1MDB or MoF to foot refund of RM741 mil deposit paid for Bandar Malaysia?

1MDB or MoF to foot refund of RM741 mil deposit paid for Bandar Malaysia?

By: 
Chester Tay
04/05/17, 04:56 pm

(May 4): Questions are now being raised over who will refund the RM741 million ($239 million) deposit paid by a consortium led by Iskandar Waterfront Holdings Sdn Bhd (IWH) to acquire a 60% equity interest in Bandar Malaysia Sdn Bhd after the deal was called off yesterday.

"Will 1Malaysia Development Bhd (1MDB) now refund the deposit or will the Ministry of Finance (MoF) have to once again bail 1MDB out by forking out the RM741 million?" DAP national publicity secretary and Member of Parliament for Petaling Jaya Utara Tony Pua asked in a statement today.

Pua pointed out that MoF has to also independently service the RM2.4 billion proceeds raised from the Islamic bonds (sukuk) issued two years ago by 1MDB for the purposes of the Bandar Malaysia project in Sungai Besi here.

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In January last year, 1MDB had said parts of the proceeds were used to finance the relocation of defence units from the land marked for the 196ha Bandar Malaysia development.

"MoF will also have to bear the burden of making payments to Perbadanan Perwira Harta Malaysia, a wholly-owned subsidiary of Lembaga Tabung Angkatan Tentera, which had received a RM2.7 billion contract to relocate the air force military base, of which nearly RM2 billion are still outstanding," he noted.

Yesterday, TRX City Sdn Bhd, an indirect wholly-owned subsidiary of MoF, announced that the RM7.41 billion sale of a 60% equity interest in Bandar Malaysia Sdn Bhd has lapsed.

It stated that despite repeated extensions being granted, IWH CREC Sdn Bhd — a 60:40 joint venture between IWH and China Railway Engineering Corp (M) Sdn Bhd — had failed to meet the payment obligations outlined in the conditions precedent under the share sale agreement (SSA). "As a result, the SSA between the parties stands null and void with immediate effect," TRX City added.

Pua said he had previously questioned 1MDB and the MoF as to why the prized asset was sold to a consortium led by IWH, whose total net assets is worth barely RM3.8 billion, less than half the above transaction value. "For the financial year ended Dec 31, 2015, IWH's pre-tax profit was only RM170.4 million."

"Despite IWH clearly attempting to bite off more than it can chew, 1MDB had proudly announced on Dec 31, 2015 that IWH-Bandar Malaysia sale agreement 'marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet on May 29, 2015'," said Pua.

"The deal was expected to be completed by June 2016, but was delayed clearly by IWH's inability of meet the agreed payment terms and schedules," he added.

Pua also called for the resignation of 1MDB president and group executive director Arul Kanda Kandasamy for the deal fallout, saying it is an "embarrassment caused to the Malaysian government".

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