Elias Hj Idris
QUICK TAKE: In a rare response to critics, 1Malaysia Development Berhad (1MDB) has clarified its position following "attacks" from the media and opposition politicians regarding the performance and sustainability of the national sovereign wealth fund.

The normally reticent 1MDB addressed the insinuations and allegations hurled at it recently, including the “suspiciously” late submission of its annual returns.

It would be interesting to see how DAP’s PJ Utara MP would respond to the 1MDB statement, dated Feb 21, which said that since 2012, 1MDB has had a new business direction.

On Feb 20, theantdaily carried a report that he seemed to have jumped the gun in his crusade against 1MDB.

MP had said: “It is both shocking and suspicious that a multi-billion ringgit entity 100% owned by the Ministry of Finance has failed to produce its audited financial statements after nearly a year.”

In its statement, 1MDB said it has grown exponentially, requiring the consolidation of several new subsidiaries, with large assets worldwide, into the 1MDB Group.

"As such, 1MDB has been granted an extension of time up to March 31 to file its annual returns to the Companies Commission of Malaysia.

"1MDB expects to file and submit its audited accounts in accordance to the extension granted by SSM, as it has in the past years," the statement said.

Following negative media reports on 1MDB’s Cayman and energy ventures, that MP lashed out at the “controversial” management of Prime Minister Datuk Seri Najib Razak’s multi-billion ringgit 1MDB.
He posted two commentaries in Malaysia Chronicle on Feb 18 and 19, titled “CORRUPTION & HANKY-PANKY AT NAJIB’S 1MDB: M’sians will have to PAY MORE FOR UNFAIR DEAL” and “1MDB NAJIB'S WATERLOO? Sudden shock resignation of external auditors triggers alarm bells”.
The 1MDB statement said it had appointed Deloitte, a Big 4 accounting firm, to complete the audit for the financial year ended March 31, 2013, after it was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors.

"This is nothing special or new as it is in line with best market practice where companies decide on its current or future auditors after considering all aspects, including but not limited to conflict of interests and other consideration.

"Deloitte, as a Big 4, will apply equally stringent auditing standards in line with international practice. We thank KPMG for its services and advice," 1MDB said.

On its foray into the energy sector, 1MDB said it is poised to realise strong strategic value from its energy assets of high growth potential domestically and globally.

1MDB stressed: "To give a more accurate representation and valuation of 1MDB’s assets, it is vital to have a more detailed knowledge of the operations and factor in other considerations such as precedent transactions for acquisitions of controlling stake, discounted cash flow, management expertise and potential growth of the business.

"Any valuation without detailed information is wrongly premised and inaccurate.

"All 1MDB assets have strong future growth potential, beyond the finite life of assets at purchase period. They come with credible, experienced management which can create further value from the power business.

"All this points to a high value proposition that can be expected to stimulate markets and bring significant FDI and cash profits to the shareholder – the Government of Malaysia – as well as enhance competitiveness towards better pricing."

1MDB said it had recently completed its acquisition of Jimah Energy, a 1,400 MW coal-fired power plant in Negeri Sembilan backed by strong cash flows and a 25-year PPA expiring in 2033. This purchase diversifies the group’s energy portfolio and opens up further development opportunities.
1MDB’s biggest subsidiary Powertek operates in Malaysia and five other emerging markets -- Egypt, Bangladesh, UAE, Sri Lanka and Pakistan -- while another subsidiary Kuala Langat Power Plant won a 10-year extension to its PPA until 2026.

1MDB said it was also well placed to grow significantly in its overseas market with a management armed with deep industry knowledge, both at country and group level.

"We are heading expansion for international operations, supported by a growing demand for electricity and shortage of supplies in some of the countries.

"1MDB is the largest IPP in both Egypt and Bangladesh. In Bangladesh, 1MDB controls 20 per cent of the market share, and is looking forward to growing even further," it said.

On its venture into Cayman-based funds, 1MDB said: "The Cayman-based fund is regulated by the monetary authorities in Cayman, Switzerland and Hong Kong.

"1MDB has invested the proceeds with regulated and licensed international fund managers. These fund managers adopt an absolute return strategy of which the primary investment objective is to achieve long-term capital appreciation and/or steady income through investments in listed and/or unlisted companies.

"The funds have an investment objective specifically tailored and aligned to 1MDB's risk/return objective.

"A total of US$200 million (RM652 million) has been remitted from the fund to the 1MDB group in Malaysia to service repayment. Out of this, US$134 million (RM430m) is from the 5.76 per cent cash dividend generated within the first year of the investment period.

"The funds are Cayman Islands-based international fund structures which are widely used by global international financial institutions. Cayman Islands are one of the largest banking centres in the world where 80 per cent of the world's largest banks have branches/subsidiaries.

- See more at: http://www.theantdaily.com/…/Najib-s-1MDB-hits-back-at-cr…/…

Ojay Khoo's photo.
0 Responses