for letting slip the findings of the Attorney-General himself into 1MDB?

Or will he perhaps decide that it might be better not to draw the worlds attention to that headline figure in
such a way, just as he is heading off to impress the blushing British (well they should be blushing) as a
London visitor next week?

US$7 billion missing from 1MDB the official figure from Malaysias
own AG

Pua and others have little trouble working out how some of that money disappeared. They begin with the
US$1.83 billion that went into the original PetroSaudi Joint Venture in 2009, which the Bank of Malaysia
just last week again demanded be sent back, because the Bank said, the money in fact was sent to a
company owned by an individual unrelated to 1MDBs joint venture

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Najib the Official Secret Act is supposed to help prevent crime, not to cover it up

Next, the missing US$2.4 billion from the so-called power purchase deals, which was sent to the fake
Aabar in the BVI. And then what about the unaccounted US$1.5 billion that disappeared from the March
2013 Strategic Joint Venture with Aabar and has never been accounted for?

Funny that it was just two days later that US$681 million appeared in Najibs accounts in the run up to the
general election called days later after that.

There is simply no justification to continue to keep this Auditors Report a deadly secret, especially when it
was promised as a chance for objective information to be brought for citizens to judge.

Everyone in Malaysia can see it is just a further attempt to justify the unjustifiable and to abuse the power
of the government to protect a Prime Minister, who is himself the one who has broken all the rules with
criminal behaviour.

1MDB report: PAC zeroes in on

former CEO Shahrol as among the
culprits
THURSDAY, 7 APRIL 2016 BY HEMANANTHANI SIVANANDAMANDRAHMAH GHAZALI

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 KUALA LUMPUR: The Parliamentary Public Accounts Committee (PAC) has
found that former 1Malaysia Development Berhad (1MDB) chief executive officer
Datuk Shahrol Azral Ibrahim Halmi (pic) should be held responsible for the
"weaknesses and constraints" faced by the state investment arm.

"We urge the authorities to conduct an investigation on Shahrol and those related,"
said the PAC in a 106-page report on 1MDB tabled on Thursday in Parliament.

The PAC probe into 1MDB began in May 2015 but was abruptly halted in July
following a Cabinet reshuffle that saw first-time MP Datuk Hasan Arifin replacing
former committee chairman Datuk Nur Jazlan Mohamed, who was appointed
Deputy Home Minister.

Among those called to testify before the PAC were 1MDB chairman Tan Sri
Lodin Wok Kamaruddin, current president and CEO Arul Kanda Kandasamy and
Shahrol.

As a state investment arm, PAC said, 1MDB should have implemented

"best practices in their management."

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"After looking through the final reports by the Auditor-General Department and
PAC proceedings, we have found that the management and the board of directors
was weak.

"The management had repeatedly not complied with decisions and orders made by
the board of directors or the management took its own decisions before going
though it with the board of directors," said PAC.

There were also a few investments and huge loans secured that were done without proper
valuation and its impact on the company's cash flow, said PAC.

Related stories:

1MDB report: PetroSaudi joint-venture done without due diligence

1MDB report: RM10.6bil of shares bought without detailed evaluation

1MDB report: Debt stood at RM50bil as of January

1MDB report: PAC wants advisory board abolished

Read more at http://www.thestar.com.my/news/nation/2016/04/07/1mdb-report-pac-

zeroes-in/#38MahJEKJc3WlDZ9.99

Thursday, 7 April 2016 | MYT 1:35 PM

1MDB report: PetroSaudi joint-

venture done without due diligence
BY TAN YI LIANG

image: http://www.thestar.com.my/~/media/online/2016/04/07/05/41/1mdb-report-
cover.ashx/?w=620&h=413&crop=1&hash=4EB7BE704ED52B32C44810F1EA7360086FF36805

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 KUALA LUMPUR: The Parliamentary Public Accounts Committee (PAC) has
found that 1Malaysia Development Berhads (1MDB) RM3.895bil (US$1bil)
joint-venture with PetroSaudi was done without due diligence.

The US$1bil investment by 1MDB in this joint venture was done without a due-
diligence process; there are no specific details on the project stated on the proposal
paper that was prepared by management and no feasibility study was done on the
investment project that would be carried out, said the PAC in a 106-page report
on 1MDB tabled on Thursday in Parliament.

It added that the board of directors was only told of the date of the signing of the
joint-venture on Sept 18, 2009 when the joint-venture was to be signed on Sept 28,
2009.

The PAC added that other aspects of the project such as a background check of
the partner in the joint venture and the total cost of the project were not studied
in depth.

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 There were four different companies that were registered under the
PetroSaudi name but the approval proposal paper that was presented to the board
of directors did not contain this important information. Aside from this, the joint-
venture agreement contained several clauses that did not look after 1MDBs
interests, said the PAC.

Thursday, 7 April 2016 | MYT 1:38 PM

1MDB report: RM10.6bil of shares

bought without detailed evaluation
BY TAN YI LIANG

KUALA LUMPUR: The purchase of RM10.6bil of Tanjong Energy Holding

shares by 1Malaysia Development Berhad was done without a detailed evaluation,
said the Parliamentary Public Accounts Committee (PAC).

The buying of Tanjong Energy Holding Sdn Bhd shares with a bidding
price of RM10.6bil on Feb 8 2012 was made without a detailed consideration of

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the method of funding, the loan costs and commitments that had to be borne by
1MDB for the acquisition, said the PAC

The PAC probe into 1MDB began in May 2015 but was abruptly halted in July
following a Cabinet reshuffle that saw first-time MP Datuk Hasan Arifin replacing
former committee chairman Datuk Nur Jazlan Mohamed, who was appointed
Deputy Home Minister.

Among those called to testify before the PAC were 1MDB chairman Tan Sri Lodin Wok
Kamaruddin, current president and CEO Arul Kanda Kandasamy and former CEO Datuk
Shahrol Azral Ibrahim Halmi.

Thursday, 7 April 2016 | MYT 11:12 AM

1MDB report: Debt stood at RM50bil

as of January
BY RAHMAH GHAZALIANDHEMANANTHANI SIVANANDAM

KUALA LUMPUR: The Public Accounts Committee (PAC) has revealed that
1Malaysia Development Berhad (1MDB)s debt stood at RM50bil as of January
this year.

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In a 106-page report tabled in Dewan Rakyat on Thursday, it said the debts were
incurred due to among others, its over reliance on the refinancing exercise to pay
off their matured debts by taking in new loans to pay off the interests of their
previous loans.

After thorough investigation, PAC has found the company's financing structure
and financial performance to be unsatisfactory, the report said.

At first, said the report, the debt stood at RM5bil in 2009 and went up to RM42bil,
compared to their assets valued at RM51bil in the financial year ending March 31,
2014 and it had spent RM2.4bil to pay off the loan interests.

In January 2016, their debt stood at RM50bil, compared to their assets

valued at RM53bil, where 1MDB has spent RM3.3bil to pay off the loan interests
between April 1, 2013 to March 31 2015, said the report.

The report said 1MDB had paid RM3.3bil for interests on the loans they took from
April 1, 2014 to March 31, 2015, which 1MDB said its financial audit had yet to
be audited.

It is clear that the debt level and repayment of interest is too high compared to the
cash flow of the company, said the committee.

It also said that 1MDB relied on the refinancing exercise to pay off their matured
debts and also took in new loans, which among others, used to pay off the interests
of previous loans.

After being in operations for five years, PAC said, 1MDB faced an imbalance cash
flow in Nov 2014.

The management and the board of directors relied on the Initial Public Offerings
(IPO) of Edra Energy Berhad to generate funds, which would be used to pay off
the debts and interests.

However the IPO could not be carried out due to internal and external factors,"
said PAC.

The PAC also said1MDB faced its first loss at RM665mil, which was announced
in Nov 2014, which had resulted in a loss of confidence in the company.

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1MDB subsequently could not pay off its almost maturing debts which stood at
RM2bil, through its refinancing exercise.

The companys business model is overly dependent on loans and this caused a
burden on the company as it did not have enough income to sustain operational
costs and pay off its loans, read the report.

PAC found that the Government took immediate steps to fix the company's cash
flow problems which surfaced in 2014.

In January 2015, a new higher management was brought in to 1MDB, after which
the Minister of Finance Incorporated (Menteri Kewangan Diperbadankan) zoomed
in on it seriously.

After that, research was done and strategic measures were identified and
implemented in February 2015, it said.

Related stories:

1MDB report: PAC zeroes in on former CEO Shahrol as among the culprits

1MDB report: PAC wants advisory board abolished

Thursday, 7 April 2016 | MYT 11:30 AM

1MDB report: PAC wants advisory

board abolished
BY RAHMAH GHAZALIANDHEMANANTHANI SIVANANDAM

image:
http://www.thestar.com.my/~/media/online/2016/04/07/03/34/1mdbreport1.ashx/?w=620&h=413&crop=1
&hash=FBCFD49FB97DA981400DC0084D1668146500CD4E

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 KUALA LUMPUR: The Public Accounts Committee (PAC) has called for
1Malaysia Development Berhad (1MDB)s advisory board to be abolished for
better management of the state investment arm.

In a 106-page report tabled in the Dewan Rakyat on Thursday, the committee said
the board should be abolished together with Clause 117 in the company.

Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, is the
chairman of the 1MDB advisory board.

All references to the Prime Minister should be changed to the Finance Minister to
streamline with the provisions of the Minister of Finance Incorporated, said the
report.

The report also found that the 1MDB board of directors

had failed in its responsibilities.

They were found not to be proactive in scrutinising the management and keeping
track of the cash flow activities of the company.

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The board of directors should closely monitor the companys activities by questioning
the prices of asset purchases and cost of debts, it said.

PAC report: 5 key findings on 1MDB

Astro Awani | April 07, 2016 19:09 MYT

The PAC abled the 1MDB report in Dewan Rakyat today. - File Photo
KUALA LUMPUR: The Public Accounts Committee (PAC) tabled the 1Malaysia
Development Bhd (1MDB) report in Dewan Rakyat today.

PAC started investigating 1MDB on May 19, last year focusing on 1MDBs governance
control management since it was incorporated in 2009 -- after the Terengganu Investment
Authority state fund -- was turned into a federal agency.

Shortly after the PAC released it's findings, the Board of Directors of 1Malaysia
Development Berhad offered their resignation to MoF Inc., the 100% shareholder of
1MDB.

Here are the top five key findings in the report:

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1. What went wrong?

1MDB is a wholly government-owned company established as a catalyst for strategic

development to promote foreign direct investment (FDI) into the country.

However, 1MDB depends on loans from banks and bonds as part of the company's
capital and part of the companys debt had been guaranteed by the government.

1MDBs debt increased every year, beginning with RM5 billion in 2009.

March 2014
Value of debt : RM42 billion
Value of assets : RM51 billion
Debt interest payments : RM2.4 billion

January 2016
Value of debt : RM50 billion
Value of assets : RM53 billion
Debt interest payments : RM3.3 billion

Clearly, the debt and interest payments were too high compared to the company's cash
flow .

1MDB depends on refinancing for debt repayment as well as taking fresh loans to pay
interests on previous loans.

2. How could this happen?

A few practices by the management and the Board of 1MDB led to the weaknesses in
governance.

For example, the management, did not comply with the decisions and instructions of the
board or took any action before obtaining approval from the board, for a couple of times.

There are several large investments and loans made without a detailed assessment
(including the impact on the cash flow of the company) and some major decisions have
been made through a written resolution based on the discussion at the previous meeting .

Several large investments and loans were made without a detailed assessment ( including
the impact on the companys cash flow) and some major decisions have been made
through a written resolution based on discussions at the previous meeting .

The board is also too dependent on the management and often accepts their explanation
without studying the issues arising, repeatedly.

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3. What did the government do about it?

The government has taken steps to immediately fix the cash flow problems in the
company that started in November, 2014.

In January 2015, a new top management team was brought in and after that the Minister
of Finance Incorporated (MOF Inc) started concentrating on solving the companys
problem.

A strategic survey was carried out and the summary was presented in February, 2015.

Following that, 1MDB and MKD presented a rationalisation plan to the cabinet on May
29, 2015.

4. Who is responsible?

PAC opined that there were constraints and weaknesses by the management, led by
former 1MDB CEO, Datuk Shahrol Azral Ibrahim.

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15
1MDB's former CEO Datuk Shahrol Azral Ibrahim Halmi

The Committee suggested that Shahrol be investigated.

5. Can 1MDB be fixed?

There are five recommendations made by the PAC:

(i) Principles of governance

1MDB should adopt principles of good governance like the guide issued by the Putrajaya Committee on
GLC High Performance Through the Green Book: Enhancing Board Effectiveness And Blue Book:
Intensifying Performance Management Practices.

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(ii) Avoid excessive debt

The use of excessive debt in the capital structure should not be allowed at all, especially when the cash
flow is insufficient.

(iii) The Board of Directors should practice strict control

The board failed to carry out responsibilities and take care of the interests of the company and shareholders.
They also did not take any proactive measures in monitoring the managements activities and cash flow.
More intensive regulations required of the board of directors, including the price of asset purchases and
costs of liabilities.

(iv) Abolish the Advisory Board

The Advisory Board should be abolished, together with Article 117 in Memorandum and Articles of
Association. All references to the Prime Minister should be changed to the Minister of Finance.

(v) Transfer Subsidiary companies

Subsidiaries and assets held by 1MDB such as TRX, Bandar Malaysia, Tanah Air Itam, Tanah Pulau Indah
should be transferred to the MOF, supervised and managed properly.

View the full PAC report here.

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