SOME FUNNY FIGURES IN 1MDB BALANCE SHEET. CHAIRMAN LODIN, CEO ARUL KANDA AND PM NAJIB, WHAT IS THE TRUTH?

by 1+1=3 and 2-1=3, donplaypuks® intrepid correspondent for fishy accounting affairs

 

Firstly,  I have been trying to inform everyone that 1MDB actually borrowed RM46 billion and not RM42 billion. Above is the proof from 1MDB's Group Balance Sheet, analysed as follows:

1. Current borrowings (bonds/banks etc.)  - RM8.33 billion.

2. Long Term borrowings (bonds/banks etc.) - RM33.54 billion.

3. Other Current Payables including Derivatives - RM2.33 billion.

4. Other Long Term Payables including Derivatives - RM1.78 billion.

The amount of RM4 billion classified under derivative debt, is the amount, I believe, borrowed from government pension fund, KWAP. 

This money was, as best as anyone can gather, utilised to "invest" in a Mongolian coal mine venture, as well as a similar "investment" in Indonesia. 

The current market value of this "investmen" is anyone's guess, but at least one source thinks, based on diving coal spot prices, that the value is below 50% of original cost.

This RM4 billion debt was subsequently removed from 1MDB's books and taken over at original cost by the Ministry of Finance. 

In short, this appears to be a bailout forced upon the Rakyat, since 1MDB will, for the year ended 31st March 2015, show no profit or loss in its accounts, for this "investnment".

So:

1. CEO Arul Kanda and PM Najib, how did 1MDB get drawn into these RM4 billion of "investments" that very shortly afterwards required a 100% bailout by MoF?

2. Who were the Advisors and Directors in 1MDB who approved these "investments" and what action have you taken against them for this disastrous deal? Could there have been an element of fraud which resulted in poor due diligence being undertaken, and cost over-valued?

3. KWAP will have to be serviced interest cost (not less than 4% per year i.e. at least RM160 million) and eventually repaid the principle amount of RM4 billion. Why should the Rakyat bear the burden of this, 100%, while no one at 1MDB is held accountable for the loss in "investment"?

Next, we come to the figures given by CEO Arul Kanda as to how 1MDB's RM42 billion was "invested":

 

The Sg Besi land (Bandar Malaysia) cost is given as RM400 million. This is very puzzling. The land size is 495 acres or 21.56 million sq.ft. (1 acre = 43,560 sq. ft.). This therefore, works out at RM18.55 per sq. ft. (psf) which is incredibly low. So far, everyone, including Mahathir, has been talking about RM65 psf.

Based on previous announcements, and a recent clarification by CEO Arul Kanda, CLICK HERE, 1MDB received this 495 acres in a contral deal with the government where it had to build 6 army camps in exchange for the land.

The cost of these camps was fixed finally at RM2.7 billion, against which 1MDB received an extremely generous no-strings attached grant of RM1.1 billion from the MoF i.e. Rakyat.

So, in accordance with Malaysian and International Accounting Standards, the cost of Sg Besi/Bandar Malaysia land should be reflected in 1MDB's books at RM2.7 billion, and the government grant of RM1.1 billion treated as income in 1MDB's P&L account. 

At worst, the figure could be RM1.6 billion (2.7-1.1).

Based on these figures the Bandar Malaysia land cost would be:

(a) RM125 psf (@ RM2.7 billion total cost), OR,

(b) RM74 psf (@ RM1.6 billion total cost.

So, Chairman of Board of Advisors PM Najib, Chairman Lodin and CEO Arul Kanda all of 1MDB, please advise us, the Rakyat, and a certain HRH TMJ, how the Sg Besi/Bandar Malaysia land cost only RM400 million @ RM18.55 psf. 

Has 1MDB sold off a chunk of the 495 acres and not told anyone about it? What is the accounting treatment involved?

And why has 1MDB and the government pointedly talked about RM42 billion of debt, and not RM46 billion? Just because the government has taken over the RM4 billion KWAP borrowing, it does not mean they don't have to be eventually paid the RM4 billion, does it? How can those at 1MDB responsible for this fiasco be allowed to get away with it, scot-free?

We await with bated breath for the answers!

Donplaypuks® with figures you don't double check, man!